Boston, MA -- (SBWIRE) -- 05/03/2013 -- Bulgaria's mobile market returned to positive growth in Q312 after contracting in the previous quarter. However, this came at the cost of a sharp decline in ARPUs, which we believe was due to aggressive promotional activities by operators to retain existing customers and attract new ones. We expect growth to remain in positive territory over our forecast period, despite a penetration rate of more than 160% as of 9M12. This will be driven by competition, regulatory policies, such as MTR reduction, and continued network investments. We remain upbeat about the broadband sector, which we expect to benefit from strong investments, next generation access networks and increasing take-up of internet-based services, such as IPTV.

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Key data

- The mobile sector grew by 1.1% in Q312 to bring total growth in 9M12 to 2.1%.
- Mobile ARPU declined by 13.8% in 9M12, following sharp falls in Q112 and Q312.

Risk/Reward Ratings

Bulgaria dropped one place to 14th position on our Risk/Reward Ratings (RRR) table in this quarter's update with an aggregate score of 43.8, compared to the regional average aggregate score of 48.9. Bulgaria scores below the regional average in all four of our ratings categories of our ratings table. Its lowest rating is in the Industry Rewards category where a combination of declining subscriber growth and rapidly falling ARPU are among factors impacting on its ratings.

Key Trends And Developments

Bulgaria's mobile market is gearing up for an increase in competition following the award of the fourth mobile licence to satellite operator Bulsatcom in January 2013. The new licensee intends to launch commercial services before the end of 2013, a development we expect to increase the downward pressure on operators ARPUs and operating margins in future, as well as erode the market shares of the existing players. We expect Bulsatcom to pursue a value-led strategy in its bid to get a foothold in the market, bundling its mobile services with its existing satellite broadband and TV services.

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