Orange Romania, the largest mobile telephony operator domestically, has entered the market of quad-play services (fixed and mobile telephony, Internet and TV services) through a partnership with UPC, the largest cable TV operator, in a move to counter the offers RCS&RDS and Romtelecom launched together with Cosmote.
Over the past three years the domestic telecom market has been experiencing cutthroat competition that brought about lower rates and caused operators to lose both customers and revenues. Under the circumstances, operators are attempting to enter new market segments, inclusively through partnerships with other players.
Through the test-offer Orange and UPC ended on January 31 and launched in Ploiesti, Tulcea, Giurgiu, Suceava, and Focsani users were encouraged to sign up for a triple-play package (telephony, Internet and television) from UPC, and a new mobile telephony subscription from Orange. Each operator offered customers who contracted the services package a 10-euro discount when they subscribed.
"It is clearly our ambition to enter each segment of the telemedia market. We obviously lack expertise in the field of TV services at present and as a result we have started a test partnership with UPC; a path we may follow in 2008," Richard Moat, Orange Romania CEO, told ZF. He says, however, that Orange will assess the outcome of the campaign it carries out with UPC and then make a decision.
"This is our opportunity to expand onto the TV segment in 2008, but I believe we have to explore all the possibilities to enter the quad-play area. This is the first step we have made to include TV services in Orange's offer," explained Moat. "However, It is too early for us to draw any conclusions right now".
This partnership, as well as the decision UPC made last year to switch from Vodafone to Orange as a provider of mobile telephony services for company employees made several telecom market sources speculate on Orange's possible interest in the acquisition of UPC.
Richard Moat denies there is any truth in the speculations. "We have no such intention and there have been no discussions on the matter. Each company has its own policy and the partnership will simply use a series of synergies between Orange and UPC".
According to Moat, one of Orange's biggest challenges in 2008 will be to maintain its profit margin amid increased competition on the telecom market, the trend of macroeconomic indicators and heightened costs.
"I do not think we will register the same growth rate in 2008 as in the previous years. Operators will seek other sources of revenue besides organic growth to maintain their profit margins. I believe this is going to be an interesting year; quite different from any of the years we've had so far," added Moat.
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