Bulgaria to sell three UMTS licenses

7 Feb 2005

Bulgaria is to launch a tender for the first of three 20-year UMTS licences on 30 March 2005, according to Gergana Sarbova, head of the Communications Regulation Commission (CRC). The initial tender will be for a ‘Class A’ 3G concession (for the frequencies 2×10MHz + 1×5MHz) with a starting price of BGL70 million (EUR36.12 million) and possible incremental bids of BGL2 million. Bidding is to start on 5 April for two additional ‘Class B’ 3G licences (for the frequencies 2×5MHz + 1×5MHz), set at a lower price of BGL42 million (EUR 21.67 million) with bids allowed in BGL1 million increments. Qualification requirements for potential bidders include a 2003 turnover of EUR50 million and a telecoms subscriber base of over half a million customers; a deposit of BGL2 million is also required.

So far the regulator has received five expressions of interest in the licences, with three coming from domestic operators – wireless market leader MobilTel (operating under the brand name MTel), Greek-owned, second placed cellco Cosmo Bulgaria (Globul) and the newly-licensed GSM arm of the Bulgarian Telecommunications Company (BTC), majority controlled by Austria’s Viva Ventures, which aims to launch commercially in April. Foreign interest has come from London-registered First Place IR and Swedish telecoms group Tele2, which has long followed an aggressive expansion strategy in Europe, and recently ventured into Russia, Croatia and the UK. The CRC has stated that all potential bidders must purchase tender documentation by 28 February.

The eventual UMTS licence winners must be able to launch commercial 3G services within two years of acquiring a concession. On the face of it, the two largest cellcos, MobilTel and Cosmo Bulgaria, are best placed for success, with well over three million GSM subscribers between them, but the launch of BTC’s GSM network in November 2004 has added an extra dimension to the wireless market, as the company has the substantial resources and experience of a former monopoly coupled with the investment potential of its Austrian backers. Before the appearance of BTC, competition to MTel and Globul came only from the steadily fading analogue operator RTC Mobikom (acquired by BTC earlier this month), and the market remains relatively underdeveloped with a cellular penetration rate of just 55%. Perhaps the most significant international interest in the new tenders comes from the Tele2 Group, which has achieved good subscriber growth in several European countries recently, both by operating its own networks and by renting capacity from others as a virtual operator; it also launched a 3G network in Sweden in June 2004.

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