Vol. 4 No.8  


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Prime Minister queried for meddling with telecom regulators

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Prime Minister Calin Popescu Tariceanu has disbanded the telecom regulatory authority the day after a Romanian court decided his dismissal of the president of the authority was illegal, in a move that has surprised Brussels.
Tariceanu sacked Dan Georgescu [picture above] as president of the National Authority for Regulating IT&C (ANRCTI) without giving any reasons, stunning the authority head.
This has created suspicion that the Prime Minister fast-tracked a law to restructure the authority, which was under debate in Parliament, to stop the reappointment of Georgescu.
Overnight the Government created a new regulatory authority, the National Authority of Communications of Romania (ANC), in a decision which has caught the attention of the European Commission (EC).
The EC Commissioner for information society and media Viviane Reding has stated she is “concerned” with the measures the Romanian Government has taken to restructure the regulators at the same time as the court ruled against the Prime Minister’s decision.

Romtelecom wins mobile license in wave of controversy

Meanwhile Romtelecom has been awarded the license to become a new mobile phone operator in a deal overshadowed by controversy.
The licence enables Romtelecom to build, hold and operate a broadband network, as well as to offer broadband services to consumers for a ten-year period.
The license was awarded at a knock-down price of 1.08 million Euro. The terms of the deal forbade any current mobile phone operators from bidding for the frequencies up for sale.
The Government’s intention was to allow a new player on the mobile market to increase competition. However Romtelecom is owned by Greek telecom firm OTE, which is also in possession of Cosmote, the third largest mobile operator in Romania.
Market leaders in mobile telephony Orange and Vodafone Romania have attacked the terms of the deal. Vodafone stated that this does not encourage fair competition on the market. The acquisition price was tens of millions cheaper than the licenses telecom firms had to pay to enter the market. This deal “favours the entry on the mobile Telecom market of Romtelecom” and has “significant implications” on the competition framework, said Vodafone officials.
The telecom regulator ANC has stated that, legally, it had to allow the participation in the selection procedure of Romtelecom because the law stated that no ‘mobile phone operator’ could bid for the license. Romtelecom, as an independent company, is not a mobile operator.
Romania’s Competition Council blasted the deal, stating an operator of electronic communications should also include their parent company. Vodafone officials added that the initial objective to increase competition on the mobile market is no longer a priority as long as the major shareholders of Cosmote and Romtelecom “now have two licenses”.
The UK-owned mobile operator has taken its case to the Constitutional Court, where a verdict was waiting as we went to press.

Ford purchase faces second state aid probe

The European Commission is opening another investigation into possible state aid provided by the Romanian Government to Ford Motor Company, the purchaser of a state-owned car plant in Craiova. Romania plans to grant public funding worth 57 million Euro to Ford for a four-year staff training programme, but the EC is concerned that this may give the beneficiary an unfair advantage over its competitors.
“The Commission supports training that improves the skills of the workforce,” says EC commissioner Neelie Kroes. “However, we must make sure that public funds really lead to additional training and do not just pay for the normal operational costs of big companies.”
Ford Motor Company signed a deal to buy the Craiova car plant from the state in late 2007 for 57 million Euro. But in February 2008 the EC ruled that the privatisation included 27 million Euro of incompatible state aid. Ford was compelled to repay this amount. In April the Commission has approved 143 million Euro in regional aid to support Ford’s Investment.

Four-fifths of Bucharest restitution claims remain unresolved

Ex-owners of property in Bucharest confiscated during Communism witness a much lower chance of seeing their claims resolved than in the rest of Romania, according to a report by the Romanian Academic Society.
Only 20 per cent of cases involving Bucharest-based property forcibly acquired by the Communist regime after 1945 have been resolved. From 43,000 cases ex-owners have submitted to the local authorities in Bucharest, only 9,000 have ended in a decision, according to statistics up to the end of 2007. Bucharest accounts for one fifth of all restitution claims in Romania. Counties such as Ialomita, Calarasi, Olt and Tulcea have resolved over 95 per cent of restitution claims.
Constanta county follows Bucharest as the district with fewest resolved cases. Nationally, around 40 per cent of the 202,000 restitution claims to the local and central authorities are waiting for a final decision.

Privatised aerospace deal collapses

Romania’s Privatisation Authority (AVAS) has announced that Czech aircraft producer Aero Vodochody has failed to fulfil its privatisation contract to buy aerospace firm Avioane Craiova.
The Czech group specialised in military training jets last summer agreed to buy 81 per cent of the Romanian aero-space parts producer.
In consequence, AVAS has taken over Avioane Craiova and re-started the privatisation process. The Privatisation Authority said in a press release that the Czech company had made claims to AVAS which “breached any rule that governs a democratic country and a free market economy and which cannot be accepted by AVAS”.
Aero Vodochody had asked AVAS to lay off part of the factory’s personnel before the final takeover, stated AVAS. The Czech company had asked for compensation worth 50 per cent of the value of the factory’s equipment found missing or impossible to use. Aero Vodochody imposed this last clause even though it was aware of the state of the factory’s assets and equipment, argued AVAS.

