2009 Bulgaria - Telecoms, Mobile, Broadband and Forecasts

One of the European Union’s newest members, Bulgaria underwent a period of extensive reform leading up to EU ascension that coincided with a healthy real GDP annual growth rate in excess of 6.0% from 2004 to 2008. Like many of its neighbours, Bulgaria has been impacted by the recent global financial turmoil through declining demand for its exports, a slowdown of credit activity, and lower foreign direct investment inflows, with Bulgaria expected to record a 6.0% contraction in real GDP for 2009, followed by a further 2.5% contraction in 2010. Government reaction to the resulting fiscal deficit includes increasing tax compliance and excises as well as reducing capital spending and optimising public administration spending.

Bulgaria’s telecoms market underwent reform to align its telecommunications policy with that of the EU. Competition has been introduced but incumbent operator BTC retains a major share of the overall telecoms market. Ongoing action by an active regulator has improved market conditions slightly, particularly in the network access sector, although more stringent measures are required to ensure fair competition, which is expected to materialise as the regulator expects to complete market competitiveness analysis in 2010 and 2011.

Internet services are widely available in Bulgaria although competition is more prevalent in cities and urban areas where competing platforms are deployed. Bulgaria’s Internet market is undergoing a transformation as broadband services increase in popularity due to falling broadband access prices and now represent the majority of Internet connections, with future Internet connection growth in 2010 and beyond exclusively due to broadband. Internet services are available from a number of Internet Service Providers, some of which are expanding service offerings to include VoIP and broadband TV (IPTV) in an attempt to differentiate offerings.

Competing digital TV offerings include cable TV and satellite TV, although major service providers in both markets have been impacted by frequent ownership changes by private equity groups. Licences to construct and operate digital terrestrial TV networks were awarded in 2009, with analogue switchoff scheduled for 2012.

Bulgaria possesses a well developed mobile market with mobile ownership levels in excess of 100%, although such penetration levels indicate multiple SIM card ownership. Bulgaria’s mobile market is served by three mobile network operators. Rising local fixed-line tariffs due to tariff rebalancing as well as increased mobile market competition has reduced the price difference between fixed and mobile voice services, supporting the trend of substituting fixed lines with mobile. The launch of 3G/HSDPA networks has opened up a new revenue growth opportunity in 2010 centred on mobile broadband, with all three operators offering competitive offerings with generous data allowances.

Key highlights:

·         Healthy platform-based broadband competition is evident, with access available via cable, ADSL, FTTx, LAN and wireless. ADSL accounts for less than one-third of total connections, with micro LAN-based ISPs representing the majority of broadband subscriptions. Competition within the ADSL market should improve as the regulator completes market analyses in 2010 and 2011 and implements measures to improve wholesale market conditions.

·         An emerging Internet society is evident, encompassing public administration and health. Uptake of e-government services by businesses in particular is evident, with approximately half of all businesses expected to use e-government services in 2010 to obtain information and complete information transactions.

·         Digital TV is widely available via cable, satellite, IPTV and DTTV, Cable operators offer triple play services and have focused investment on expanding network access and deploying HDTV infrastructure. A licence to develop and operate three nationwide DVB-T multiplexes for 15 years was awarded in May 2009, offering both SDTV and HDTV broadcasts.

·         Bulgaria’s three established mobile network operators have launched 3G/HSDPA services, with growth in 2010 focused on promoting 3G take up. Mobile broadband plans with generous data allowances are offered by all three operators, offering stiff competition to Bulgaria’s existing WiMAX-based broadband ISPs.

Bulgaria broadband and telecoms key performance indicators – 2008/09

(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.