Probe launched into Vodafone’s dominant position

TIRANA, March 27 – The Competition Authority says it has opened a probe into Vodafone Albania over alleged abuse of its dominant position after identifying that the operator has more than half of the revenue share in a market with four operators. The Competition Authority will determine if there is limited competition considering that Vodafone’s market share is bigger than all three other mobile operators. The probe into the 2011-2012 activity of the pre-paid mobile market will cover the 2011-2012 period and is expected to conclude after six months.
Citing an abuse of dominant position by market operators, the Competition Authority launched a preliminary enquiry into the mobile telephony market in January 2013 after observing signs of limited competition. In a decision taken in late December 2012, the Competition Authority says it has launched a preliminary enquiry into the pre-paid mobile telephony market after observing potentially anti-competitive behaviour by market operators which could target or result in limited free competition.
“Statistical and financial indicators in the electronic communications market for 2011 show that the mobile telephony market generated around 39.2 billion lek in revenues from its four market operators. This market is characterized by enterprises of dominant position in the retail mobile telephony sector,” says the Authority.
Data by the Electronic and Postal Communications Authority (AKEP) show pre-paid customers account for 91 percent of mobile phone users.
AKEP data show Vodafone Albania, which was the first operator to launch the 3G service in November 2010, increased its revenue market share to 52 percent although having a 35 percent share in terms of subscribers. Vodafone Albania, part of Vodafone Group Plc, launched its GSM services in Albania in August 2001. In November 2010, Vodafone became the first operator to offer 3G service in Albania after winning a 15-year license for 31.4 million Euros.
Mobile operators saw their revenues drop for the third year in a row in 2011, reflecting the crisis impacts and increased competition which has considerably lowered tariffs. A report published by the Electronic and Postal Communication Authority (AKEP) shows total revenues for all four mobile operators in 2011 shrank by 6 percent to 39.2 billion lek (Euro 275 million). The market started slightly shrinking in terms of revenue in 2009 after the successful launch of the third operator, Turkish-owned Eagle Mobile in March 2008, which made competition tougher. In 2010, mobile companies’ revenues dropped by 11 percent year-on-year.
Meanwhile, AMC the second biggest operator saw its market share in terms of revenues drop by 6 percent to 34 percent and the number of subscribers to 37 percent. In September 2011, AMC, the first mobile operator in Albania since 2000 part of Greece’s Cosmote Group and Deutsche Telecom, was announced the winner of the second 3G license after offering 15.1 million Euros, 2.6 million more than the price tag government had set.
Data show Turkish owned Eagle Mobile, which has been operating in Albania for four years, maintained its 12 percent market share for revenues for 2011 and had its subscribers increase by 3 percent to 21 percent.
Plus Communication, the only wholly Albanian-owned mobile operator which launched its services in late in 2010, gained a 2 percent market share and 8 percent of total subscribers.
Data for the two leading companies, Vodafone and AMC, which have 86 percent of total revenues and 72 percent of subscribers, show their profit rates have considerably shrunk during the past two years. Vodafone’s profit rate in 2011 dropped to 21 percent down from 29 percent in 2010, 42 percent in 2009 and 46 percent in 2008. Vodafone’s net income also shrank to 4.2 billion lek in 2011, down from 5.9 billion lek in 2010 and 11.4 billion lek in 2008.
Meanwhile, AMC’s profit rate also dropped to 31 percent of total revenues in 2011, down from 38 percent in 2010 and 60 percent in 2009. Its net income registered 4 billion lek drown from 6.2 billion lek in 2010 and 12 billion lek in 2009, AKEP data show.