UPC puts Romanian investments on stand-by

The shareholders of UPC, the third-largest cable TV operator on the domestic market in terms of subscribers, are willing to make significant investments in Romania, but would rather wait for the moment.

Copyright fee-related controversies have very much to do with this decision, UPC Romania’s general manager Richard Anderson told Ziarul Financiar.

UPC is controlled by United Global Com (whose significant shareholder is Liberty Media, held by John Malone). The company has recently come out of an extensive restructuring process, following group-wide difficulties.

Unlike its competitors, RCS&RDS (number one) and Astral Telecom (number two), which have enthusiastically embraced telephony and Internet services, as well, UPC Romania would still rather wait and focus on its core business, cable TV, seven months after the market deregulation.

“UPC is now surveying the market,” Anderson says. “Our decision for the time being is to focus on quality for the cable TV services provided to our clients; we will launch new services, including Internet and telephony, as soon as the market is ready.”

Sources on the market say UPC is interested to acquire number four, FX Communications, which its American owner Metromedia is looking to sell.

In addition, UPC is engaged in a constant competition with RCS&RDS and Astral Telecom to buy the smaller players that control nearly 40% of the cable TV market.

The reluctance of the UPC shareholders to proceed with investments in Romania, which amount to $60 million at the moment, is partly due to the copyright fees the cable TV operators have to pay for the shows broadcast (movies, music etc.).

UPC Romania feels the total level of such fees, which may reach 13% of the gross revenues of a cable TV operator, is too high. Anderson points out that whilst he is not against such fees as any author must naturally get paid for their work, the ceiling set by the law is among the highest in Europe, so that levying taxes up to this level on the gross revenues hinders investments. victor@zf.ro