Bulgaria's Telco Sector Enters Maturity
Supporting free and efficient competence, development of innovative telecommunication infrastructure, and management of scarce resources, as well as neutrality regarding telco technologies and services are the main goals of the new Government Policy in the field of electronic communications, approved by the Bulgarian government at the end of 2010. To achieve its strategic goals, Bulgaria has to implement the new rules of EU's telecommunication “Framework 2009” in the national laws by 25 May 2011. Among the tasks indicated in the new governmental program are flexible and effective usage of the radio spectrum, harmonization of the National Plan for Radio Frequency Spectrum Allocation with the EC, CEPT, and ITU decisions, provisioning of conditions for mobile LTE development, next-generation networks, and broadband networks. The accomplishment of the transition from analogue to digital television is still pending, since the government postponed the deadline for the switch-over to the end of 2015. By the end of 2012 one national network for public TV programs digital broadcasting, as well as 5 national and several regional digital broadcasting networks for commercial TV operators have to be built.
2012 is the deadline for the clearance of the frequency bands of 2.5 GHz and 3.5 GHz. By the end of 2015 the frequency band spectrum between 790 and 862 MHz (aka digital dividend) has to be cleared. It could be used for mobile broadband, broadband services in rural areas, new wireless technologies, etc.
The strategic document views mobile WiMAX as one of the innovative 4G technologies which will make broadband available to the customers and are attractive to the operators. Bulgaria will examine the interest of the e-communication enterprises to provide 4G services in the radio spectrum 2500-2690 MHz, and LTE is “one of the possible standards in these frequency bands”. The Policy envisages the establishment of a secondary market for the radio frequencies, so that telecos can resell to other players the licensed bands which they do not use efficiently. This move will provide more flexible spectrum management and innovative services development.
Mobile services penetration in Bulgaria is some 139% of the population by 1 October 2010, or more than 10.5 mln active SIM cards. Mobiltel’s (M-Tel) mobile market share remains stable at 50%, i. e. 5.2 mln customers at the end of the third quarter of 2010. “Mobile broadband showed a strong performance with the subscriber base growing by 92.9% to almost 97,800 mobile broadband customers,” reads the quarterly report of Telekom Austria Group, the owner of M-Tel. Globul’s total customer base at the end of Q3 2010 reached approximately 3.9 mln, as the number of the postpaid subscribers increased to 2.2 million. Globul's fixed line services marked a strong growth in Q3 2010 with that subscriber base exceeding 100,000 customers.
At the end of 2010 Vivacom reported a 17% increase of its mobile subscriber base, and the customers of its ADSL-based Internet service Vivacom Net went up 11% year-on-year. The telecom's 3G subscribers grew by 68% last year. The company claimed that around the end of 2010 the coverage of its 3G network was some 97% of the population.
By the end of 2009 in Bulgaria there were 1 mln fixed Internet subscribers, and 99% of them used broadband services, according to the Communications Regulation Commission (CRC). In January 2010 the mobile Internet subscriber base totalled 120,000 and broadband penetration was 13% (24.8% on the average for the EU). By July 2010 mobile broadband penetration in Bulgaria was 5.8% of all active users (21.3% averagely in the EU), and through dedicated data service cards/modems/keys only the penetration was 2.3% (6.1% on the average for the EU), says Nokia Siemens Bulgaria quoting data from the official EU report “Broadband Access in the EU: The Situation on 1 July 2010”. According to ITU's statistics, in June 2010 there were 3.5 mln Internet users in Bulgaria (47.5% of the population), and mobile broadband penetration grew by over 100% on the year to 2.3% in July 2010. „In 2010 in Bulgaria 280 to 320 thousand smartphones were sold, or 15% of all mobile phones sold, according the data from the 3 mobile operators,” said Michail Angelov, Marketing and Business Development Manager at Nokia Siemens Networks Bulgaria.
The volume of the data carrier and Internet access market segment was some €150 mln in 2009 following a 5% annual growth, according to the CRC data. The investments in data networks were around €45 mln, or 22% more than the amount of the spendings in 2008. “Total annual telecom investments are 5% of the total FDI in Bulgaria and around 2% of GDP versus an average EU value of 0.5%,” said Andreas Maierhofer, CEO of Mobiltel, during the Bulgaria Economic Forum at the end of November 2010. “Mobile companies invest more than fixed operators, and in 2010 M-Tel's investments in the county were close to €150 mln”, stressed Maierhofer.
In July 2010, at a special demonstration Mobiltel presented its highest speed of mobile data transfer through a 3G network – 42 Mbps, enabled through the new technology Dual Carrier HSPA+, which had to be launched in Sofia by at end of 2010. In 2009, the company introduced the 21 Mbps HSPA+ technology in the capital and promised services, based on this technology, to be also available by the end of August 2010 in Varna, Plovdiv and Burgas.
