A number of western Europe’s major mobile operators are said to be preparing bids for the majority stake in Bulgaria’s dominant cellco MobilTel which is due to be auctioned off next month. Last week MobilTel’s current owners, a consortium comprising Germany’s Bayerische Landesbank, Austrian bank BAWAG/PSK and the financial group Management Trust Holding, revealed that they are seeking a strategic partner for the company, rather than an outright buyer.
Although no details of the size of the stake on offer have been released, it is expected the sale will value MobilTel at approximately EUR1.5 billion. Possible suitors have undoubtedly been attracted by a combination of MobilTel’s strong performance over recent years and the relatively untapped potential of the Bulgarian market where penetration of mobile services currently stands at 33.5%. MobilTel has benefited from the sustained growth of the Bulgarian economy since 2000 and recorded net profits of EUR144 million on revenues of EUR380 million last year. It has been adding subscribers at a healthy rate whilst many operators across western Europe have been cutting costs and scaling back marketing budgets. MobilTel launched Bulgaria’s first digital offering under the brand name Citron GSM in September 1995, but initial subscriber growth was stunted by the economic crisis which took hold towards the end of the decade. However, by the start of 2000 MobilTel had become Bulgaria’s leading operator – a position it has held ever since – despite the fact it had signed up just 193,000 subscribers by that date. It has witnessed rapid gains since then, claiming a total of 1.9 million users by the end of 2002, up from a million twelve months earlier, a market share of 69%. Its main rival is fellow GSM operator GloBul, owned by OTE of Greece, which launched in late 2001 and has managed to amass 650,000 subscribers in the interim. The Bulgarian market is completed by analogue NMT-450 operator Mobikom, which has seen customer levels remain static at around 200,000 for the past three years.
Faced with the rising challenge from GloBul, MobilTel has set its sights on improving service levels and expanding its portfolio of services. It has contracted Siemens for the installation of GPRS infrastructure and has said it is currently developing its strategy for the introduction of third-generation (3G) mobile services by the end of 2004. The operator invested around BGL300 million in network expansion and upgrades in 2002 to push its coverage to 91%, a figure it is aiming to increase to 100% by the end of this year.