Romania telecom tender brings 4G within reach

Newsroom 01/10/2012 | 09:34

The telecom tender which awarded the highest amount of spectrum ever granted in Romania in one sitting has come to an end, raising in total EUR 682 million for the state budget. Now they have secured their resources for the next 15 years, some operators have already announced their intentions to launch 4G, which is just around the corner.

 Otilia Haraga

“Mobile communications are entering a new age in Romania, following this tender: spectrum resources available to operators have increased by 77 percent and allow the introduction of 4G technology, and the distribution of the 900 MHz band is more efficient,” said Catalin Marinescu, president of telecom regulator ANCOM. The five contenders in the tender – Orange Romania, Vodafone Romania, Cosmote Romania, RCS&RDS and 2K Telecom – successfully bid for a total of 485 MHz in four frequencies: 800 MHz, 900 MHz, 1800 MHz and 2600 MHz.

Orange Romania will pay in total EUR 227,135,002, after boosting its spectrum resources by 84 percent. The operator won two blocks in the 800 MHz bandwidth, two blocks in 900 MHz, four blocks in 1800 MHz and four blocks in 2600 MHz, valid for the timeframe 2014-2029. The company also won short-term licenses: five blocks in the 900 MHz bandwidth and three blocks in the 1800 MHz bandwidth, valid between January 1, 2013 and April 5, 2014.

Meanwhile, Vodafone Romania will pay EUR 228,520,034, managing to hike its spectrum portfolio by 78 percent.The firm took two blocks in the 800 MHz range, two blocks in 900 MHz, six blocks in 1800 MHz and one block of 15 MHz in the 2600 MHz frequency, valid for 2014-2029. The operator also won short-term licenses: five blocks in the 900 MHz range and three blocks in the 1800 MHz one, valid between January 1, 2013 and April 5, 2014.

Elsewhere, Cosmote Romania paid EUR 179,880,000 in license taxes, growing its spectrum resources by 58 percent. The operator acquired one block in 800 Mhz, two blocks in 900 Mhz, five blocks in 1800 Mhz and two blocks in 2600 Mhz, valid for the timeframe 2014-2029.

RCS&RDS committed to pay EUR 40 million for the licenses, expanding its spectrum portfolio by 29 percent. The operator gained access to the 900 MHz range after winning one block in this frequency, valid for the period between 2014 and 2029.

The newest contender on the market, 2K Telecom, will pay EUR 6,601,000 in license taxes for two blocks of 15 MHz each in the 2600 MHz frequency, valid over 2014- 2029. “Acquiring the licenses is an important step, based on calculations regarding future revenues that can be obtained by exploiting these. According to these calculations, financing is always ensured by a mix between the resources of the company and bank loans, which varies from year to year depending on various factors such as works of modernization, the success of commercial offers and so on,” Dragos Enescu, marketing director in 2K Telecom, told BR.

License taxes will be paid by the winners in two stages, first by November 30, 2012 and then by June 30, 2013. However, this does not necessarily mean the market has been settled for good: according to the law, any of these licenses can be ceded totally or partially to another operator, with the agreement of the telecom authority.

Following the tender, 676 rural towns and villages that are so far uncovered by broadband will get coverage with HSPA, HSPA+ and LTE (4G) networks as the operators have committed to a plan to provide this coverage.

Three of the contenders, Cosmote Romania, RCS&RDS and 2K Telecom, also assumed the obligation of hosting mobile virtual network operators (MVNO).

“For the operators, the results of the auction open supplementary business and innovation opportunities, and ensure both the security of investments and exceptional efficiency in using the spectrum. For users, the auction brings access to four national networks, with better coverage, higher data transfer speeds, and generally more, better and more affordable services, in the setting of healthy competition,” concluded Marinescu.

This positive view is shared by the minister of communications, Dan Nica, who said the auction “stands as proof that we could organize to international standards the most extensive tender in Romanian telecom history.” “The Romanian state will cash over EUR 682 million in license costs alone. Add to these the investments that will be made, and we can talk of more than EUR 1 billion,” said Nica after the results of the tender were announced.

