SUMMARY

This report provides an overview of the market for U.S. developers and suppliers of value-added telecommunications services to Bulgaria's business, government and individual users. It describes the value-added telecommunications currently available in Bulgaria and the technologies currently in the market.

Demand for value-added telecommunications services will be strong in the following best-prospect subsectors: broadband-based cable services, mobile telephony value-added services, and Internet-based services. Strong growth is expected in Voice Over Internet Protocol (VoIP), virtual private networks, video-conferencing services, pre-paid calling and pre-paid Internet cards, conference calls, IP based data and fax transmission, unified messaging and short message services. U.S. companies as world technology leaders in value-added telecommunications services have an excellent export potential in Bulgaria, where U.S. products and services have an outstanding reputation and are known for their cutting edge technology and reasonable pricing.

Bulgaria's telecommunications services market was $480 million in 2000, which is expected to grow 10 percent in 2001 and with 15 percent in the next couple of years. The state Bulgarian Telecommunications Company (BTC) which has a monopoly on voice telephony, has a 93 percent share of the telephone services market. MobilTel (Israel), Bulgaria's first GSM mobile services provider, and Mobikom (Bulgaria's sole NTM mobile services provider) (joint venture between Cable & Wireless (U.K.) and BTC) together have a market share of 7 percent. Bulgaria has a small but promising value-added telecommunications services market of $23 million which is expected to grow in 2001 by 15 percent to reach $26.7 million in 2001, with growth of an additional 15 percent in 2002 and 20 percent in 2003 also forecast.

At present, Bulgarian companies, primarily BTC, MobilTel and Mobikom and ISPs, have a 70 percent market share of the provision of value-added services. However, BTC is far behind in the provision of high-quality services. U.S. companies have only a 9 percent market share, while third country companies have a 21 percent market share. The U.S. and third-country market shares are expected to increase substantially after the end of 2002, when the liberalization of the Bulgarian telecommunications market will occur with the end of the monopoly of BTC over fixed voice services. Value-added service providers include Sector Communications Bulgaria (value-added telecommunications services to hotels, video-conferenced based job fairs), Nexcom Ltd. (VoIP) and Cable Bulgaria (cable TV operator). The only third country value-added service provider is Global One (France), The main reason for the small number of telecommunications companies operating on the market is the monopoly of BTC on voice transmission, and the strong influence which BTC has had on the development of the telecommunication market and the development of the telecommunications infrastructure.

With the development and especially the digitalization of the telecommunications network, the expansion of value-added telecommunication services will become possible. Licensing of three mobile operators (two using GSM and one using the NMT standard) has already significantly contributed to the development of the telecommunications services market.

Three factors will spur the development of value-added services in Bulgaria. These are the licensing of a second GSM operator, COSMO Bulgaria Mobile (CBM) (owned by the Greek OTE) in January 2001, the development of cable TV operators and ISPs -- which are expected to start providing telecommunication services -- and the future privatization of BTC.

The Bulgarian mobile telecommunications market will increasingly be characterized by intense competition while prices go down. In such a market, telecommunications carriers will depend on the quality of and variety of the value-added telecommunications services they offer. Important for the success in providing of value-added telecommunication services on the Bulgarian market is, therefore, as in other sectors, the combination of good price, quality of service and aggressive promotion.


A. MARKET HIGHLIGHTS AND BEST PROSPECTS

Market Profile

Telecommunications Market Overview

Bulgaria had a telecommunications services market of $480 million in 2000 which is expected to grow 10 percent in 2001 and by 15 percent in the following two years. The state-owned Bulgarian Telecommunications Company (BTC), which has a monopoly on voice telephony, has a 93 percent share of the telephone services market. Several factors will contribute to the expected market growth. First, the number of Internet users is expected to substantially increase, creating great additional demand for high quality telephone service. Second, mobile phone use is increasing substantially and will increase even more when the second GSM operator COSMO Bulgaria Mobile (CBM) (owned by the Greek OTE) starts operating later in 2001. Third, significant growth of digital service as a share of market continues. Fourth, the deregulation of the telecommunications market at the end of 2002 will open the market for competition, when telecommunications operators are expected to start competing with BTC. And fifth is the expected increase of services provided by cable TV operators and ISPs, some of which in addition to data transmission after the termination of BTC monopoly are expected to start voice transmission services.

MobilTel (GSM mobile operator) and Mobikom (NMT mobile operator) together had about 770,000 subscribers at the end of 2000. By the end of 2001 the GSM operator MobilTel expects to have about 1.3 million subscribers. Mobikom expects to increase its subscribers by only 5-10 percent as the NMT technology is generally viewed as old and the variety of services that can be offered is limited, although Mobikom covers 95 percent of Bulgaria's population and offers good service.

There was an average 15 percent increase of the total sales of value-added telecommunications services from $20.3 million (1999) to $23 million (2000). Another 15 percent increase is expected in 2001 to a projected $26.4 million. An average 20 percent increase of the total sales for the years 2002 and 2003 is expected mainly due to the increase of sales of foreign owned companies, mainly the mobile telecommunications operators, cable TV operators and foreign owned ISPs. The projected increase may even be higher if BTC is sold to a foreign operator and starts offering a variety of value-added services. The value-added services market growth will be affected by several factors. First is the substantial increase of the number of mobile and fixed-line subscribers. Second is the increased variety of value-added services offered by carriers. Third is the increased quality of the basic telephone services and network digitalization. And fourth is the increasing purchasing ability of the population, which will allow more people to become not only basic subscribers but also to use many of the value-added services.

A greater part of the increase in the sales of foreign-owned companies will come through sales by the new second GSM operator. There was a 25 percent increase of the sales by foreign-owned companies in 2000 over 1999, an increase from $4.8 million to $6 million, with another 25 percent expected increase in 2001, a projected increase from $6 million to $7.7 million.

The average increase of 10 percent in the sales of locally owned companies in 2000 and 2001, from $15.5 million in 1999 to $17 million in 2000 and $18.7 million in 2001 is expected to decrease to 5 percent in the following two years due to the fact that none of these companies is offering a great variety of value-added services and it is unlikely that will start offering such services or attract many new customers for the services currently offered.

U.S. companies increased sales by 81 percent in 2000 compared to 1999, from $1.1 million to $2.0 million, with an expected increase in 2001 of about 30 percent, thus reaching $2.7 million. The sales by U.S. companies are expected to increase by another 20 percent in the following two years, especially in 2003 after deregulation of the telecommunications market, in line with the strong competitiveness of U.S. companies and the overall expected growth of the market.


Telecommunications Infrastructure

Bulgaria has the highest penetration of telephone service in Eastern Europe, with 39.43 telephones per 100 persons. Bulgaria's fixed telecommunications network is owned by BTC, which is owned by the Ministry of Transport and Communications. Over 95 percent of Bulgaria's telephone subscribers can make automatic domestic long-distance calls. As of January 1, 2000 BTC had a total of 3,254,742 telephone subscriber lines -- 2,394,118 residential subscriber lines and 860,624 business subscriber lines. Eighty five percent of residential subscribers are using analog lines; 70% of business subscribers use analog lines while only 30% of the business subscribers have digital subscriber lines. Central Sofia, the location of most U.S. firms, already has largely moved to seven-digit digitally-switched lines offering direct-dial access to the United States. In 1999 140,000 new subscriber lines were installed throughout the country. The BTC network is directly connected to over 45 telecommunications operators in other countries. Connectivity is by digital transmission systems operating mainly on optical cables. For distant connections such as the United States, Canada, Japan, China, connectivity is via international satellite systems.

BTC, as the main telecommunications operator in the country, has the obligation to provide universal telecommunications service of a specified quality level which is available to all users regardless of their geographic location and which is provided at affordable prices. Universal service in Bulgaria is defined as ordinary telephone service and free use of national emergency services.

Extremely important for the development of telecommunications services and value-added services in particular is the digitalization of the telecommunications network. BTC's main objective for telecommunications network development is its technological upgrades through new digital switching and transmission infrastructure. BTC's middle-term priorities for the period until 2002 in the area of the telecommunications network technological modernization include building up the digital switch network; continuation of the digitalization; speeding up of the implementation of modern telecommunications and information services including ISDN; and accelerated extension of the subscriber access network including broadband. The implementation of these priorities is expected to significantly increase BTC competitiveness before the end of the BTC monopoly and liberalization of the telecommunications market on January 1, 2003.

Bulgaria has no 3G network, also known as Universal Mobile Telecommunications System (UMTS). It is expected that the first 3G license will be granted by 2004. UMTS will allow the broadband, packet-based transmission of text, digitized voice, video and multimedia at rates higher than 2 Mbps The increased bandwidth of UMTS will offer customers new services like video-conferencing delivered over advanced mobile devices.

Almost 93 percent of the population uses the fixed telephone network, while only 7 percent use mobile phones. The average duration of a telephone conversation using mobile phones is 2 minutes and using the fixed network 4 minutes. But market share and call length of the mobile market are expected to increase. Bulgarian users like mobile phones for the following reasons:

• Good coverage
  
• Better telephone connection
  
• Good quality services for the price
  
• Modern technology These preferences over BTC indicate that Bulgaria offers excellent opportunity for mobile services development.

After the liberalization of the voice transmission in 2003 more foreign telecommunications companies are expected to come to the market, develop the telecommunications infrastructure and diversify the market of value-added services. Further development of the telecommunications network, ISPs and cable TV operators will introduce further possibilities for provision of new services.


Government Telecommunications Policy

Bulgaria's telecommunications sector policy for the short term (through the end of BTC's monopoly at the end of 2002) and medium term (from 2003) emphasizes the importance of telecommunications for the economy of the country and development of conditions for a competitive market, following the principles and policies of the European Union. The main objectives of the policy are:

• development and adoption of regulatory laws, regulations, rules and procedures, conforming to new market and technological conditions and harmonized with European Union legislation;
• liberalization of the telecommunications market by elimination of the monopoly of BTC in providing telecommunications services; and
• provision of equal terms for all parties in the telecommunications services market and establishment of structures and rules of conduct ensuring fair competition.

• fast development, modernization and upgrading of the existing telecommunication infrastructure;
• improvement of the quality of telecommunications services;
• transformation of Bulgaria into a center for international telecommunications traffic;
• increased foreign investment;
• introduction of new up-to-date telecommunications services; and
• development of Bulgaria as an information society with high usage of multimedia services for exchange of data, text, voice and images.

Internet Services

The market for Internet services is estimated to be $50 million with about 170 Internet Service Providers (ISPs) operating on the market and expected annual growth of about 50 percent. Despite the relatively large number of ISPs there are 13 ISPs that dominate the market as "wholesalers." As many ISPs have rather low capitalization, a consolidation of the Bulgarian ISP market can be expected in the near future, which will decrease the number of ISPs but will lead to substantial increase of the quality and range of services provided.

Bulgaria has approximately 330,000 Internet users (4% of the population). By 2004 this number is expected to increase to 700,000, 9% of the population. Due to the rather low average monthly income of under $150 per person, the Bulgarian Internet services market is mainly price driven. The biggest share of Internet users, 34%, is concentrated in Sofia, 64% in other towns and only 2% in the villages. Seventy three percent of the users are under age 30, 18% are between 31 and 50, and only 9% are older than 50. Only 24 of the leading 100 companies have websites, and there are only about 3,000 corporate sites. Twenty-nine percent of users access the Internet from their offices, 24% from Internet clubs which are very popular in Bulgaria, and only 19% from home. 1.5. Cable TV Operators

Bulgaria has a cable TV market with about 700 cable operators operating all over the country. There are about 800,000 cable TV subscribers, which represents roughly 10% of the population of Bulgaria. The cable TV market is dominated by 5 leading companies, which have the biggest number of subscribers. For example, one of the leading operators, Evrotur SAT, has 60,000 subscribers and the second biggest, Centrum Group, has 28,000 subscribers. The Bulgarian cable TV market is poorly developed and needs a lot more in infrastructure development before it becomes comparable with western standards. Most value-added services that are based on cable TV such as video on demand and cable Internet are known on the market but are relatively expensive and end-users cannot afford them yet. That is why at present cable operators are not viewed as major competitors to ISPs. In order to work more effectively and be able to invest in infrastructure development and equipment, the 700 cable TV operators in Bulgaria have to start a process of concentration and merger of capital. Industry experts predict that some of the biggest TV names like Time Warner, United Pan European Communication and TCI are expected to come on the Bulgarian market in the near future through acquisition of existing cable TV operators.

The biggest cable TV operator in Bulgaria is Cable Bulgaria, which at present has over 120,000 subscribers. Cable operators such as Cable Bulgaria are expected to become major competitors to BTC after 2002.

Broadband and WAP

Services based on broadband and WAP are not yet provided in Bulgaria. Although broadband is not offered, cable TV operators using fiber optic cables are expected to start providing broadband based service in the near future. Video-conferencing services which are based on ISDN lines and require additional video-conferencing equipment and are usually provided by high-tech companies or telecommunications operators in addition to their basic activities. However, only video-conferencing between two points is available in Bulgaria. Multiple conferencing with more than two participants at more than two points is not available in Bulgaria.

Services like billing services, on-line directories and business directories are available in Bulgaria and are provided mainly by the ISPs, as legal and accounting databases are found to be extremely popular and useful.

ISDN

In 1999 BTC started to market ISDN (Integrated Services Digital Network). The new technology integrated all types of telecommunications services (voice, fax, data exchange and video images) and provides the users with high-speed and reliable connections, variety of services and possible application. BTC offers two types of subscriber access to the ISDN network:

• Basic rate - BRA ISDN (2B+D)
• Primary rate - PRA ISDN (30B+D)

• Call Holding
• Call Forwarding
• Call Barring--incoming and outgoing
• CLIP (caller ID)
• Detailed billing
• Conference calling

• Call Forwarding. Call forwarding allows subscribers to forward a call from a mobile phone to another mobile or fixed telephone. Four types of forwarding are offered: forward all calls, forward if line is busy, forward when no answer, and forward the call if the subscriber is out of service.
• Call Barring. Call barring allows subscribers to bar incoming and/or outgoing calls. The following options are available: outgoing calls -- bar all outgoing calls/international calls; incoming calls -- bar all incoming calls/roaming calls.
• Conference Calling. Five people can participate in a conference call. The initiator of the call has to be a subscriber of MobilTel, while conference calls participants may be subscribers of Mobikom as well.

• Calling Line Identification Presentation (CLIP). Called Caller ID in the United States, the calling number is displayed on the phone. However, if the call is from an analog phone the calling number does not appear.
• Calling Line Identification Restriction (CLIR). As with Caller ID Barring in the United States, this service enables the calling party to prevent their number from appearing on the called party's display.
• Call Waiting. This service allows subscribers to be informed of a new incoming call while having a conversation. The call may be answered, rejected or ignored.
• Call Holding. The service allows subscribers to keep an active conversation on hold, while taking or making another call.

• Data Transmission. The service allows transfer of data GSM-GSM, GSM-stationary telephone, and stationary telephone-GSM through using the GSM network. Transmission speeds are 300, 1200, 2400, 4800 and 9600 bps. Some new telephone handsets produced by Nokia and Samsung allow transfer speed of 14,400 bps. In order to use this service, a SIM card has to be activated. With exception of some Nokia 9000 and Nokia 9110 models, all GSM telephones must have a connection to a PC, laptop or a palmtop through an infra-red port, cable connected to the communications port of a computer or through a cable and PCMCA card.
• Internet access. Every GSM subscriber can have access to the Internet through a mobile phone. The service provides Internet access without the necessity of a subscription or password by merely dialing the special GSM telephone number.
• Fax transmission. The GSM subscriber must have activated a fax number. In order to transmit or receive faxes, the GSM telephone must be connected to a computer through a cable or infra-red port. In order to receive a fax, the subscriber must connect the telephone to a computer and start their fax software. A special attachment is necessary to connect to a standard fax machine.
• Short Message Service (SMS). The service allows transfer of short messages with a length of up to 160 symbols. The transmission of long messages requires specific software for the GSMs of both the sender and the receiver.
• SMS to e-mail. This service allows sending of e-mails from a GSM. Subscribers who want to use this service have to specifically request the activation of this service and pay additionally for it.
• E-mail to SMS. The service allows receiving of e-mail on the GSM. In order to send e-mail messages to a GSM, the client may use common e-mail software such as Outlook Express, Netscape Messenger, Pegasus Mail, or Eudora. The service may be activated free of charge through the web-site of the company: http://www.mtel.net/. Sending of an e-mail to an SMS is free of charge.
• Web to SMS. The service allows message transfer to an SMS through the web page of MobilTel http://www.mtel.net/. The services is free of charge.
• GSM Voice Mail. A "GSM Voice Mail" ensures that all calls which are not received/accepted by the receiver to be forwarded to a voice mail service. The voice mail service automatically informs the subscriber for any messages when the phone is accessible in the network. The subscriber may dial his voice mail number and read the message. This is an extra-cost service that must be activated.
• SMS received mail. Every time the phone is switched on or the phone accesses the GSM network, the "GSM Voice Mail" will inform the subscriber via a short message (SMS) as to the existence of unread messages.
• Global Positioning System (GPS). This service by GPS Bulgaria Ltd., a separate affiliate of MobilTel Ltd. allows locating of moveable targets, navigation, control and monitoring of personal property, medical assistance or assistance on the road. The company also allows subscribers to monitor the location of goods transiting Bulgaria, movements of vehicles transporting money or other valuable property; to control and manage vessel movements and cargo shipments; to enhance security of vehicles; and to help drivers find route and map directions.
• M-Tel Info. By dialing one number, subscribers have access to a variety of information such as foreign exchange rates, schedules of air flights, buses and trains, cinema and theater programs and sports programs. Partners of MobilTel in providing of this service include Lufthansa, IBM, Sofia Airport and DHL. A variation of this service is to request specific information through SMS by sending a product information code, with the response by SMS.

• Three-party Conference Calling
• Call forwarding
• Call Restrictions
• Call Waiting

• E-mail. E-mail is "accepted" by calling 048-1638. The call goes through an operator to whom the customer dictates the address and contents of the e-mail.
• MoViTel. (Mobile Virtual Phone). This is a new service provided by Mobikom Ltd. aimed at users that need a 24-hour connection but have no mobile phone or pager. Every subscriber to the service gets a personal mobile number 048238 xxxx, which can be called to leave the subscriber a message. The messages can be retrieved by the subscriber at any time by calling the same number.
• Information Services. By dialing three-digit numbers, Mobikom subscribers have access to the following value-added services: weather forecasts, financial information, sports information, real estate information, and business and legal consultations.

Note: The above statistics are unofficial estimates based on industry sources.

Receptivity of U.S. products and services: the Bulgarian market is generally very receptive to U.S. products and services as U.S. firms have an excellent reputation of providing modern, innovative and cutting edge technology solutions with reasonable pricing.


3. Best sales prospects

The following are the best sales prospect value-added services:

1. Broadband-based Cable Services

The enormous technical opportunities provided by broadband will enable operators to increase not only the data transmission speed but also to increase to number of provided services. The first providers of broadband-based services will be cable TV operators. Besides cable TV programs, they will be able to provide Internet data transmission, and after December 31, 2002 voice transmission as well. The big advantage of cable operators is that the cable network they create now goes into individual homes and they will be ready to start competing with BTC immediately after the monopoly expires.

2. Mobile Telephony Value-added Services

With 7 percent of the population using mobile phones, Bulgaria lags behind other Western European countries, where about 40 percent of the population uses mobile phones. Bulgaria therefore has an enormous development potential. The second GSM tender attracted the attention of 45 foreign companies and the granting of the license will spur the development of the mobile communications. The competition between the three mobile operators will not only increase quality of services and lower prices but will also stimulate the development and offering of a wider range of value-added services.

3. Internet-based Services

IP-based services like data and fax transmission, VoIP and IP-based video services including video-conferencing have an excellent development potential for Bulgaria.


B. COMPETITIVE ANALYSIS

The combination of good price, quality of service and aggressive promotion is vital to sales of value-added telecommunications services in Bulgaria. One proven marketing strategy is to operate through a Bulgarian subsidiary and employ local Bulgarian staff, which has knowledge and expertise on the market and has good business contacts.

Successful market entrants are those that can offer innovative products featuring high quality and reasonable pricing. New solutions in technologies and services which will help Bulgaria join the e-world, offer great potential.


1. Sales by Bulgarian Companies

The main companies on the Bulgarian telecommunications market are BTC, Mobikom (49% of which is owned by Cable & Wireless) and GOCIS (owned by BTC and Global One). They hold about 70% of the value-added telecommunications services market, given the fact that BTC, which is the main player on the market is a shareholder in all of them. The expected increase for 2001 is about 10% while in the next few years the increase may be lower, due to the fact that more companies will operate on the market and BTC will have increased competition both from the currently operating mobile operators including the second GSM, as well as from some of the cable TV operators which will get involved in telecommunications activity as well. BTC will have to substantially increase the variety of services it offers in order to keep the business community as a client, which currently contributes to 80% of its profit.

The expected privatization of BTC will bring additional foreign companies to the market and through increased investment, the company will be able to offer new services to the market and attract new customers for the value-added services. This will give BTC the opportunity to transform itself from a telecommunications operator to a services oriented company.

2. Sales by Third-Country Companies

MobilTel, Mobikom (49% owned by Cable & Wireless) and Global One are the foreign-owned companies that operate on the Bulgarian market.

Global One focuses on Internet services, data transmission services and pre-paid calling for calls with more than 100 countries. The company actively promotes its pre-paid Internet cards in competition with local Bulgarian companies. Global One also offers IP based fax services and after 2002 is ready to start offering VoIP.

Third-country companies hold about 21% of the market. In 2001 and especially in 2002 their market share will increase substantially due to the start of operation of the second GSM operator COSMO Bulgaria Mobile and after the liberalization of the telecommunication services market in the beginning of 2003.


3. Sales by U.S.-based Companies

At present the share of U.S. companies is about 9% of the market. Contribution to the increase will have Cable Bulgaria when in 2003 it starts providing value-added telecommunication services and services based on Internet Protocol.

Sector Communications has been on the Bulgarian market since 1994 and has invested approximately $5 million in telecommunications infrastructure in Sofia and Plovdiv (the two main cities), which amount also included the design and installation of 15 km of state-of-the-art fiber optics. Sector Communications provides value-added telecommunications services to some of the largest hotels in Sofia and Plovdiv and acts as a reseller of BTC services. It has announced plans to expand services in the fields of video-conferencing and video-conferencing job fairs in 2001.

Cable Bulgaria is another U.S. owned company that operates on the Bulgarian market, although it has not started offering value-added telecommunications services yet. Cable Bulgaria started operation in the beginning of 2000 by obtaining cable TV licenses and by purchasing three existing cable operators, Union TV, Globo TV and Varna cable. The goal of the company is to install fiber optic cable covering the whole country and provide cable TV services like video on demand, digital TV, interactive TV, along with Internet services and possibly provide voice telephony services after the monopoly of BTC expires at the end of 2002. The company plans to invest $40-50 million in upgrading the existing network and developing infrastructure. Cable Bulgaria shareholders are primarily American and Irish.

Nexcom has established its presence on the Bulgarian market in 1998 and so far has invested more than $1 million. The company intends to continue its development on the market and start offering a variety of value-added IP based services.

Picturetel provides video-conferencing services.

These companies have exploited niches in the permitted scope of services allowed under the present scope of the BTC monopoly. With the end of the monopoly, more U.S. companies can be expected to enter Bulgaria's market.


C. END USER ANALYSIS

Value-added telecommunications services based on VPN, WAP, ISDN, broadband and video-conferencing are of primary interest to companies, due to their higher price, while other value-added mobile telephone services and services based on IP technology are of interest to both private individuals and companies.

The end-users of value-added telecommunications services in Bulgaria can be divided into the following groups:

• the commercial sector
  
• the residential sector (private individuals)
  
• the public sector (government)
  

The commercial sector represents the biggest end-user group and accounts for 60% of the consumption and revenues from value-added telecommunications services. The second biggest group with 35% is the public sector, mainly represented by the government and the third group with only 5% is represented by the residential sector (private individuals).

