TSQ Interactive Database
The Bulgarian telecom market continues to shrink, sliding by nearly 10% YoY to EUR 1.2bn in 2013, impacted by regulatory measures as well as very weak macroeconomic climate - including declining population and employment rates - which affected the country’s consumer confidence as well as the demand for services.
Forced by a reminder from the European Commission that Bulgaria does not yet apply the existing European legislation in full, the local telecoms regulator — the Communications Regulation Commission (CRC), is set to gain more power, as draft amendments to the telecom law are discussed in Parliament currently. Under the present regulatory regime, operators are not obliged to apply CRC rulings if they disagree and can appeal them in court. With the new amendments however, operators will have to apply the CRC decisions immediately and the ruling will be reverted later only if a court rules in favour of an operator that has appealed that ruling.
Last year, the incumbent Vivacom/BTC has been privatised and the country has attracted a certain number of new entrants although the incumbent remains the dominant fixed-line market player — with about 47% of the market — while it holds only about 25% of the mobile market in terms of revenues. Last August, Vivacom de-listed from the Bulgarian Stock Exchange, following the acquisition of all of the telco's shares by its parent holding company Viva Telecom Bulgaria, and apparently is set for restructuring.
Competition as well as the trend of fixed to mobile substitution have resulted in fixed-line providers to focus on broadband and associated services, especially bundles with TV, driving thus the much needed network upgrades. Nevertheless, the fixed line market remains blurred and difficult to interpret with different providers active in an overall eroding fixed voice segment that more than offsets the gains achieved with broadband and TV. Broadband lines increased about 2.5% YoY at end-2013, as a result of bundled Internet packages offered at reduced rates. There is an accelerating uptake of FTTx services, especially for Vivacom, which helped to push growth in its total broadband subscriptions.
As of mobile, two of the largest players, Globul and MTL, claimed that their revenues were negatively impacted by the mobile termination rate cuts introduced in July and November 2013. Globul added that lower handset sales contributed to revenue decline, only partly offset by the operator's increasing mobile subscription base. The operator is reportedly adopting the Telenor brand after Telenor’s acquisition in mid-2013 and the completion of an infrastructure upgrade in 2014. The intense competition with rivalling discounted offers, the weak economic climate and the regulatory measures altogether put pressure on mobile operators to reduce their tariff rates in order to sustain customer acquisition and retention. As a result, although the total mobile subscriber base in 2013 showed a virtual growth (less than 1%), all three mobile operators experienced lower blended ARPU YoY.