Romanian pay TV is like a microcosm of the European market, a competitive battle between cable, IPTV and DTH ‘ with some participants well past their sell by date. The market is 63% penetrated, so most of the incumbent players can still pick up customers in a Romanian land-grab being dominated by price cutting and bundling deals.
The market represents 21.5 million out of the 500 million homes in the European Union, and the market standings right now are 64% of pay TV being cable, 35% DTH and only 1% IPTV, which puts the incumbent telco, Romtelecom in a curious position, pushing satellite DTH as its main TV route to market, rather than relying on a pure IPTV play.
Romtelecom does have IPTV, but to date has just 30,000 customers and although this base is growing at 40% per annum, so far it has relied on a DTH TV play called Dolce TV, which now has over 1 million customer homes and is outgrowing the local cable rivals . This week it has signed a deal to acquire Digital Cable Systems Akta Satelit platform.
This promises to be a fight to the death between Romtelecom, now controlled through Greece’s OTE by Deutsche Telekom with some continuing government ownership, and RCS&RDS, a cable platform which has TV operations in Slovakia, the Czech Republic, Croatia and Hungary. So while Romtelecom wants to soak up all the DTH players, and has picked up 70,000 homes with this deal, RCS&RDS is hoping to land all the cable TV suppliers and push on to digitization and to triple play. The DCS cable customers are around 180,000 and they can either decide to keep this business afloat, but given that it has not been able to grow at all during the past year, it could be next under the auctioneer’s gavel and on its way to RCS&RDS.
The other major player in this market is Liberty Global’s UPC which has for the past year looked increasingly uncomfortable with its local cable operation and the competitive pressure it is under, losing 7.5% of its customers, some 93,000 in the past year alone. RCS &RDS is widely reported to be in discussion with UPC to buy this operation, which would add more than 1.15 million customers and almost double its size overnight.
The deal by Romtelecom is the second recent deal to buy DTH players, having landed Boom TV with 95,000 customers some months ago. This will leave just one anomaly in the market if the UPC deal with RCS RDS goes through, and that’s the fact that UPC owns a DTH operation which has jumped 45,000 customers during the past year, performing way better than the cable side of its business (which lost some 138,000 in total, which with the DTH gains, brings overall gains down to 93,000). It could either sell this separately to Romtelecom, or leave it in the hands of RCS&RDS to do with whatever it wants. Conversely Liberty Global may decide to stay in Romania despite persistent rumors to the contrary.
The Akta Satelit and Boom TV deals both have still be approved by the Romanian Competition Council. The ARPU for Liberty Global in Romania is €23 a month, but most of the other players are thought to be under €20 making this close to a €1 billion ($1.4 billion) market for pay TV subscriptions.