The telecom market could decline in 2009

So far, the managers of Orange Romania and Vodafone Romania, the top two players on this market, said the decline in economic growth forecast for 2009 will only affect growth rates of the telecommunication industry.

Bataillard said that the telecom mar­ket could suffer a relapse in terms of total revenues in 2009, due to a drop in budgets allocated for telecom services, which will determine clients to either reduce consumption or look for lower prices.

“When you have a penetration rate of 120 percent, the question is whether you cut prices to raise your share of a declining market, which will further emphasize the downward trend of revenues. Usually, in telecom, you cut prices and raise market share, thus revenues do not drop. However, we are reaching the point where we are cutting prices faster than we are gaining new clients, and this will put pressure on revenues,” Bataillard told Business Standard. Telemobil’s CEO said that the preference of market players for Asian communication equipment suppliers will lead to a contraction in competition. “We have chosen Chinese suppliers, as have many other operators. There are many traditional suppliers who may not be around in 12-18 months,” Bataillard added.

The worst scenario that the local market could face is the lack of any investment, which will block the appearance of new products. “Competition does not always mean lower prices. Rather, competition means several choices. The worst thing at present is that all small companies are dead. The best ideas do not come from large companies, but from small and medium-sized enterprises. The big problem now is that creativity is dropping, while costs are rising,” said Bataillard.

Telemobil, the fifth-largest mobile phone operator on the market, is preparing a sustained strategy to consolidate its position on the data service segment. Zapp’s main line of business is post pay voice services, but Bataillard said that things will change radically in two years. “The growth rate on the post pay segment will plunge, and the two growth poles in two years time will be prepaid and data services. The advantage of data services is that this is a growing market, so we are talking about new subscribers not just subscribers who switch operators,” Bataillard added.

The No Pay prepaid voice services, launched last week by the company, will be integrated in a data service which will be available on the market in the near future. “For us, everything revolves around data, even voice services. What people do not understand is that voice means only more data. Voice is a service you can have access to through the data network. Traditional voice is dead once people have a data network,” said Bataillard. The CEO also mentioned that revenues from voice services will drop in 2009, due to lower tariffs.