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March 19, 2009
According to press reports in Romania, Cosmote, the country’s third largest Romanian mobile operator, is working to acquire the country’s smallest operator, Zapp Mobile. Should this happen, it could be a match made in heaven, as these two operators would complement each other perfectly. Zapp has always lacked scale, but has a good position in the postpaid and business segments of the market, and it might be just the missing part for the large but low-value and prepaid-focused Cosmote.
- Cosmote had 20.4% of subscriptions in Romania at the end of 2008, but its mobile service revenue share accounted for a mere 10.6% of the market total. Due to the fact that 84.5% of its subscriptions are prepaid, and the fact that it is the only one of the biggest three operators that does not have a 3G license, Cosmote generates only about half the APRS of Orange or Vodafone.
- Zapp, meanwhile, has been operating a CDMA2000-EV-DO network since 2004 and was also awarded a UMTS 3G license in October 2006; it has already covered major Romanian cities with its UMTS network. Thanks to this and the fact that it was postpaid-only until recently, Zapp boasts the highest ARPS among Romanian MNOs. But its market share in terms of subscriptions was only 2% at the end of 2008.
Combined, the two companies would have an estimated 24.4% of subscriptions (see Exhibit 2) at the end of 2009, and 17.3% of total mobile service revenue during the year. Cosmote, which has desperately been trying to break into the business market for the past two years, would get hold of Zapp’s estimated 13% share of the mobile enterprise subscriptions in Romania (according to Pyramid Research’s upcoming Q1 2009 Mobile Enterprise Forecast for Romania). Also, with the addition of Zapp, Cosmote’s share of postpaid subscriptions would rise from 15.4% in 2008 to 23% in 2009, giving its APRS a healthy boost.
Exhibit 1. Romania operator market shares in terms of subscriptions in 2008
Source: Pyramid Research
Exhibit 2. Romania operator market shares in terms of subscriptions in 2009 with Cosmote and Zapp shares merged
Source: Pyramid Research
— Bakhyt Weeks, Analyst, EMEA
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