Romanian telecommunications and tower market overview

Romania is country with a growing telecommunications market where telecommunications services were valued at $US4 billion in 2022. Mobile subscription penetration of the population in the country is expected to grow, supported by growing mobile internet subscriptions and increasing multi-SIM ownership and smartphone subscriptions, which would in turn fuel investment in infrastructure to support these.

MNOs have fulfilled the obligation to provide voice services to at least 98% of the country’s population. Romania has achieved a 98% coverage for 4G and is now working towards increasing 5G coverage.

Romania’s market of just over 19 million people is served by are four MNOs Orange Romania, Vodafone Romania, Telekom Romania (formerly: Cosmote) which is 100% owned by Deutsche Telekom and Digi Mobil (RCS & RDS).

In addition to the MNOs, there is the MVNO Lycamobile, and two towercos – the privately owned Vantage Towers formed by Vodafone’s spin-off of its European passive infrastructure, and the state broadcast company TVR.

Orange Romania is the unit of France Telecom's Internet and mobile arm Orange which entered the country 20 years ago. It leads the mobile services market in terms of total mobile subscriptions with a circa 38% market share and is expected to retain its leading position in the short and middle term, thanks to its strong focus on 5G network expansion.

In 2016 Orange signed a deal to share 4G/LTE with Telekom Romania through national network sharing.

In end 2021, Orange Romania acquired the fixed-line assets of Telekom Romania from Deutsche Telekom’s subsidiary OTE. This was prompted by competition in the fixed-line segment, particularly from Digi, which would have compelled Telekom Romania to invest more heavily in fixed-line infrastructure. According to Orange, it provides services to 57% of households in Romania, including 10.6 million mobile subscriptions and more than three million internet and TV users.

Orange Romania manages both active and passive infrastructure in the country and continues building its own fibre network in line with its parent company’s Lead the Future strategy announced in February 2023.

Vodafone Romania is the second MNO in terms of market market share and subscribers. It launched in April 1997 as the first GSM network in Romania and was the market leader until 2004 when Orange edged ahead.

In July 2019 it acquired Liberty Global’s local unit UPC Romania, thus enabling Vodafone Romania to compete more effectively in offering bundled services.

In end 2020 Vodafone spun off its passive European infrastructure into a separate towerco, Vantage Towers, which was also the case in Romania.

In 2021, The Romanian high court found Vodafone Romania guilty of being anti-competitive and it was fined RON111 million (US$23m) following a decade-long a case.

According to Vodafone Romania, MNOs in Romania at present need to find new revenue streams as market saturation rises and operators are currently in pricing wars rather than competing through compelling products. In mid-2022 it announced it has started to impleemnt a restructuring programme aimed at a redesign of the business model which is expected to take two years and includes reducing the number of employees.

Orange Romania and Vodafone Romania have a network sharing joint venture called Netgrid Telecom set up in 2014 for a period of 16 years.

Telekom Romania is wholly owned by OTE, which in turn is controlled by Deutsche Telekom, ranks third with about 17% market share in terms of subscribers. It started operations in 1999 under the Cosmorom name and in 2004 its owner became Greek OTE.

In 2021, it was fined RON700,000 (USD149,250) in January 2021 for non-fulfilment of its spectrum licence obligation to achieve the required coverage by April 2017, after an earlier monitoring survey found 97.25% of the population were within its voice services footprint instead of 98%.

In August 2022, it announced it had passed the four million subscription milestone in the first half of August.

According to Romanian Insider Deutsche Telekom has announced in 2022 it has started looking for buyers of his MNO unit in Romania.

Digi Mobil, part of Digi Communications, is the fourth MNO and leads the fixed broadband services market, supported by its strong foothold in fiber and focus on the VoIP segment.

Digi Mobil have their own passive infrastructure and own at least 4,000 towers in the country.

Digi Communications is also active in Spain and Italy (through local MVNOs Digi Mobil), and in Belgium and Portugal.

Digi used to be present in Hungary for over 20 years providing fixed voice, internet and mobile services, but the company exited the market after completing the sale of its operations to local government-backed IT and telecommunications company 4iG for €625 million in early 2022.

Digi was not permitted to apply for a 5G licence and also had several obstacles by the Hungarian Competition Authority in its attempt to acquire the service provider Invitel.

Digi is said to have used the funds from the transaction to expand into Western Europe and also pay off some of its debut.

Mobile virtual network operator (MVNO) Lycamobile commercially launched its services in Romania in 2015. When it set foot on the Romanian market, it was the 18th country in the UK-based group’s international footprint at the time.

