CosmoRom revival likely to unleash price war

The strong comeback by Romanian mobile communications operator CosmoRom that has been announced for this year will be accompanied by attractive customer offers that will re-launch competition, said the company”s new majority shareholder.

The falling cost of calls and mobile phones could start a chain reaction among market rivals Orange, Connex and Zapp, with some analysts not ruling out the possibility of a genuine “price war” on the Romanian mobile communications market. None of the operators were willing to comment on the issue.

When asked whether the CosmoRom revival was to be accompanied by a rebranding process, communications minister Zsolt Nagy said: “I believe so”. The Greek company CosmOTE, which acquired 70% in CosmoRom for 120 million euros in cash, declined to comment.

After the transaction, CosmOTE will finance and run the re-launched CosmoRom. Nikolaos Tsolas, the former CEO of the Bulgarian mobile telephone division of OTE, GloBul, has been designated to run the operations of the Romanian operator. CosmOTE will invest some 400 million euros in CosmoRom in the coming years, with one of its immediate targets being the expansion of the operator”s network coverage, RomTelecom officials say. The communications and IT minister is to put out another two 3G licences to tender, with CosmoRom a possible applicant for such a licence, said Nagy.

He said CosmoRom would be officially re-launched on the market this year. “As a result of the transaction, CosmoRom now has no more debts,” he said, while explaining that the company”s debts of around 200 million euros had been paid by the shareholders. However, according to a statement by CosmOTE, 16 million euros of debt which is owed to OTE”s international operations unit and a further two million euros owed to other creditors were excluded from the CosmoRom debts.

“We do not mean to underestimate the hurdles that need to be overcome in the re-launching of an operator on the Romanian market, but we are fully confident of our success,” said Panagis Vourloumis, chairman and CEO of OTE. “We have a lot of trust in the economy.”

“This deal lifts a huge burden from RomTelecom”s shoulders, strategically speaking. That burden has become a big gain,” said James Hubley, RomTelecom CEO. “This means we will be able to devise a complete telecommunications service package for users”.

The communications minister said the revival of CosmoRom would make another of the government”s objectives – the floating of its shares in RomTelecom – more easily attainable. Late this year or early next year could see some of the state”s holding in RomTelecom floated on the stock exchange. A consultant for the operation is currently being selected. mihai.musatoiu@zf.ro