Mikaloff, UPC Romania CEO: Competition in Romania had become irrational

The Romanian telecom market is comparable to other European markets in terms of the number of operators, but the “irrational” price competition brought fees to a “dramatically low” level, which makes business expansion difficult, says American Jack Mikaloff in his first interview since taking over a year ago as CEO of UPC, one of the largest providers of television, Internet and fixed telephony services. After 40 years’ experience in telecom, of which 28 within American giant AT&T, and another 10 years spent in top management positions at several UPC subsidiaries in Europe, Mikaloff insists the main problem in Romania is not the large number of competitors, but the progression of fees. “When I was at the helm of UPC France, we had two strong rivals for our satellite TV and seven on the Internet segment. Romania is very much like France, but what is dramatic is how little the services cost. When you provide satellite TV services at two euros per month, believe me that you don’t make any money. To some extent, competition had become irrational.” Prices for telecom services have fallen abruptly over the last few years, amid tough competition among RCS&RDS, Romtelecom and UPC. UPC, for instance, cut the fee for the basic cable TV package by 30% last year, from over 30 RON, to 22 RON. “We cut fees because people (subscribers i.e.) were leaving because they were too high compared with those of our competitors.” However, after investing 40 million euros in the network last year, the company expects higher sales for more expensive services, such as 20 Mbps Internet services, digital cable, DVR, and, starting this autumn, high-definition television.