The CEO of Vodafone Romania, Ravinder Takkar, told a local newspaper that Romania has too many operators and that the current configuration—many market players with high-quality networks and prices that are purportedly the lowest in Europe—is not sustainable in the long term and possibly not even in the medium term. Takkar said he believes that the telecommunications authority should take steps to bring about the strengthening and “recovery” of the industry. Among these would be the “equalization” of rules between mobile operators and fixed line operators and a reduction in the tax burden to encourage investment. Takkar added that in the Romanian telecom market, earnings are too low in relation to investment.
Vodafone is the second-largest operator in Romania, after Orange. It is possible that its CEO believes that if the number of players in the country’s market were to go down, Vodafone would be better able to pick up the new subscribers than its rival, Orange would. Alternately, Takkar’s remarks may truly reflect an altruistic attitude toward the Romanian telecom market as a whole. If may well be the case that if tax laws are changed to encourage investment and regulatory rules are changed so as to create fairer competitive conditions, the market will shake itself out, shedding dead weight and allowing the remaining entities to be healthier and accrue more profits. Whether or not regulators will heed Takkar’s call, of course, remains to be seen.
“In the hypercompetitive telecom market, sometimes cooperation makes more sense than competition—or rather cooperation can actually strengthen competition. Whether it is two rival operators, such as Beeline and MTS, working together to build an LTE network that will benefit both, or urging the elimination of unfair regulatory advantages, as in Romania, operators may come to realize that a rising tide can indeed lift all boats.”
Will Watts, Program Manager at Tarifica.
The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx