Zappĺs CEO: The 50% cut in telecom charges bogged down the profit margins in the industry

Zapp, a mobile network operator in Romanian telecommunication industry, said the market’s profit margins fell sharply due to a 50% cut in charges compared to previous years.

“Profit margins fell by a wider margin compared to previous years, namely 50%, due to cut of charges for calls and for mobile data packages, especially if we look at price per GB which was very high”, Chris Bataillard, CEO of Zapp told in an interview for Wall-Street.

The year 2008, he said, was extremely difficult for the company, due to the major investments, and for next year, the operator expects a higher turnover given the broader client database.

“The year 2008 was very difficult for us, because he had to restructure almost everything. We invested large amounts in expanding the network and in setting up a new 3G platform. Moreover, we launched new offers, in an effort to upgrade services for clients. Next year, we expect interesting results, and a growth of turnover, given the broadening client database,” Zapp’s CEO added.

As for mobile data services provided by the mobile carrier, EVDO coverage will be enhanced up to 80-85% by yearend.

“In a first phase we have expanded EVDO network by 35% more than other operators, following to achieve 80-85% coverage nationwide in the second phase, which will start in January,” said Bataillard.
The company launched this year the 3G services, and by yearend, the company said the third generation network will cover 32 cities, following to be expanded to at least 120 cities. The equipment for UTMS network is supplied by Chinese-based ZTE manufacturer.

“Our 3G network covers 30 cities in Romania at this moment and by yearend, it will be broadened to 32 cities, and by the end of 2009, Zapp’s 3G coverage will enclose at least 120 cities. At this point, Zapp’s data portfolio is 40% of the overall client database. Most of our data services clients use voice as a secondary service,” Chris Batailllard said.

According to him, Zapp will be the first operator to allow unlimited Internet access in a new offer that the company has not yet completed. “The unlimited traffic will be possible within a few weeks. We are working on a product that will allow unlimited 3G Internet traffic on a daily basis”, Zapp’s CEO stated.

Romanian telecommunication market registered major growth in terms of number of users for mobile telephony and Internet services, reads a report remitted by National Authority for Communication.

“Romania has the highest growth margin in Europe in terms of internet connections. The growth pace will be maintained next year as well. WiMax services which will be shipped next year will provide Internet access in the uncovered areas,” said Liviu Nistoran, chairman of ANC.

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