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Computaris interview: The Romanian telecom market and MVNO/MVNE opportunities

We have discussed with Nicusor Tanase, Business Development Manager at Computaris about the Romanian telecom market and its MVNO/MVNE opportunities. We invite you to read the full transcript of the interview below:

What are the three words that best describe the Romanian telecom market?

Nicusor Tanase [NT]: Competitive, static, in transition.

What are the main challenges of the telecom market in Romania?

NT: Operators and solution providers need to find new ways to capitalize investments and generate profit. The mobile market was affected, like any other segment of the economy, by the global crisis. The main reaction to this was to fight at price level by launching increasingly generous offers on the market. But this kind of competition has deepened the problem even more and it is obvious now that this is not a sustainable model on the long term. There is a need for different business models. Operators can compete by infrastructure or by business models and value-added services they practice. In addition to the direct competition between local operators, there is also the pressure exerted at global level by players such as Apple, Google or Samsung, that erode the income and operators’ value, as perceived by end users, by offering intelligent devices, applications and web services. The MVNO model can help revitalize the market, either by voice services that enable retention, or by services that aim to increase network usage and revenues, such as mobile data services.

What makes the telecom market in Romania different from any other East European country?

NT: Romania is quite similar to markets in the region, so I can’t say that there are major differences. A particular case is Poland, a market we know well, giving that Computaris has expertise and business development offices there. That market is moving faster, that is a fact, having an advance of about five years.

What are the main issues faced by your company today?

NT: Computaris’ opportunities and challenges are mainly the same as the ones faced by the telecom industry today. A stagnation of the market affects the whole system, from solution providers like us to operators and related services.

What was the evolution in number of employees, turnover and profit of the company last year?

NT: Computaris had a steady, but healthy growth from the first year of existence, and last year was no exception; there was a significant increase in income, number of employees, solutions and services portfolio, as well as in customer base. What we can conclude, seeing the unaudited results of the 2011 financial year, is that Computaris has registered a 54% increase in turnover.

What are your expectations from an MVNO?

NT: We are first on a market that has just started to grow. As a solution provider for MVNOs, we want a sustainable development of this type of business and we wish that more and more companies enter the MVNO market. There are messages and signals, both public and on other channels, that interest in this business model is growing. It is our goal to help both existing mobile operators and those newcomers who want to engage as virtual operators. The MVNE solution we offer together with Prime Telecom is a technology platform that enables virtual operators to enter the market with minimal investments, and existing mobile operators to manage any virtual operator without requiring major changes in the systems they operate. So to speak, it is a “MVNO on-demand” platform available in flexible business forms to anyone who is interested.

What is an MVNO and how does it work?

NT: In a purely technical, simplistic definition, a Mobile Virtual Operator leases the radio network from an operator and then sells mobile services to end-users in its own name. He buys “wholesale” from the host mobile operator and sells at “retail” price on the market.

What is the difference between telecom rates and MVNO rates?

NT: It depends on the MVNO’s business strategy and trade agreement with the host operator. There are cases where the MVNO prices are lower and cases where the MVNO prices are higher. In an MVNO business, there are many factors to take into account such as brand strength, distribution, offers’ packaging or users’ retention strategy. You must take into account that many Virtual Operators come from other industries and therefore mobile services are only part of their business or marketing strategy. An example is Carrefour, which launched virtual operators in 6 countries and uses MVNO mobile services to gain customers’ loyalty, but this is ultimately a secondary business or a marketing one compared to the main retail business.

Why did the MVNO appear so late in Romania?

NT: First of all, I need to make a clarification: for the time being, there are no virtual operators in Romania. There were two such initiatives, MyAvon and Click, but they are not active anymore, as far as we know. On the other hand, the MVNE platform we offer is a technology solution that facilitates the entry of virtual operators on the market; it is not a virtual operator itself.Coming back to the original question, I think the explanation is beyond the telecom industry. The evolution of the Romanian economy is slightly delayed compared to Western Europe, USA and Asia. However, the telecommunication sector in particular is very advanced from a technology point of view; for example, we have some of the best access rates worldwide, but in terms of business models, initiatives and entrepreneurship in the field, we are slightly behind other countries in the mentioned regions.

What is expected from the market in Romania?

NT: It varies. There are several companies interested in becoming MVNO and that are currently analyzing and discussing this opportunity with various operators or MVNO solution providers.

What is the relationship between MNVOs and telecom operators?

NT: Again, we are talking about potential MVNOs. As I have said, there are currently no such operators in the Romanian market. Relations are at an incipient level; commercial discussions were initiated and are now at various stages. Although we are talking a lot about telecom operators’ offer to the MVNO (wholesale), the MVNO’s offer to the operator is also highly relevant, specifically the benefits that they bring with the business proposal. I think there will soon be many successful ways to develop an MVNO – telecom operator partnership.

What are the major problems faced by MVNOs in Romania?

NT: I would rather talk about the steps that an MVNO should take, and not about the problems they may face. As in any business, an MVNO needs to define a strategy in this respect, to create a business model, to discuss with different host operators and suppliers, to analyze various financial scenarios. A positive aspect is that both mobile operators as well as operators in other industries have access to the expertise needed to enter the MVNO business, being part of groups that have launched MVNOs in other countries. Another positive aspect is the existence of technical platforms like the one developed by Computaris and Prime Telecom, that allow MVNOs to operate without having any expertise in telecom industry.

When can we speak of a developed MVNO market in Romania?

NT: It is hard to say. What is relevant is to have a healthy and sustainable market, these being important conditions to become a significant market as volume. We hope that this year or the next one will bring the first MVNOs on the local market