 4G services in Romania are just around the corner

There are grounds to believe that 4G will be implemented very soon in Romania, says Marinescu. “Operators may implement 4G as soon as this year, but if not in 2012, next year for sure,” he said. The operators have already confirmed in official statements their interest in the launch of 4G services in Romania.

Thus, Orange announced that it would launch 4G services by the end of the year in the 1800 MHz frequency. “Orange has won all the spectrum needed  in all categories. We are planning to start 4G services before the end of this year, pending the approval of the authorities, and from April 2014 we will be able to offer 4G services at the highest efficiency.

The company has already performed the first tests. “We already had an implementation of 4G services when we measured the maximum performances of the service; more precisely, we reached speeds of 100 Mbps and measured parameters such as latency. I could not say that the implementation of 4G is much more complicated than the 3G implementation we are doing at the moment. Of course, since we are talking about data, the process of optimizing the network will have to be a very precise and rigorous one,” said Madalina Suceveanu, CTO of Orange Romania.

Vodafone Romania also announced a timeframe for a 4G launch in its network. “We are very satisfied with the auction outcome which ensures the spectrum that we need to carry on with our LTE-based mobile data strategy. Vodafone will be able to launch 4G services for its customers in early 2013 (…). We already have a testing license for 4G and we will shortly start running tests in our network. At the same time, in view of the long-term commitment we have made by acquiring the spectrum until 2029, we hope that the Romanian authorities will ensure a predictable and supportive environment for industry investments,” said Inaki Berroeta, CEO of Vodafone Romania.

During the auction, Cosmote secured 50 x 2 MHz of spectrum, which is “fully aligned with the company’s auction targets and strategy, able to accommodate the long-term network needs for development and capacity for all technologies (2G/3G/4G),” said the company in an official statement.

Before the bid, RCS&RDS also announced its interest in supplying 4G to its customers. “We will certainly want to acquire licenses for the lower frequencies of 800 MHz and 900 MHz,” said Valentin Popoviciu, business development manager at RCS&RDS before the auction. Following the tender, RCS & RDS gained access to 900 MHz after winning 2 x 5 MHz in this frequency, valid for the period between 2014 and 2029. “The acquisition of the 900 MHz frequency corresponds to our intentions of development and expansion. This frequency will allow us to cover 98 percent of the Romanian territory and bring voice and mobile data to a greater pool of users (…). We estimate considerable growth in competition on the market of mobile communications,” Dragos Spataru, manager business unit voice RCS & RDS told BR. “We are also very interested in 4G and in the new services that can be launched based on this technology,” he also added.

Not all the spectrum that went under the hammer was eventually sold during the procedure. There is still 90 MHz available (one block of 10 MHz in the 800 MHz bandwidth and eight blocks of 10 MHz in the 2600 MHz one). The reason they failed to sell is that “there was a great deal of spectrum put up for sale, at the same time” said Marinescu, who pointed out that this is not unusual. “In many countries, the 2600 MHz spectrum was not allocated in its entirety.” This means that there is still room for one more player, at least in theory. “We could conclude that the Romanian market can accommodate a new investor,” said Marinescu.

In fact, a possible move of RCS&RDS would be to try and acquire that spectrum that is still available to boost its portfolio, if ANCOM takes that out for auction at one point.

The fifth contender that took part in the bidding, 2K Telecom, also opened up to BR about future plans involving the acquired licenses.  “2K Telecom is already offering data services of the 4G-type using the alternative technology WiMax. We offer these services both under our own brand Idilis, as well as by resale to other telecom operators, a model generally known as MVNO. The newly acquired spectrum will be integrated into these two strategic directions of our company: first, specializing in building and maintaining modern telecommunications networks, especially networks of the type 4G LTE and second, opening up these networks to the other operators as part of collaboration models in which each firm enhances its own competencies,” said Enescu.

otilia.haraga@business-review.ro

Find out more about 4G services in Romania during the BR event Focus on Telecom on October 11.

 

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