Short News

Finance Ministry to abolish
capital markets profit tax

Romania’s Economy and Finance Ministry has abolished the tax on profits on the capital markets for next year in a move that aims to help kick-start the flagging stock exchange. Also investors who have lost money on the capital markets will be able to report the losses in their balance sheet for 2009. Taxes on earnings from the capital market are 16 per cent for investments less than one year and one per cent for those over one year.

Deutsche Bahn set to
pick up freight forwarder

German-owned Deutsche Bahn has formed a framework agreement to buy the largest freight forwarding group in Romania, Romtrans. The transaction is estimated at between 80 and 90 million Euro and has been made through Deutsche Bahn’s commercial logistics provider DB Schenker.

EBRD loans 300 million Euro
to state power generator

European Bank of Reconstruction and Development (EBRD) has decided to give a loan of 300 million Euro to state-owned thermopower generation company Turceni to rehabilitate two of its units. The total cost of the project is 534 million Euro. CET Turceni is the largest thermal power plant in Romania, generating roughly ten per cent of the domestic electricity consumption. Turceni has been slated to take part in the Government’s delayed project to create a giant state-owned energy company.

EIB funds Oradea authority
trams and buses

European Investment Bank (EIB) is lending the city of Oradea 16.3 million Euro for the modernisation of its public transport system. The city will buy ten new trams and help finance 20 new buses and rolling stock with the cash. This is the first loan the EIB has provided directly to a Romanian regional authority.

BCR Erste makes move on
pension rival

Austrian-owned BCR Erste has bought the tenth largest player on the mandatory private pensions market, pension fund Omniasig Pensii through its leasing division BCR Leasing. The financial services group will buy Omniasig Pensii form TBIH Finacial Services Group and Omniasig Vienna Insurance. After the transaction is approved by Private Pension System Supervision Commission, BCR Pensii will absorb Omniasig Pensii, which together will account for 202,000 clients and rank seventh in the market of mandatory private pensions.

Ratiu to spend 70 million
Euro on ex 4X4 factory

Nicolae Ratiu’s real estate development company Landmark Management plans to pour around 70 million Euro in the construction and rehabilitation of industrial halls in the ex-Aro Campulung factory in Arges county in the next five years, according to Ziarul Financiar. Two producers of car parts, Nobel Plastiques, a division of the French group Nobel Automotive and Lear Corporation, have already rented spaces for future plants to be built in Campulung Industrial Park, stated the paper. US firm Crosslander originally bought out state 4X4 factory Aro Campulung to build Ford Explorer Engines in an investment plan that failed to materialise. Ratiu picked up the platform last year for 16.5 million Euro.

Real estate investment
drops by almost half

Romania has seen a 43 per cent fall in real estate investments in the first half of 2008 compared to the previous year, according to a report by real estate agents Jones Lang La Salle. The 2008 period saw investments drop to 902 million Euro. Lack of credit, high land prices and dropping yields have turned many investors off Romanian real estate. At the same time the off-plan market has also dropped.

Inflation takes a small drop

Annual inflation dropped to 8.02 per cent in August compared to 9.04 per cent at the end of last July, according to the National Statistics Institute (INS), partly due to an increase in the value of RON, a good harvest and a fall in the oil price. The prices fell by 0.09 per cent compared to August 2007. The average price growth between August 2007 and July 2008 was of 7.7 per cent compared to the 12 months comprised between August 2006 and July 2007. Romania’s central bank (BNR) is targeting 6.6 per cent inflation for the year 2008.

Appliance retailer to invest
in Pitesti mall

Domestic electronics retailer Girexim will open a 100 million Euro shopping centre in Pitesti, Arges county, Ziarul Financiar informs. ‘Allegria Mall’ will have a 64,000 sqm area and will include 240 stores, with hypermarket Cora as anchor tenant and a ten-screen cinema.The mall will be located on the premises of former Ursus factory, currently owned by Girexim Universal.

Foreign investment to rise
to ten billion Euro for 2008

Foreign direct investments (FDI) will reach ten billion Euro in 2008, according to Vergil Voineag, president of the National Statistics Institute. FDI totaled 4.758 billion Euro in the first half of 2008, a 59.5 per cent increase on 2007. Investments in banking sector stood at 638 million Euro, accounting for 13 per cent of the total amount, while the investments in other economic areas reached 4.12 billion Euro. The figure for Romanian companies investing abroad stood at 87 million Euro for the first six mmonths of the year. FDI stood at seven billion Euro for 2007 and nine billion Euro for 2006.

Self-service coffee store
raises café competition

German self-service in-store café Cup&Cino has entered Romania through stationery and book retailers Diverta, owned by Romanian-based RTC Holding. The first unit is located in Diverta on Bucharest’s Blvd Magheru and by the end of this year RTC plans to open four more Cup&Cino coffee-shops and three more new self-service coffee shops in a one million Euro investment. Competitors include the Romanian Turabo chain, UK entry Coffeeheaven, plus franchises for Starbuck’s and Costa Coffee.

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