Local mobile telephony market nears maturity

The first roots of mobile telephony on the Romanian market sprouted in 1993 when Telemobil launched a service based on NMT 450 technology. GSM technology, which is the most popular in Europe and Romania, was introduced in 1997 by Connex and Dialog, which were later taken over by Vodafone and Orange respectively. With four players on the market, following the entrance of Cosmote and Telemobil's brand Zapp, and with RCS&RDS expected to launch mobile telephony services commercially by year-end, the local market is close to reaching maturity.
“The current evolution of the sector indicates that by 2009, mobile telephony in Romania could reach a 100 percent penetration rate, which would make the mobile communications sector the first to reach European level,” said IT&C minister Zsolt Nagy.
The increase in mobile telephony market since its debut in Romania has been spectacular, with an 80 percent penetration rate by the end of 2006, meaning about 18 million users, he added. In comparison, the penetration level at the end of 2005 was 61.8 percent. “We will soon reach a penetration rate similar to those in European countries like Great Britain, Italy, Ireland, Luxembourg and the Czech Republic, where they have surpassed 100 percent,” Nagy continued.

Diversified services replace market shares on priority lists
The biggest players on the market no longer make market share the top priority on their agendas, but are mostly interested in increasing their services portfolio. The growth generator for mobile telephony in the future will be innovation and added value services, not the increase in the number of clients, said Liliana Solomon, president and CEO of Vodafone Romania, when celebrating the firm's 10th year of activity on the market.
“It is clear for everyone that an increase in client base will no longer be the main income generator. The local operators will have to be even more innovative and launch new services that will increase the income per customer, as is the case in Western European countries,” Solomon said.
The development of mobile telephony has contributed to the education of the Romanian consumer, who has become more demanding in his or her expectations from the price-quality ratio point of view, said Razvan Ionescu, marketing director of Orange Romania.
Meanwhile, Telemobil officials predict that people's communication needs will continue to increase and will become more and more sophisticated.
“If we were to compare the Romania we knew before 2000 with other emerging markets, then the pattern of the first years after mobile telephony services were launched would be the same. Mobile telephony was accessible only to a select group of people, who used it for its novelty and as a status symbol,” said Costas Kapetanopoulos, marketing and communication director for Cosmote Romania. “With the development of mobile technologies and accessible handsets, and the rapid increase of the penetration rate, companies became interested in growing their ARPU, keeping their existing clients and adding new ones.”
Meanwhile, mobile handsets have transformed into a multifunctional communication tool that is indispensable to daily activities.
Vodafone announced last week the expansion of its 3G Broadband-HSDPA network to all the 23 cities in the country where 3G services are present, too. Previously, other technology was cutting edge. Under the Telefonica Romania brand, Telemobil started offering mobile telephony services based on the NMT 450 technology as early as 1993.
Once new technologies developed and the penetration rate of mobile telephony increased, the tariffs for mobile telephony decreased while the handsets and provided services diversified, as mobile telephony ceased to be prohibitive for the majority of the population, Telemobil officials said.
Dialog was introduced on the local market by Mobil Rom in mid-1997. By the end of that year, the company had reached 100,000 clients.
Romanian users have been open to new and up-to-the-minute technology since the beginnings of mobile telephony on the market and remain so, say Vodafone Romania representatives. As the market grew, users' demands and communication needs have become more complex. From simple voice services, data services have also boomed in recent years.
When it was launched on the market, back in 2001, Zapp addressed the business segment, while its competitors at that time, Connex and Dialog, were targeting the mass market, Telemobil representatives said.
“The data transfer need was mainly associated with corporate companies and associates,” they added.
With no pre-pay services in its portfolio, Zapp is still focused on corporate clients, even though it has made efforts to attract individual clients as well.
Established in 1999 by the fixed-line operator Romtelecom, Cosmorom started activities in 2000. Four years later the company had under a one percent market share in the mobile telecom field.
Cosmote, part of OTE Group, took over Cosmorom in July 2005 and relaunched operations in December 2005 with a little over 20,000 users in its database. Last week, the operator announced it had reached more than two million customers. Its strategy included the acquisition of the Germanos retail chain, the expansion of its coverage and a low-price policy.
From the 112,000 Connex clients at the end of 1997, when the firm entered the market, Vodafone Romanian has managed to keep several tens of thousands of its first customers loyal.
In the recent period, the fight to keep customers loyal to an operator has intensified and led to a significant decrease in the prices of both voice and data services.
“Although the Romanian market still offers growth potential, compared with 2003-2004, we currently face a slowdown in the increase of the number of clients, as the mobile telephony penetration rate has surpassed 80 percent,” Ionescu said.
This marks a real turnaround from the beginning. “At the time of Cosmote's launch on the Romanian market, consumers did not have real options, with the existing offers and tariffs being extremely complicated, confusing and pretty much similar, said Kapetanopoulos. “The market was dominated by two major operators and their offers did not differentiated clearly from one another.” But he believes that the market started changing and becoming more dynamic since his company entered the market.
The future of mobile telephony belongs to companies that understand and listen to the needs of the customers, always adapting their strategies and bringing relevant packages, while also focusing on bringing the latest technologies and implementing significant value added services, market players believe.

Roxana Mihul