The approach to the Romanian telecom industry should rapidly change, urges Euroweb

Measures are urgently needed on the Romanian telecom market in order to remain attractive for investors, after 5 years of decline caused by the financial crunch, the price erosion and fierce competition, urges Stuart Evers, CEO of Euroweb (in picture).

“In the past Romania was very attractive for investors in the IT&C industry due to highly skilled employees and the low entry barriers, especially as far as creating fiber optic networks that could be built in the air. These were circumstances that brought major cost benefits compared to other European countries. One of the side effects of these situations was that many companies built their own fiber optic backbone and thus competition became fierce and prices went lower and lower,” says Evers.

He also explains that ever since it became compulsory to transfer these networks to the underground, the picture is different. “From a market with small profit- small costs, we rapidly grew to a model with high costs and low revenues. This context not only affects active players, forcing many to cut costs, investments, the number of employees, or even go bankrupt, but it also discourages foreign investors who might be interested in investing on the Romanian market, creating new jobs, and thus bringing revenues to the state budget.”

According to the Euroweb CEO, in 2009-2010, the costs with running an optic fiber network were approximately EUR 30 per kilometer but since then, they have gone up by 300 percent and now reached around EUR 100 per kilometer.

“A telecom company manages hundreds of kilometers of optic fiber in every city, which generates a huge growth in costs. Even more, telecom operators sign 5-year contracts with those who install the optic fiber, while the end-user commits to at most 24 months, which ups the costs and risks for every new patch of installed infrastructure and makes the overall market much more expensive, while revenues stay at the same low level,” said Evers.

The Romanian IT&C market reached a total value of approximately EUR 9.4 billion, of which the telecom sector totals EUR 3.4 billion, which represents 2.5 percent of the GDP.

Otilia Haraga