Your company was created in 1992, what has been the evolution of the company over that period?
Our operations started somewhere in December 1993 when literally there was not a single mobile phone in Bulgaria and we had about 5000 subscribers in the first year, then after a year or so MobilTel started (it was called something else at that time). Then our customer base grew quite dramatically from around 1997, it was just shooting up and it reached the current level that we have now which is about 190 000 customers which is a pretty good going for an NMT network. I was not around but up to a couple of years ago MobilTel and Mobikom had equal number of customers - it's only in the last couple of years that MobilTel has really pulled ahead. Mobikom is the largest NMT operator in Europe. Yes I think it is fair to say that the company has been pretty successful given that it has been fighting GSM competition in the last 5 years.
The other thing I would add is that Mobikom has established a reputation in Bulgaria over the last 8 years for being a company that operates in a very efficient and professional manner, treating its customers properly and its staff very well. This may sound obvious but going back five years ago,there were not many companies in Bulgaria that operated in a proper western manner. We have established a very positive image in Bulgaria that stands to this day.
What is the structure of the company?
Mobikom is very much the story of John Munnery, who actually came out and did the original development with Cable & Wireless starting in 1992. Cable & Wireless holds 49%; the remaining 51% belongs to the government. Actually Mobikom's main business is cellular; there is also a paging customer base, a payphone business, and finally an Internet business that is growing very quickly. I would say that we are the telecom company with the widest range of services in Bulgaria.
On which activities do you concentrate most?
In the absence of a digital license, for us, at the moment, we are placing more emphasis on the payphone and Internet businesses because that is where we have the greatest growth opportunities. Paging, we have about 80% of the market but it is essentially a flat market, and cellular again we are able to provide good quality service to our customers but there are limits to growth when you are operating on analogue technology against GSM.
To what extent are you planning to increase your coverage?
We don't need to extend because we already cover 99.9% of the population. In fact one of the advantages of NMT technology is that is well suited for a country like Bulgaria that is sparsely populated and mountainous. The technical characteristics of the technology support good propagation and good country coverage.
Do you have agreements with companies outside Bulgaria for roaming?
Yes there is some limited roaming within eastern Europe but clearly it is not on the scale of GSM which is a global standard for roaming in over 100 countries.
You are said to become the third GSM operator, could you elaborate?
It's an option, it is really a question for the government, I don't know if you have spoken to the Telecom ministers. One of the development routes for Mobikom is as part of the privatization of the Bulgarian Telephone Company. If a third GSM license is included then there is a possibility that the investor who acquires BTC also acquires Mobikom as a vehicle to exploit that third GSM license. That scenario makes a lot of sense but it does depend on the government's policy and decision towards privatizing BTC.
Is there some market share to be gained for new operators that would like to break into the Telecom market?
Mobile penetration in Bulgaria is about 15%. There is a lot of talk about saturation in western markets where penetration is about 60-70%. Clearly Bulgaria has a lot of growth potential. Of course, disposable income here is considerably lower than in Western Europe, but nonetheless the economy is growing at quite a reasonable rate, probably around 3 or 4 % per annum. I think there is a lot of potential for growth in the mobile market given the current low penetration base.
The other point is on the fixed network side. The
fixed network monopoly will end at the end of 2002
and there are a number of companies that are interested
to come in and build alternative networks. I am
sure we will see a lot more competition in a couple
of years' time, in particular for international
business traffic. It might take a bit longer for
that competition to seep down into the consumer
market. |
As Foreigners what is your view on the Bulgarian telecommunication sector?
As far as cellular the situation is fairly clear: there are 2 GSM operators and something may develop for ourselves as the 3rd one but we don't know at this stage. The Internet is an area where there has been an opportunity for us to grow in the last couple of years because we haven't been under the same regulatory restrictions as on the mobile side. So we have built out an IP network that covers 40 points of presence around the country. We have connection to the Internet backbone through Cable and Wireless, BTC and UUNet. We provide Internet access - dial up and leased line access - and virtual private network services to large businesses and public sector organizations. There is a lot of opportunity for expansion in the Internet world. At the moment the Internet penetration is probably around the 3-4% level whereas in the UK more than one in three homes has a PC, so you can see there is a lot of room for growth. Again, like in the mobile market, the main constraint to growth is personal disposable income. People find it expensive to buy PCs. Nonetheless, as the economy expands and personal wealth increases, these opportunities will grow with it.
There will also be many opportunities in IP-based virtual private network services, which allow companies to connect together their sites around the country in a very cost-effective way. For example, many of the banks here with branch networks still have no electronic means of communication - they rely on faxes or couriers - so there is a huge opportunity in the financial sector. Value added applications like e-commerce will come as well but it is still early for that here. There are some barriers to growth - the level of use of credit cards is low here and this is by far the most common means of payment on the Internet. So the opportunities for e-commerce are currently pretty limited. But having said that, there is a debit card, which is widely use now so that is beginning to present some opportunities for online purchase.
Do you participate in projects to stimulate the market?
We had a leasing scheme last year with IBM, to offer PCs on lease with Internet access, but the fact remains that PCs are still quite expensive for the average Bulgarian user, and that is why Internet cafes are so popular here. We try to stimulate the market where we can, but at the end of the day it is really down to the PC manufacturers and distributors to make PCs available at a price that customers can afford, to stimulate the market.
Among all your activities, what is the most profitable, and how will it develop in the future?
Cellular is still the major source of revenue with more than 80% of the business, with 50-50 prepaid and post-paid phones. But we have nearly 6000 payphones which is something like 50% of the market, and that is about 15% of our revenues. Most of our payphones are outdoor phones, and we are beginning to deploy indoor phones, which is a new market. Given that the average income is still fairly low, we cannot expect the cellular penetration to get to 50 or 60% in the next few years, therefore there will remain a large payphone market for people who need to communicate when they are out and about. Especially when people are travelling into the country from abroad, because mobile roaming is not cheap. For payphones we are also increasing the number of payment options (phone cards, credit cards, cash) to make it easy to use them, and that in turn pushes up the use. Paging is not a huge thing and it is static. Internet is growing rapidly and the forecast for the future would be Internet eventually taking over from cellular.
What would be your final message to our readers?
Come soon, the country has made a lot of progress. There are still quite a lot of opportunities in Eastern Europe and in Bulgaria in particular for investment in the telecom sector. Not only is the mobile market still relatively underdeveloped, but the fixed line market is still a state monopoly. The quality of service is relatively low and there is still a lot of room for growth and improvement when the fixed line market is liberalised at the end of 2002.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
