Government of Romanian ICT Market Ministry of Communications

Government of Romanian ICT Market

Ministry of Communications and Information Technology - main role and responsibilities § ensures strategic planning and defines the strategic and tactic objectives in the field of electronic communications, postal services, information technology and information society services § defines, implements, monitors and evaluates the policies necessary for the achievement of these objectives § ensures the coherence of the governmental policies and strategies in the field of electronic communications, postal services, information technology and information society services § encourage efficient investments in infrastructure § promote and stimulate the research, development, innovation and technology transfer in the field of electronic communications, postal services, information technology and information society services

Strategic objectives in the ICT field § increasing the competitiveness of the Romanian economy by encouraging the use of new information technologies § consolidating the ICT industry § reducing the digital gap § increasing the public administration’s institutional performance through a coherent and generalized implementation of integrated information systems § increasing citizens’ comfort

Current Romanian legislation foreign investors offers: § national treatment § free access to domestic markets § the possibility to participate in the management and administration of the investment § equal fiscal regime with Romanian investors § simplified procedure in business administration when exporting to other EU member states § 16% unique taxation rate on profit § a competitive 19% VAT rate, translated into a sound fiscal policy, managing to reduce the fiscal burden on companies

ICT - one of the most dynamic sectors of the national economy • • Communications field contributes 5% to the Romanian GDP Investments in telecommunications represent 22, 01% of all foreign investments in Romania

Most dynamic technology market in Europe

Romanian ICT market

Romanian electronic communications market 2007: Snapshot in figures Penetration rates/100 inhabitants of the main electronic communications services and infrastructures Population: 21. 6 million (2007) Territory: 238, 391 sq km Population urban/rural: 55. 2/44. 8% Households: 7, 320, 202 10. 5% broadband* * Broadband includes fixed and mobile access of at least 128 kbps speed

Fixed telephony – slight decrease of the access lines Source: ANRCTI, according to the statistical data reported by the providers of electronic communications networks and services; penetration rate is calculated as a percentage of the total population for each period.

The alternative providers’ market share doubled in 2007 compared to 2006 Source: ANRCTI, according to the statistical data reported by the providers of electronic communications networks and services;

Mobile telephony – 31% more users than in June 2006 Annual penetration rate increased by 31 % Source: ANRCTI, according to the statistical data reported by the providers of electronic communications networks and services; penetration rate has been calculated as a percentage of the total population.

Internet connections Penetration rate 21% June 2006 - June 2007: 78. 2% growth rate of Internet connections Source: ANRCTI, according to the statistical data reported by the providers of electronic communications networks and services; penetration rate is calculated as a percentage of the total population; broadband Internet access connections include mobile and fixed access connections with a connection speed of at least 128 kbps.

Significant growth of dedicated access Internet connections: 140% up since end-2005 * Highest growth rates (31. 12. 2005– 31. 12. 2006): § XDSL connections: +1075 % § Connections by “other means” (UTP/FTP, satellite): +211 % Highest market shares (31. 12. 2006): § Coaxial cable connections: 33 % § UTP/FTP connections (“neighborhood networks”): 53 % Source: ANRCTI, according to the statistical data reported by the providers of electronic communications networks and services;

Broadband – leading segment of market growth Penetration rate of broadband Internet access in ROMANIA has reached 10. 5% June 2006 - June 2007: 90, 4% growth rate of broadband Internet connections Source: ANRCTI, according to the statistical data reported by the providers of electronic communications networks and services; penetration rate is calculated as a percentage of the total population; broadband Internet access connections include mobile and fixed access connections with a connection speed of at least 128 kbps.

Mobile internet access is very popular

Broadband vs Narrowband

IT sector – driver for economic growth § § § The IT sector is of strategic importance for the economy, as it can function as an engine for the development of every other industry. The Romanian IT market will reach 1. 6 billion dollars in 2007, increasing by 12. 1% since 2006. Romania is one of the strongest markets in Europe for technology investment and trade, with a highly skilled technology workforce, competitive costs, top-tier investors, and a friendly business environment. According to the latest estimations, there are over 13. 000 IT companies in Romania. The IT sector in Romania boasts more than 3, 000 technology companies throughout the country, and € 400 million in software and IT services revenue each year. As the fastest growing and top IT market in Europe in 2006, Romanian companies serve the world's most demanding offshore customers in IT outsourcing, business process outsourcing, call center support, and product development. The development of electronic commerce has become visible in Romania, and at present, there are over 1. 000 web sites that carry out e-commerce activities. Two hundred of these web sites allow online payment. Otherwise, in 2006, one virtual store was launched every second day.

Romanian IT Sector within the Global Market Romania is the European leader and 6 th in the world, in the number of certified IT specialists it produces. Romanian graduates are multilingual Romania has 5 elite polytechnic universities, 59 other universities, 174 private colleges with technical degree programs. Microsoft, Amazon, SAP, Oracle, HP, Siemens, Advanced Micro Devices, Intel– Investors already present on the Romanian market Romania graduates 230 IT specialists per million people every year, one of the highest rates in the world and greater than that of the US and Russia

Advantages for attracting investments in IT ■ Second largest country in CEE - a market with high potential ■ A dynamic IT/Internet sector ■ Good and productive education system ■ Tradition in IT - one of the first European countries producing computers ■ The governmental projects in the IT field - have a “snow ball” effect for the development of IT&C in Romania ■ Good infrastructure for IT ■ Abundant and skilled workforce ■ Competitive Costs Specific incentives (100% income tax exemption for IT specialists – in force since the summer of 2001: stimulates specialists to work in their own country

The 2006 -2009 brand strategy for export for the Information Technology field § the IT sector is the first Romanian sector that succeeded in building a brand strategy for export § the strategic initiative for branding is a concrete application of the National Strategy for Export and has 3 main objectives: - to increase the investments in the IT sector - to promote a new image for the local IT market - to create new jobs § the community of the IT exporters, estimated at 9000 companies, will benefit from a better and distinctive image on the external markets, which shall translate into a significant growth potential for the IT exports that will reach over one billion Euros within the next 2 -3 years § the branding strategy seeks to identify niche segments of the IT market that will enable Romanian companies to compete with companies from India, Russia and China on equal footing.

Electronic communications market in 2008 Forecast • • • the number of active providers and the users will continue to grow Mobile telephony will keep its steady upward trend, especially when the user’s choice is driven by the new services offered through the 3 G technology internet broadband access will develop and become a prominent choice for the Internet users cable and x. DSL are the supports with the most important development potential regarding the internet broadband connections all inhabitants in rural areas will have access to the internet by 2010

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