Some companies have been losing money because of the euro appreciation against the dollar, while others earned serious revenues because the ROL/USD exchange rate has hardly budged in the past year. Connex, Romania’s largest mobile telephony operator in terms of number of clients, also benefited from the dollar’s evolution.
“The dollar’s weakness has allowed us to post higher revenues, because people are spending more. Last year, when the purchasing power was smaller because of the dollar’s increase, it was more difficult to persuade people to use their cell phones more,” says Ted Lattimore, Connex chief operating officer.
Romanians feel that the services priced in dollars are cheaper and then they allocate more money in this direction. Under the circumstances, Connex is not planning to change the currency for its prices from dollars to euros.
At least not in the near future. “In time, as Romania is getting closer to the European Union, we will probably have to shift to the euro,” Lattimore says. And since Romanians are faring better this year (if incomes are expressed in dollars), they are more willing to buy services involving regular payment to the supplier, such as postpaid services.
“More than 80% of the clients we gained (on the GSM segment, i.e.) this month opted for postpaid services. This is a reversal of last year’s situation,” Ted Lattimore states. The Connex official is convinced Romanians are turning to postpaid mobile telephony services because the prices are expressed in dollars and the inflation rate is quite small.
In fact, Connex will pay special attention to the postpaid customers in the next few months. “Prepaid is a very good product, but we have reached a point where there are too few clients on this segment who are willing to spend money on mobile calls. We will probably have other promotions for prepaid, but most of them will target the postpaid services,” the company official said.
Connex mainly aims to win over as many big, corporate clients as possible. “We will certainly have more than 3 million clients by yearend. Most likely somewhere around 3 and 3.2 million for the GSM services. We expect more than 200,000 users for data and we aim to get 50 corporate customers for integrated services,” Ted Lattimore said. On March 31, 2003, the company had 2,672,700 clients. Although the company has not revealed H1 results yet, Ted Lattimore expects total revenues to exceed 500 million dollars in 2003. Net profit estimated for this year revolves around 100 million dollars.
The operator has paid $59m dollars in dividends to its shareholders (TIW, Vodafone, etc) so far, but it has not been said whether these payments will continue in the next months.
Furthermore, Connex has invested $68 million since the beginning of the year.
“Much of this money was invested in order to be able to seize the new opportunities created by the telecom market deregulation in Romania. We focused mainly on the integrated services, not necessarily on attracting GSM clients,” Lattimore said. iuliana.susanu@zf.ro