By Borislava Andreevska
Sofia-based operator Max, launched as a WiMax carrier in 2007, commissioned the first Bulgarian commercial 4G LTE mobile network in 2014. The company, acquired in 2013 by London-based private equity investor Daniel Kupsin, plans to raise the coverage of its 4G LTE service in terms of population to 55% in five years. The investment tag for the five-year 4G LTE rollout plan is seen at 75 mil-lion euro.
What is the state of play on Bulgaria’s mobile services market? Where do you see growth opportunities over the medium term?
Bulgaria is in a unique situation. People here are addicted to their mobile phones more so than anywhere else – they want to be uploading, downloading and upsizing all the time – which leads to the need for exceptional data speeds.
We have to have in mind that data has changed a lot. A new survey in the UK of under 15-year-olds showed that only 3.0% of them make voice calls. That’s quite a departure from the business model of an existing mobile company and where their revenues are. The trend in Europe now is to do a lot of network sharing for two reasons – for cost, obviously, as you don’t have so much capital expenditures and you share the operating costs, but the impact on the environment is also an issue. That really hasn’t come here as yet and really needs to happen.
Also what was seen in Europe as mobile data speeds increase is that the dependence on fixed networks decreases. Why would you have a fixed line at home when you come with your mobile and it has the same speed capability? So that dynamic is changing as well.
How is the competitive landscape in Bulgaria shaping the development of the mobile services market?
There is a convergence trend for telecoms services that is global and breaks away from an infrastructure situation where people had the mobile phone for this and ADSL for that, and the TV for a third thing. Now what is going to happen is all these services will be bundled as people are expecting to have the ability to have TV, to have data, to have voice all at once and in one place through one device. They don’t want to go to three different providers or three different platforms. And that’s where 4G LTE comes into its own. You can only do that in a mobility situation if you have the right capacity.
What is your view in the local uptake potential for 4G LTE services?
In Bulgaria, you have the highest fixed Internet speed in the world. So, you’ve been spoiled in a way. It’s the expectation of people. Up to now, the expectation has never been in a mobility sense because there’s never been that technology around to provide it. 4G LTE technology is designed for this century. It is designed for applications. It is designed for the smart-phone. It is designed for the tablet. No other technology was built for that. So, they’ve been built together, mobility from devices, high-speed mobility from a network.
Why did Max decide to enter Bulgaria’s 4G LTE segment? What were the indications that there is a business case for such a move?
Well, the obvious one – nobody else is doing it and we’ll be the first in the market. It is connected to market demand for this service and to the expectations of consumers. It’s already there but the service is not being offered.
4G LTE technology is accepted everywhere – 318 networks in the world run on it. I mean, it’s not new, it’s not a fad. It’s here to stay. You go to Scandinavia, you can’t even see 3G anymore, it’s all 4G LTE. That’s the way things are going. The generation that’s growing up, even here in Bulgaria, the technological demands and expectations that they have are a lot higher and a lot more. The ability to meet them is provided only by 4G LTE.
People are hungry for this new technology for two reasons – a phone is a status symbol but what you can use it for now has developed beyond that. I personally use it for banking, I use it for everything. I wouldn’t need a computer to be honest if it wasn’t for working in the office. Even emails I could do on my phone.
Could you provide an update on the rollup of your 4G LTE service? What are your medium-term goals in terms of subscriber number and coverage?
In order for us to take a 4G LTE licence we have some entry points we need to have. And those go-markers, or go-lines, are 20% and 55%. So 20% was the initial target as part of becoming operational and 55% is the tar-get at the end of five years. That’s based on population numbers. At the moment we are in Sofia, Ruse, Stara Zagora, Sliven, Bansko and Pleven which gives as about 23%, so the first hurdle has been passed which is quite amazing if you think we only started really less than 12 months ago. Our plans for this year will be to obviously complete the rollouts in Varna and Burgas and continue in Plovdiv. We’ll have about 50% of the urban population by the end of this year. 4G LTE is a very urban technology. The people that want it are the people in the cities.
What competitive edge do you expect to gain as an early-mover in the 4G LTE space?
Nobody else has it. That’s a pretty good advantage. In a way we were lucky because we already had the network with WiMax. It will become more difficult as time goes on but that gave us a really good start. The competition that we have at the moment – the other holders of a license suitable for the deployment of a 4G LTE network, still have to build a network. I’ve build a few networks in my life and it takes time. On top of that, I think at Max we know 4G LTE. We have a group of dedicated people here, we have a very serious management team. We definitely punch above our weight for the numbers we have. And that fits in with everything else. So you have a good technology, a good management team, very clean, very transparent. We are just trying to bring a product to the market that people want without any hidden agendas, just a business.