RCS&RDS, one of the largest telecoms in the region and the largest owned by a Romanian entrepreneur, set as its main goal for this year to expand on the mobile telephony market in Romania, where the ‘high’ prices of the rivals give it room for significant growth.
“The most important area we will focus on will definitely be mobile telephony,” Serghei Bulgac, 38, the new chairman and CEO of RCS&RDS told Ziarul Financiar in an exclusive interview.
“We can still see an opportunity and somehow a lack of competition on the mobile telephony market. It is the market where we want to grow. There are competitors on the mobile telephony segment, and there is competition in Romania but they are still trying to stay in their comfort zone, their high price zone.”
Bulgac, who came to Romania from the Republic of Moldova to attend the Bucharest University of Economic Studies in 1993, has been working for RCS&RDS for 12 years but has never appeared in public, just like the owner of the business, Zoltan Teszari.
The mobile telephony market with its 23 million users, almost 10 million of which post-paid users, is dominated by Orange, Vodafone and Telekom. RCS&RDS has managed to get about 300,000 customers to switch, carrying over their numbers from the old networks, which is one of the most serious such moves on the market in the last few years.
“These are only the customers coming to us from other networks, many more come directly to us to sign a contract,” says Bulgac, without providing any details about the customer numbers on this segment.
The focus on the mobile telephony market in Romania, which entails significant investments in the network to close the coverage gap to the market leaders, comes after the group ended a process of restructuring its foreign operations a month ago, by exiting a number of markets. It has two main markets now, Romania and Hungary, which generate almost EUR600 million revenue a year, followed by Spain and Italy, where it stays to provide services to the significant Romanian communities there.
RCS&RDS posted growth of more than 13% to EUR470 million last year, as the number of cable TV, fixed Internet and mobile telephony customers increased, Bulgac says.
“We were engaged in a process to sell the other subsidiaries which ended this year, we managed to sell the Czech subsidiary a month ago and this is where we’ll stop. We want to concentrate, to stay in the areas we’ve been successful in and want to continue to be successful in over the coming period.”
The company has sold its operations in the Czech Republic, Croatia, Serbia and Slovakia over the last few years.
What Bulgac says is that the abrupt departure of Alexandru Oprea from his position at the helm of the company after 18 years does not have any impact on the strategy or the business targets of RCS&RDS.
“Nothing changes. A change in the board that occurred does not mean we or RCS&RDS want to change direction and progress.”
The questions about the abrupt departure of Alexandru Oprea are left unanswered. It is ‘a personal decision’ says Bulgac, who would rather discuss the new management structure of the company. After 12 years, during which he had been in charge of the financial department of the cable TV company and had no public appearance, Bulgac became CEO and chairman of the board of directors, replacing Oprea.
“The vacant seat in the board went to Valentin Popoviciu (development director), we are the same group of people who have been working together for the past decade. I am the youngest in this team.”
Ioan Bendei and Valentin Popoviciu are the vice chairmen and the other two board members are Mihai Dinei and Bogdan Ciobotariu, he added.
The founder and majority shareholder of RCS&RDS, Zoltan Teszari, continues to steer the business, Serghei Bulgac suggests without putting it into words. The message, however, is conveyed by the fact that the new CEO of the company never says things like “my priorities” but ‘our priorities’ and often mentions the management ‘team’. “We are all part of the management and do all sorts of things. The work is the same and we share it equally.”
“The important thing is that there were no changes in the management team,” says Valentin Popoviciu, also attending the meeting, as comment to Oprea’s departure, hinting, as Bulgac did, that they will never say anything more on the matter.
A question that every rival of the company, which has been accused of ‘ruining’ various market segments, has: “Do you plan to raise prices?”
The two answer in unison: “No.”
“That’s always been a strategy for us, a way to stand out. We will always look at the service a customer gets, and the value we want to improve and diversify, as well as their purchasing power, because unless you make the telecom service – which is already a utility, affordable you won’t be able to develop the industry and the services you can provide in the future,” Valentin Popoviciu says.
Another thing frequently mentioned in connection with RCS&RDS is the potential deal involving one of the major companies on the market. Teszari’s company was about to buy rival cable TV company UPC at some point. RCS&RDS has been repeatedly said to be planning to sell to various names, from Deutsche Telekom to companies from China and America. Every major company was mentioned at least once, including Orange and Vodafone.
Is consolidation going to happen in Romania or Hungary that RCS&RDS is ready to take part in?
There is no pressure towards it, Bulgac answers, with the certainty of a person who knows the EBITDA of all the players in the region.
“Our industry is very competitive and dynamic, that is a reality. On the other hand, our main rivals are profitable, at least in terms of EBITDA, so no one has an urgent or imminent problem that would force them to sell, to exit.”
His cautiousness as a chief financial officer that does not mince words kicks in. “We cannot speculate about a consolidation or transaction on the market. Our concern is to have continuity in our services, what will or will not happen on the market in this respect is the shareholders’ decision and is somehow impolite to think about Orange France and ask ‘When are you going to sell that subsidiary in your right pocket?’ . Or of Vodafone. It is a valid question, indeed, which can influence the structure of the market in the medium or long run, but not a question we are so eager to answer. Time will tell.”
So are you looking at a potential deal or just rule it out from the start?
“We are considering everything and we’ll be very careful.” Is there room for funding at RCS&RDS? “That is a harder question. We are definitely considering everything and there definitely are objective constraints that will not allow us to do anything,” Bulgac answers.
“The answer depends on the respective moment (of the financing need i.e.),” Valentin Popoviciu in turn says.
How about going public? Is it still on?
“That, too is a question we cannot answer, because the listing is a project that the company has been working on for a long time. It neither rejects nor ignores it, we are waiting. We are waiting for the right moment in the development of the company and the right moment on the market, which if combined would make going public much more likely or possible,” Serghei Bulgac says.
Is the company considering the Bucharest Stock Exchange?
“The answer to this question is much simpler; if we were to go public we see us doing it and would like it to be in Bucharest. The last time it did not happen in Bucharest but in London and that was maybe because of the development of the local market at the time and of the advice of the investment bankers who said the best, most liquid and profitable transaction was in London. We now believe we have matured and maybe we have a greater number of customers who would be interested to follow the company’s progress and the market has definitely matured, too.”
(English version by Loredana Fratila-Cristescu)