2011 Bulgaria - Telecoms, Mobile, Broadband and Forecasts

Major telcos boost investment in FttH across the country by 2014

BuddeComm’s annual publication, Bulgaria - Telecoms, Mobile, Broadband and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Eastern Europe’s emerging markets which continues to contend with difficult economic conditions. It includes operator data to the first quarter of 2011.

Bulgaria benefited from many years of strong economic growth in the years leading up to and immediately after its EU accession. However, strong GDP and employment growth also led to high current account deficits and double digit inflation and the recent global financial crisis impacted the country through the reduction in capital inflows and export demand, resulting in real GDP contracting by 4.9% in 2009. Real GDP growth remained flat for 2010 though is expected to rise to 2.7% for 2011.

This downturn has been reflected in Bulgaria’s telecoms industry, which was the recipient of much foreign investment capital as evidenced by the ownership structure of many of its largest players. Much of this investment flowed into the telecoms sector as a result of market liberalisation and the alignment of the regulatory environment with the EU’s telecoms regulatory framework, creating regulatory certainty for investors. Overall telecom sector revenue fell 6.2% in 2010, while revenue from fixed services fell 12.6% and those from mobile services fell 3.7%. Total investment in the sector continued to decline in the wake of the financial crisis, falling 30.2% in 2009 year-on-year to €283 million and to an estimated €250 million in 2010. It is expected to show a slight recovery in 2011. The sector accounts for only 0.8% of GDP, compared to 2-4% in many other EU countries.

Broadband accounts for the majority of internet connections in Bulgaria, with healthy competition resulting from a number of competing technology platforms: DSL, cable, FttX, WiMAX and LAN-based micro-ISPs. The Bulgaria government has taken steps to develop an internet society encompassing commerce, health and government services.

Cable TV penetration is well above the EU average although the number of major service providers is decreasing due to consolidation. The prevailing cable technology remains DOCSIS 2.0 (with 90% of lines in early 2011), though DOCSIS 3.0 is being increasingly rolled out.

Bulgaria’s mobile market is served by three MNOs, which have all deployed GSM and WCDMA networks offering nationwide coverage. Considerable investment is progressing in HSPA technology, with 42Mb/s services launched in a number of cities by mid-2011. Given the high mobile voice penetration future growth within the mobile market depends largely on lifting consumer use of mobile data. Increasing mobile broadband coverage coupled with the improved affordability of mobile devices and falling data tariffs will help drive this consumption in coming years.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• MobilTel has been instrumental in developing coverage of its HSPA+ network, providing data at up to 42Mb/s. This complements lower grade HSPA services which are already available in more than 1,000 towns.
• A new association of cablecos operators (BACCO) created at the end of 2010 and serving the interests of over 30 members will help guide infrastructure expansion, access to the incumbent’s passive network, and undertake liaison with municipalities in the future development of fibre infrastructure.
• Although ASO was initially expected to be completed by the end of 2012 this has been put back to early 2015 due to financial constraints and the need to subsidise decoders for some social groups. The delay will affect the release of sub-GHz spectrum expected to be made available for mobile broadband services.
• FttH infrastructure is developing rapidly as the major players ramp up their investment programs in a bid to connect households in coming years and so secure a stronger customer base for their bundled services offerings. Vivacom’s FiberNet offer is expected to reach over one million households across the country by 2014, while the cableco Blizoo and the MNO MobilTel, through its ISP subsidiaries Megalan Network and Spectrum Net, both have considerable investment programs. Blizoo is developing a 400Mb/s offer, among the fastest in Europe. 

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Bulgaria. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards;
• 3G developments, regulatory issues and technologies including HSPA;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

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