As with most of the services sectors, spending on value-added services is tightly connected to the increase of GDP of Bulgaria, increase of companies' revenues and welfare of the population. With the increase of foreign investment in Bulgaria and further stabilization of the economy and financial sector, more and more of the end-users are expected to increase their use of mobile phones, Internet based services and value-added services in particular.

The factors that affect the end-users purchasing decision are availability of service, price and quality of the value-added service. As the Bulgarian market in general is very price sensitive, pricing of services should be an important part of a company's business strategy.

The long-awaited privatization of BTC and end of the monopoly of BTC on fixed-line telephony at the end of 2002 are expected to bring more companies on the telecommunications services market and increase competition both in terms of pricing, variety of new services and higher and better quality. Despite the fact that the quality of the services currently provided is at an excellent level, the fact that this is probably one of the most dynamic sectors maintaining high level of quality of services requires constant investment in technology, equipment and know-how.


D. MARKET ACCESS

1. Import Climate

There are no import licenses, investment restrictions or other barriers to U.S. companies providing value-added telecommunications services in Bulgaria. U.S. investors are protected by the U.S.-Bulgaria Bilateral Investment Treaty.

2. Regulatory Framework

Bulgarian telecommunications activities are regulated by the Council of Ministers, the Ministry of Transport and Communications (MTC) and the State Telecommunications Commission (STC). The STC was established in 1998 with the purpose of controlling and regulating the telecommunications market is the country and it reports to the Council of Ministers. The STC is also responsible for granting licenses to telecommunications operators, cable TV operators, radio and TV broadcasting operators. Consequently, providers of data services do not need licenses.

The Law on Telecommunications was passed by the Bulgarian Parliament on July 28, 2000. The law creates the legal framework for carrying out of telecommunications activities and services in Bulgaria and regulates activities of telecommunications operators. The aim of the law is to create ensure the satisfaction of the public demand for telecommunication services. The law provides conditions for liberalization of telecommunications activities and services, establishment of a free market and fair competition, and fair and non-discriminatory treatment of operators. Public telecommunications operators are obliged to provide customers, under conditions of equal treatment, with access to public telecommunications networks and with the opportunity to use telecommunications services under publicly announced conditions.

The telecommunications law is in accordance with the E.U. legislation and creates favorable ground for further development of the sector. The full text of the law is available at the web-site of the STC: http://www.stc.bg/.

Telecommunications services providers and operators, including cable TV operators but not ISPs -- must be licensed under the law by the State Telecommunications Commission (STC). However, there are no provisions in the Law requiring licenses for value-added service providers such as ISPs or which have specifications or service standards governing value-added services. Also no license is required to build, maintain or operate a private telecommunications network for a company's own use which has no access to the public telecommunications network.

Additional information on licensing of telecommunications service providers may be obtained from STC:

Mr. Ivan Taushanov
Chairman
State Telecommunications Commission
6, Gurko Street
1000 Sofia
Phone: 359-2-949-2335
Fax: 359-2-987-0695


3. Distribution/Business Practices

U.S. suppliers of value-added telecommunications services distribute directly to local service providers, who provide the services to their customers.

As cable TV operators and ISPs have built their own infrastructure, have an established customer base and have development potential, they may be considered good partners of US companies. After expiration of the monopoly of BTC at the end of 2002, some of these companies may be interested in expanding their operations and competing with the telecommunications carriers. As Bulgaria has a population of only 8 million, only telecommunication carriers which offer a variety of attractive value-added services have a chance to obtain a considerable market share and be profitable.

Business practices in Bulgaria do not differ significantly from those in the United States or the European Union. Unless a U.S. company chooses to open its own office in Bulgaria, it should consider appointing a local agent or distributor who is familiar with the marketing, distribution and business practices in Bulgaria, key decision makers and business customs. The local company should also be qualified to provide technical assistance and local servicing of the products. There are many well-established companies that can operate as service providers.

