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23 Apr

Bulgaria's ICT business went down 3.6% in 2012

The ICT market heavily relied on export and EU funding for various projects in the private and the public sector


The overall 2012 revenue in the ICT sector in Bulgaria declined by 3.6% year-on-year in to 3.955 bln Bulgarian levs (just over 2 bln euro), according to the financial results of the 126 companies which submitted data for Computerworld Bulgaria's ICT Топ 100 2013. The drop was on the back of the weakening revenues of all three mobile operators and the decreasing overall revenue in the telecommunication business by nearly 7,1% in 2012.

It is important to notice that the results in the telecom sector are influenced by fact that it is devided into two parts – a large group of small businesses with annual revenues of 10-20 mln Bulgarian levs and another group of the leading five telecoms in the country with revenues of over 100 mln Bulgarian levs (BGN). The latter group includes Bulsatcom and Blizoo which have not publicly announced their financial data, nor have they revealed it in Bulgaria's Trade Register in the last two years. NURTS Bulgaria is another important player whose 50 mln Bulgarian levs in revenue in 2012 is expected to grow with the start of the TV digitization in the country.

At the same time, the information solutions and communication equipment market was marked by a slight growth of 4.3% in 2012 versus 2011. This positive overall result was mostly influenced by the leading 20 players, including ITA Engineering, Asbis Bulgaria, Solytron, HP Global Delivery Center, ITA Trade, Experian Bulgaria, Kontrax, and IBS Bulgaria, which together increased their revenues by over 111 mln Bulgarian levs. From a percentage point of view, ITA Trade achieved the highest growth of 680%, and ITA Engineering's revenue went up by 609%. High percentage growth were also achieved by Telenova, IBS Bulgaria, Bianor, Balkan Services, Persy, Kontrax, and Methodia (all between 40% and 70%).

A total of 71 from the 124 IT companies, which took part in Top 100 2013, managed to increase their total annual revenues in 2012, and the rest suffered declines, including large players, like CAD R&D Progress, Techno Pro, and Vilmat. Unfortunately, big companies, such as Most Computers, Printec, and Smartcom, did not submit data to participate in the ranking. On the other hand, Top 100 2013 saw some newcomers and returning companies, like S&T Bulgaria, ProxiAD, Software AG Development Center, Infragistics, Scale Focus, and Gravis Bulgaria.

The telecom sector

saw an overall revenue of 2.65 bln Bulgarian levs, or about 3.7% less than in 2011. Like we said, there is no data about Bulsatcom and Blizoo, which occupied the 4th and the 5th place, respectively, in 2010. Megalan and Spectrum Net, which were also among the larger telecom players in the past, are now merged into Mobiltel.

The main negative factors on the telecom market in 2012 were the lower rates of interconnection between mobile operator's networks, which were axed by the regulator, as well as the lower roaming revenues, again affected by regulatory interventions. Another negative factor was end users' and businesses' weaker consumption.

It is important to notice that during 2012 two of the largest telecom players – operators Vivacom and Globul – were in conversations to change ownership. Vivacom changed its owner at the end of 2012, and the management of the company was shaken in the middle of 2013. Globul was acquired from OTE by Norwegian telecom group Telenor. The deal is still pending regulatory approval in both Bulgaria and the European Commission, but no one expects any problems with it. If everything goes as planned, the acquisition will be closed in September and telenor will take over. The Globul brand, however, will not change, at least not in the short or the mid term.

Among other telecom players in the chart, NURTS, NET1, Borica-Bankservice, and Cable SAT Zapad had growths.

A total of 9,867 employees worked at the companies which were active on the telecom market and took part in Top 100 2013. The average efficientcy in the sector (revenue per employee) was 121,700 Bulgarian levs (62,200 euro), and the average monthly wage remained high at 2,261 Bulgarian levs (1,156 euro), including insurances and bonuses.

Since we did not receive any data about the revenues from the different types of services telecoms offered in 2012, we used the report of The Communications Regulation Commission (CRC). It, however, only shows the overall growths or drops in the separate segments and does provide information about where some telecoms do better than others.

The electronic communications market in 2012 was 2.822 bln Bulgarian levs, according to the CRC, which calculated the result on the basis of the data of 1,027 companies, or 89% of all registered companies on the telecom market. However, only 869 firms did provide e-messaging services in 2012, or fewer by 4% than in 2011.

Some segments, like data transmission and/or Internet access services, packaged services, channel network services, access to satellite systems, and collocation services, enjoyed revenue growths.

According to the CRC, the total volume of the electronic communications market was 3.6% of Bulgaria's GDP in 2012.

Voice communication services (fixed, mobile and other telephony) kept their leading share in the e-communications market in 2012. It had a share of 65.2% but suffered a drop of 4.8 percentage points versus 2011.

Data transmission and/or Internet access services were the second largest revenue generator on the market in 2012. They had a share of 12.3% and went up by 1.6 percentage points.

The third most important segment were packaged services, which made up 11.01% of the e-communications revenue in 2012 and increased by 2.9 percentage points.

Radio and TV channel transmission and/or distribution services totalled 235 mln Bulgarian levs and had a 8.33% share.

Line lease services generated 42.41 mln Bulgarian levs, down 3.11% on the year.

Total IT revenue went up

by 4.3% year-on-year to 1.296 bln Bulgarian levs in 2012. This is also higher by 7% compared to 2010.

The growth is logical given the slightly better results of the large IT players and the fact that some companies that had a bad year decided not to share their financial data. On the other hand, this year a number of newcomers and returning companies appeared in the ranking, such as ProxiAD, Experian, Software AG Development Centre, Infragistics, etc. They develop software and work primarily on foreign markets by which they leave a positive mark on Bulgaria's image of a regional software development (and outsourcing) hub, also developed by companies like HP Global Delivery Center, Musala Soft, InterConsult Bulgaria, Nemetschek Bulgaria, Seeburger Informatik, Sirma Group Holding, Scale Focus, and of course Datecs and DZU, which are 100% Bulgarian companies and produce and export a lot of own software and hardware products.

The IT firm that reported the highest revenue jump in percentage terms – 900% – is EOS Electronics, followed by ITA Trade, ITA Engineering and several newcomers (see chart on page 70).

The average efficiency of the IT companies stayed relatively flat in 2012 compared to 2011 – 96,300 euro versus 97,700 euro revenue per employee, with the top five firms being POLYCOMP, Asbis Bulgaria, APCOM, Solytron, and ITA Engineering. The first four companies are distributors, which is typical in this category. The other firms in top 10 include ITA Trade, CAD R&D Center Progress, Mnemonica, Lancom Bulgaria, and MD Electronics.

The overall profit on the IT market was over 102 mln Bulgarian levs in 2012, which means that these companies contributed more than 10 mln Bulgarian levs to the country's treasury, given the 10% profit tax. Ordered by absolute value, the leaders were as follows: HP GDC, Borica-Bankservice, Datecs, ITA Engineering, ITA Trade, Fadata, Sirma Group Holding, Stanga, Lirex BG, and Global Consulting.

Two smaller companies, however, took the lead in terms of having the highest profit marginin 2012 – IPT, Vida Electronics – followed by Global Consulting, and Quality House. Other firms that did well include Mistral Software, Borica-Bankservice, ITA Trade, AS Systems, and Lema Trading.

The average monthly wage in the IT sector in 2012 was exactly as high as in 2011 – 1,517 Bulgarian levs.

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