BULGARIA Telecoms operators build on phenomenal growth
TAKING FULL ADVANTAGE OF A PRIVILEGED LOCATION AT THE HEART OF EUROPE'S TELECOMS TRAFFIC, BULGARIAN OPERATORS HAVE EXPERIENCED VERTIGINOUS GROWTH IN RECENT YEARS, SETTING THE SCENE FOR PRIVATIZATION

Bulgaria is strategically located in the Balkans, serving as a cross-point for telecommunications traffic from Europe to the Middle East, and privatization of the sector has been a priority for the Saxe-Coburg government. In February, the government approved plans for the sale of up to 65% of the country’s fixed telecommunications network, Bulgarian Telecommunications Company (BTC), in a two-stage competition open to both telecoms firms and financial investors. The government has aimed at finding a solid buyer with long-term plans and has offered the additional option of a GSM license, which would be the country’s third. BTC’s stake in Mobikom, Bulgaria’s analog cellular network and joint venture with British Cable & Wireless, will also be sold as part of the privatization package. The government has hopes of wrapping up the deal by mid-summer.

As of January 2001, BTC, which employs some 25,000 people, had a penetration of 35.18 phones per 100 persons and a total of 2,882,000 telephone subscriber lines. Some 11% of residential traffic was generated by digital lines, while 89% was generated by analog subscribers. Profits in 2001 are estimated at $80 million, a 37% increase from the previous year. Deputy Minister of Transport and Communications Nikolay Nikolov, who also heads BTC, states, “the basic and greatest strength of BTC is that you cannot pass through the Balkan Peninsula without it. In addition, it has three million customers out of a population of eight million. It has a network that reaches the most remote villages and extremely good and well-positioned distribution in the country. It also has the tradition. What we need is to have a committed, well-qualified management, a clear and flexible structure, a market approach, and to develop services that add value to the company–customer relations, the best technical solutions and competitive market behavior.”

Besides BTC’s fixed network and Mobikom’s analog cellular network, Bulgaria has two GSM digital cellular phone networks–MobilTel and GloBul (COSMO Bulgaria Mobil), a subsidiary of the Greek operator OTE that launched operations in September 2001.

By February of this year and only six months after launch, GloBul had 150,000 subscribers and its network coverage was 42% of the Bulgarian population–a figure the company hopes to boost to 80% by year’s end. The company has a 15-year license to operate in Bulgaria. CEO Nicholas Avgerinos elaborates, “one of the cornerstones behind our original decision of investing in Bulgaria was the fact that we believe it is a growing market. Our target is to expand that market. Mobile telephone use in Bulgaria in the last couple of years has grown phenomenally, with rates above 100% in the last two years and we are projecting a further expansion of 60% for the first three years or so of our operations.” With regard to business conditions in Bulgaria, Mr. Avgerinos believes that “this is a very good environment. It still has legal frameworks to improve but I think the status is already good. That will soon become obvious to Western European and American investors. The really strong message is that with the determination of the local people and the vision and efforts of international investors, Bulgaria is on the way to creating a success story.”