Globul invested some €9 mln in its new Network Management Center, located near the company headquarters in Sofia. The center is operated by 20 highly-skilled professionals, who are assisted by a giant 6-meter digital screen, which gives detailed information on the current network status and the operations at a glance. The new NMC provides round-the-clock control and monitoring of the operator’s network across the country and offers a 24-hour front-line service and continuous, secure and high-quality network operations and maintenance, as well as emergency response. “We saw a 7-fold increase in voice traffic, a 5-fold increase in SMS traffic and a spectacular 272-fold increase in data traffic in the last 5 years. To meet that growth in demand, Globul invested nearly €600 mln in its network in that period and the new Network Management Center is a major milestone of our investment program,” explained Apostolos Pagkoutsos, CTO of Globul. In June 2010, Globul acquired additional spectrum with the aim to expand and further enhance its UMTS network supporting the company’s 3G services. For the move, allotted by the Communications Regulation Commission, the company paid a one-off fee of €8.5 mln and an additional annual fee of €500,000.
In mid-February, Alcatel-Lucent and Vivacom sealed a 5-year contract, by which the telecom outsourced end-to-end network operations to Alcatel-Lucent as of 1 March 2010. As part of this agreement about 3,000 Vivacom employees joined Alcatel-Lucent.
At the end of August, the telco sold 50% of the National Unit Radio and TV Stations (NURTS) to the international financial investor Mancelord Ltd. The priority of the newly set up joint venture will be the development of NURTS's TV and radio transmission infrastructure with the aim to turn the company into an important player on Bulgaria's digital transmission market and into a nationwide multiplex services provider.
On 14 September 2010 Max Telecom signed an equipment delivery contract which turned the South-Korean giant into the Bulgarian operator's main supplier of mobile WiMAX technologies. The value of that deal was €5 mln but this was only the first phase of a series of contracts, according to Krasimir Stoychev, founder and CEO of Max Telecom. “The next phases will depend on our success in offering the service and on the new subscribers,” he said then. “The most important thing is that the service quality is completely changing with Samsung's next-generation mobile WiMAX equipment. In December we are going to offer in Sofia up to 32 Mbit download, which cannot be provided by anyone else.” This service is to be rolled out to the rest of the country in 2011 at the total cost of between €10 mln and €15 mln but again at €5 mln portions. The firm expects to offer up to 100 Mbit/s by 2012.
The supply of double-play services (cable TV and internet or cable TV and voice) and triple-play
services offered by cable providers continued to grow.
“The actual mobile penetration in Bulgaria is around 139%, and the telecom growth is expected to come from broadband and FMC propositions,” says M-Tel's CEO. He estimated that fixed broadband connectivity revenues will grow from €140 mln in 2009 to €260 mln in 2019 with subscribers growing from 1 mln in 2009 to 2 mln in ten years. This was one of the key drivers for the 100% acquisition of two high-speed fixed network operators – Spectrum Net and Megalan Network. “The launched projects for planning and building of a new-generation optic network are running on schedule and from now on many innovative offers and bundle services will be provided to the customers”, said Maierhofer in January. The first product bundles have been sold since the mid of October, including mobile and fixed line communications under the M-Tel brand.
Local telco players view the TV service as a new revenue source and a way to differentiate themselves. “The TV market in Bulgaria is unique,”, said M-Tel's CEO. “The high paid TV penetration of 72% in households is expected to lead to high IPTV penetration”. In December, on the Christmas Eve, M-tel offered a new packet service combining high-speed Internet access (30 Mb/s) through a fixed network, and digital television, including over 100 channels. The offer was developed by the telecom together with Spectrum Net and Megalan and is available in Sofia, Varna and Burgas.
At the end of the summer of 2010, Vivacom launched a satellite (DTH) digital TV service called Vivacom TV, and only in 4 months the company became the second larger TV distribution company with some 30,000 subscribers. The biggest DTH provider in Bulgaria Bulsatcom, whose subscriber base was close to 400,000 at the end of 2009, launched fixed Internet services after acquiring FTTH and LAN infrastructures in a number of Bulgarian cities, including Sofia, Varna, Plovdiv, Sliven, Stara Zagora, Dobrich, etc. The company launched in Sofia very attractive 2Play bundles with optic Internet and DTH TV services.
In December 2010, Blizoo, formed after the merger of Eurocom and CableTel the same year, unveiled a new HD settop box supporting HD and SD TV programs, Internet access, and direct access to YouTube and multimedia files from the home LAN network. The device provides an optical port to connect the home cinema with Dolby Digital and Surround support, HDMI interface for HD video, LAN port, and USB. By the end of 2010, 40% of Blizoo's network supported the new DOCSIS 3.0 standard, and in 2011 the company will upgrade the rest of its access infrastructure.
In November 2010, eleven alternative providers of Internet and TV services established a new national operator called BTT JSC (Bulgarian Telecom and Television). Its founders are Networks Bulgaria, Digital Communications, Escom, Icon, Telnet, С.Т.В., Balchik Net, Optinet, Diana Cable TV, Powernet, and BolBG Iztok. The operator will offer an alternative to the customers in more than 40 cities and 100 villages, said Dimitar Hinkov, CEO of BTT JSC. He claimed that the new enterprise will launch services under its own brand, including mobile telephony and mobile broadband through GSM, 4G and/or WiFi networks. “BTT will apply for new mobile licenses from the national regulator. For the mobile services we are in talks with a potential investor looking to build a new mobile network in Bulgaria. With the existing players we discuss the opportunity to start an MVNO on their infrastructure,” added Hinkov.