2010 Bulgaria - Telecoms, Mobile, Broadband and Forecasts

Telecoms competition heats up in Bulgaria

A European Union (EU) member, Bulgaria benefited from many years of strong economic growth brought about by large capital inflows in the years leading up to and immediately after its EU ascension. This period of strong GDP and employment growth was also marked by high current account deficits and double digit inflation.

The recent global financial crisis impacted Bulgaria through the reduction in capital inflows and export demand due to economic conditions in Germany, Greece and Italy, its top three export destinations. As a result real GDP contracted by 4.9% in 2009. The EU estimates real GDP growth to remain flat for 2010 before rising to 2.7% for 2011.

Bulgaria’s telecoms industry was the recipient of much foreign investment capital as evident by the ownership of many of its largest players. Much of this investment flowed into the telecoms industry following market liberalisation and alignment of the regulatory environment with the EU’s regulatory framework for communications, creating regulatory certainty for investors. The telecoms sector was impacted by the contracting economy as evident by decreasing revenue and difficulty in attracting capital but the overall industry is resilient due to the essential nature of most telecoms services.

Broadband represents nearly all Internet connections in Bulgaria, with healthy competition due to the number of competing technology platforms used to offer broadband access: DSL, cable, FttX, WiMAX and LAN-based micro ISPs. Recognising the potential of applying ICT to improve both social and economic development, Bulgaria has undertaken steps to develop an Internet society encompassing commerce, health and government services. Competing digital TV offerings include broadband TV, cable TV and satellite TV. Deployment of digital terrestrial TV networks is underway ahead of analogue switch-off scheduled for 2012.

Bulgaria possesses a well developed mobile market as indicated by current mobile penetration levels. Three mobile network operators offer GSM and WCDMA-based services. Competition has intensified given the recent implementation of a streamlined mobile number portability process. At least one operator is branching into the fixed-line market, acquiring a number of fibre-based broadband Internet service providers (ISPs) as part of a strategy to evolve into a provider of integrated services. Mobile data offerings are focused on mobile broadband, made possible by 3G network deployments.

Market highlights:

• An evolving regulatory environment is improving competition; a streamlined number portability procedure commenced operating in August 2010 and Bulgaria is under pressure to bring down mobile termination rates which are the highest in the EU.
• Healthy platform based broadband competition is evident, with access available via cable, ADSL, FttX, LAN and wireless. ADSL accounts for one third of total connections, less than that of fixed wireless operators which include a number of WiMAX players.
• Consolidation is underway in Bulgaria’s sizeable cable TV market; a private equity owner has merged Bulgaria’s largest cable TV operator with a major competing operator.
• The competitive nature of the mobile market has led one competitor to expand into the fixed-line market, acquiring two fibre optic-based ISPs in September 2010.

Bulgaria broadband and telecoms statistics – 2010

(Source: BuddeComm based on industry data)

Data in this report is the latest available at the time of preparation and may not be for the current year.