The reasons that led to the closure of the fourth mobile operator in Albania Plus Communication
Plus did not find the support of politics, as in the way Albanian institutions work is policy that affects decision-making. It was obvious the lack of political will to support the success of a company with such forms of ownership that would be an innovation for Albanian capitalism.
When the activity started, in June 2009, the Albanian leaders of Plus Communication knew that it would not be easy. Competition in the mobile phone market was tightened after the third operator, Eagle Mobile (today Albtelecom), entered in 2008, leaving little room for the fourth. The crisis, in turn, was making itself, reducing the purchasing power of consumers.
When the activity started, in June 2009, the Albanian leaders of Plus Communication knew that it would not be easy. Competition in the mobile phone market was tightened after the third operator, Eagle Mobile (today Albtelecom), entered in 2008, leaving little room for the fourth. The crisis, in turn, was making itself, reducing the purchasing power of consumers.
But the market was once again hungry for a new operator due to the high tariffs (amongst the most expensive in Europe) that continued to pay customers and large profits of the two leading market operators, Vodafone and Telecom Albania (former AMC ). In 2009, the two operators jointly announced profits of about 170 million euros, out of the 340 million euro income realized by the entire mobile phone market that year (according to balance sheet data and AKEP). So the half of the amount Albanians used to talk on the phone ranged as profits for the two foreign-owned companies, a significant part of which was transferred abroad.
And the entry of the two new operators on the market quickly gave effects to the benefit of consumers. Tariffs decreased rapidly after 2010. According to the Electronic and Postal Communications Authority (AKEP), mobile retail market rates are analyzed in two main directions: - Average revenue per minute / user (ARPM / ARPU); - Nominal retail tariffs of operators. (Average Average Revenue Per Minute) and ARPM (Average Income Per Minute) where these two indicators by 2015 have come down, showing improved market efficiency, as shown by the chart below. Average Per Minute / User Income (ARPM) decreased from 6.49 Lek / minute in 2010 to 2.36 Leks per minute in 2015, a reduction of three times. The increased competition led to the sharp drop in profits of the two main operators, Vodafone and Telecom Albania, which in 2015 declared together 9 million euros in profits.
While consumers saw quick benefits, the same thing did not happen with the company. Since its inception, Plus faced the walls created by the big operators, who started offering very cheap tariffs within the network, by "removing" customers from the small ones. Bureaucracies in obtaining a 3G license increased the delays in regulatory authorities' interventions to solve the problems created by the dominant market position of big players.
One of the problems that Plus has complained since 2013 is related to the existence of groups and "clubs" within major operators, which consequently generates significant price differentials in communications to other networks, creating enclosures for subscribers. Through non-intervention, authorities have not only financially damaged Plus but have also directly affected the emptying of Albanian consumer pockets by charging them higher tariffs for their communication needs.
Plus has repeatedly complained that it has been systematically crippled and strained for years by the authorities through market disorder, citing in turn the issue of changing tariffs inside and outside the networks, the issue of asymmetry applied differently to different operators, of course discriminated against Plus, or the tremendous issue of granting authorization for 3G services, culminating in openly handling two standards of a similar issue brought to its attention by market operators in terms of frequency utilization 3G and 4G.
Plus was the only fourth operator in Europe that was not given "national roaming" in the period in which the construction of the broadcasting network was foreseen, thus discriminating against a market already saturated in terms of penetration.
In the face of this situation, the company faced difficulties and in 2014 the losses were 1.4 billion ALL, from 1.8 billion ALL, which was the total income, which created problems and the repayment of a union loan, taken for the development of the activity.
In 2015 and 2016, the company's financial situation improved. In the 2016 balance, Plus reported ALL 3 billion in revenues and profits of ALL 134 million, while collecting extraordinary profits of about ALL 1 billion.
Plus's shareholders' losses were added and the loan restructuring of 35 million euros. Unlike other businesses that continue to be debtors and their loans are not returned, but only deleted from bank balances, loan restructuring was made possible through inflows by shareholders who took over the obligation to pay the losses themselves .
Closing
Plus did not find the support of politics, as in the way Albanian institutions work is policy that affects decision-making. It was obvious the lack of political will to support the success of a company with such forms of ownership that would be an innovation for Albanian capitalism.
In the face of lack of support, strong competition and economic problems, shareholders took the decision this summer to shut down the business. In the explanation that Plus has given to the Competition Authority states: "Due to financial difficulties, the enterprise can no longer go on investing in providing quality and competitive services to customers and given AKEP's demands on other operators to ensuring the continuation of the provision of contracted services, seeks to transfer frequencies in its use to other mobile operators under the Agreements with these operators, "said Plus for the Competition.
"Throughout the years of operation in the market, since 2010, the company has resulted in significant losses .... The accumulated loss over the years amounts to a significant figure of about 6.1 million ALL and for this reason the shareholders of the company have twice taken measures of capital restructuring to cover the losses. "
Under the agreement with operators, Vodafone and Telecom Albania will allocate the use of frequencies granted to Plus by AKEP for the remaining duration respectively. Even the third mobile operator, Albtelecom, has stated that it is no longer interest to use, all or part of the frequencies allocated to you by AKEP, and therefore there is no claim to the present or to the present future, demand or research if these frequencies will be transferred to third parties (including other Albanian operators).
Market, after the release of Plus
According to an analysis of the Competition Authority, the mobile phone market is about 270 million euros annually.
Mobile market shares for the active user indicator for the first quarter of 2017 are: Vodafone 48.22%, Telekom Albania 33.95%, Albtelecom 12.6% and Plus 5.23%. For 2016, the market shares are: Vodafone 50.8%, Telekom Albania 30.7%, Albtelecom 13.1% and Plus 5.4%, where is the decrease of Vodafone, Albtelecom and Plus market share. Given the above indicators, Vodafone is the most competitive in the market, followed by Telekom Albania, Albtelecom and, finally, the smallest market share, Plus.
Competition has given the passage of frequencies from Plus to Vodafone and Telecom Albania, arguing that: There are no distortions of competition; The regular, safe and efficient use of the frequency spectrum is not impaired; Efficiency of frequency spectrum usage increases; Protects the public interest; Provide the required transparency legally foreseen.
Competition acknowledges that reducing the number of operators can lead to price increases, but the market can be kept all the time in monitoring.
Number portability, the unification of in-net and off-net tariffs (in and out of the network), and the fact that more than 90% of mobile phone users have prepaid service, increase the likelihood of customer mobility and lower the possibility for customers of Plus to pass all to Vodafone.
In cases where the transfer of customers will be divided into three operators in the market, Vodafone will continue to have the largest market share and Telekom of Albtelecom, with stable market share.
At the conclusion of the economic analysis, Competition estimates that due to the oligopolistic structure of the mobile telephony market, the entry barriers due to the licenses granted to the market share held by PLUS, the competition thinks that the market exit of the Plus operator can bring changes to market structures. Competition concludes that Vodafone Albania can increase its market share in the services it offers, but we should point out that the growth of the market share after concentration will have a small impact on the market due to the small market share owned by Plus Communication. After the transfer to the mobile telephony market they will offer their service to three operators, of whom Vodafone Albania SHA has a dominant position in the market, followed by Telekom Albania and Albtelecom. Upon the transfer, AKEP will establish conditions in the Individual Authorizations to be issued at the time of the beginning of spectrum utilization and coverage, in order to increase the effectiveness of the use and to avoid blocking it.