The launch came via a full MVNO agreement formed with Telekom Romania Mobile Communications in September 2014. Lycamobile tapped into the price sensitivity of the market and the strong demand for pre-paid services which is still valid today. It also offers low calling rates from Romania to other countries where there are large Romanian communities. According to estimates by the Romanian government, around six-to-eight million Romanians live outside the country’s borders.

According to the regulator ANCOM, in 2021 revenues from the provision of electronic communications networks and services exceeded RON17 billion (€3.5 billion) and contributed 1.45% towards GDP. Mobile telephony accounted for over a third (36%) of total telecom revenues, followed by fixed and mobile internet (33%), the TV broadcasting segment (15%) and other services (16%).

Vantage Towers Romania was set up at the end of 2020 as Vodafone carved out its passive infrastructure assets into a separate company, announcing at the time it was in line with its strategy to develop more efficient passive infrastructure, streamline costs and consequently, to improve the return on these assets.

At present Vantage Towers Romania has 2,300 towers split between macro sites and roof top towers. The tenancy ratio is 2.06 with Vodafone being the anchor tenant. There is a network-sharing agreement in place between its top-tier customer Vodafone and Orange.

In late 2022 Vodafone’s announced the sale of 81.7% of its stake in Vantage Towers to a consortium of investment firms KKR & Co., Global Infrastructure Partners (GIP) and The Public Investment Fund of Saudi Arabia (PIF). Under the proposed deal, the MNO will also form a joint venture with the private equity firms, which will buy out the minority shareholders in Vantage Towers.

The two biggest MNOs operating in the country have pan-European presence and experience providing services based on 5G, such have been offered under their existing spectrum concessions since 2019 using existing LTE networks.

Following local legislation passed in the second half of 2021 that bans Chinese vendors from 5G networks due to security concerns, the MNOs will have to replace vendor equipment. They will have up to seven years to replace core and non-core kits provided by vendors such as Huawei.

Replacing equipment is also a natural process through the MNOs standard procedures for replacing outdated equipment. All new telecoms base stations are now ready for at least 5G NSA, and MNOs typically replace them every 5-10 years. This means that within the seven years between now and 2030 the majority of base stations will have been replaced using 5G equipment. The latter is also related to achieving the European Commission's Digital Decade goal of having 5G coverage in all populated areas by 2030, and this applies to Romania as a member state.

In November 2022, a multi-band 5G spectrum auction for the mid band took place and only three of the MNOs (Orange Romania, Digi and Vodafone Romania) took part which has resulted in 24% of the spectrum not being sold. The combined bids received for the spectrum were €432.6m and fell short of the regulator ANCOM’s expected €700 million revenue.

Telekom Romania has refused to comment why it has decided not to bid which has led to speculations about its parent company Deutsche Telekom intending to exit the market.

According to data provided by the 5G Observatory, Romania had achieved 24.9% population coverage in Q3 2022 and only 65% of the pioneer spectrum (the most favourable spectrum bands for 5G) in the 3.6 GHz band had been assigned. No 5G transport corridors have been identified.

The recent announcement by Orange and Vodafone to co-operate on an open RAN sharing deployment in Romania which will include commercial sites in a rural area close to the capital Bucharest, is an indication of the country being seen by some as having lots of potential for telecom infrastructure development. If successful, the project which will also test a new operational model based on the integration of multi-vendor hardware and software, will be used as a blueprint to extend 5G networks to rural communities in other parts of Europe where the two MNOs operate.

In July 2022, local regulator ANCOM announced the incorporation of the European Electronic Communications Code (EECC) into the national law. This law aims to boost competition, encourage investments in 5G networks, develop regulations for managing radio airwaves, improve connectivity, and enhance the quality of electronic communication services in the country. Although some say this is it’s still at the well-wishing stage, it might be an encouraging start for the telecom market players to start thinking towards collaboration.

The EECC is seen as facilitating fixed broadband penetration of the population, which is expected to increase alongside fiber as both the MNOs and the regulator will work towards expanding broadband coverage across the country and upgrading broadband infrastructure to provide high-speed connectivity.

Whilst Western Europe has seen high towerco penetration to date, much of Central and Eastern Europe, including Romania is still relatively untapped by towercos. Signs indicate this is about to change. Orange has carved out towers into the Totem towerco which currently operates in Spain and France, but it has announced it’s looking to follow similar steps east. The Romanian market will change drastically should another towerco become active on the market, potentially leading to more infrastructure sharing and neutral hosting, faster improvement of connectivity and applications of use cases for 5G.

In addition, 5G presents an opportunity for organic growth for existing and potentially new towercos in the country. Both Vodafone Romania and Orange Romania have obligations to cover white spots which includes covering extra localities, railways, airports, highways in the next 7-8 years which would be translated in both extra load and new builds.