The distribution of value-added telecommunications services by service providers is straightforward. By becoming a subscriber of any of the telephone service providers, ISPs or cable TV operators, end-users have in practice access to the value-added services that the respective provider is offering. In some cases, as in distribution of pre-paid calling and Internet cards, operators work through distributors or resellers. In most cases the end-user personally must go to one of the trading offices of the telecommunications company and requests that the service be activated, which is rather inconvenient but with the spreading of e-business most of these operations are expected to be done on-line.


4. Financing

Bank financing in Bulgaria is still difficult and expensive, especially for small- and medium-size enterprises. Therefore U.S. providers of value-added telecommunications services in Bulgaria should obtain their own working capital and other financing necessary for investments in Bulgaria.

Similarly, customers for value-added service technology in Bulgaria -- BTC, the mobile services providers, cable operators, and ISPs -- can be expected to self-finance purchases of value-added services technology and infrastructure. Therefore, their purchasing power depends on the overall financial strength of the customer. Payment between telecommunications service providers and their foreign business partners and technology suppliers is usually done through bank transfers using letter of credit.

Bank transfer is also the most common payment method between Bulgarian companies. Typical payment terms in Bulgaria between companies are payment in full within 30 days of invoice for existing customers with good payment histories and prepayment for new or unknown customers.

As Bulgaria is mainly a cash oriented economy with electronic payments mainly through debit cards just starting, most of the payments between end-users and service providers are made in cash on a monthly basis or through the purchase of prepaid cards. However, cash payments are inconvenient, since customers must go to the offices or business centers of companies and wait in line and pay. As yet, only an insignificant percentage of the population has debit card.


5. Key Contacts

Government organizations

Ministry of Transport and Communications
Mr. Grozdan Karadjov
Secretary General
9, Vassil Levski Street
1000 Sofia
Phone: 359-2-949-2108
Fax: 359-2-949-0248
http://www.mtc.government.bg/bg/default.htm

State Telecommunications Commission
Mr. Ivan Taushanov
Chairman
6, Gurko Street
1000 Sofia
Phone: 359-2-949-2335
Fax: 359-2-987-0695
http://www.stc.bg/

U.S. Telecommunications Companies

Sector Communications
Mr. Kalcho Kalchev
Managing Director
4, Shesti Septemvri Street
1000 Sofia
Phone: 359-2-980-0802; 987-7122
Fax: 359-2-981-8165
E-mail: sectorbg@sectorcom.net
htpp://www.sectorcom.net

Nexcom Bulgaria
Mr. Atanas Sharkov
Manager
75, Krum Popov St.
1000 Sofia
Phone: 359-2-963-4302
Fax: 359-2-963-4211
E-mail: asharkov@nexcom.bg
htpp://www.nexcom.bg

Cable Bulgaria
Ms. Denka Ivanova
General Manager
19, Tzar Boris III, 4th floor
1612 Sofia
Phone: 359-2-954-9249
Fax: 359-2-954-9834
E-mail: divanova@cablebulgaria.com
htpp://www.cablebulgaria.com

Bulgarian and Third-country Companies

Bulgarian Telecommunications Company
Mr. Ivan Spassov
Executive Director
8, Totelben Blvd.
1606 Sofia
Phone: 359-2-9494-438
Fax: 359-2-954-9780
http://www.btc.bg/

Global One
Mr. Yani Yanev
Managing Director
Interpred-World Trade Center
36, Dragan Tsankov Blvd.
1040 Sofia
Phone: 359-2-971-2575
Fax: 359-2-971-2182
http://www.globalone-bg.com/


MobilTel
Mr. Vladimir Grashnov
Executive Director
8, Balsha Street
1408 Sofia
Phone: 359-2-985-1331
Fax: 359-2-500-032
http://www.mobiltel.bg/

Mobikom
Mr. John Munnery
General Manager
Mladost 1
1, Eruslim Street
Phone: 359-2-974-3719
Fax: 359-2-974-3699
http://www.mobikom.bg/

ISPs

BGNet Ltd.
Mr. Stefan Vassilevski
Manager
POB 112, Sofia 1113
Phone: 359-2-705-187, 731-120
Fax: 359-2-700-203
E-mail: info@bgnet.bg
htpp://www.bgnet.bg

BOL BG
Mr. Veni Markovski
President
31, Tsar Ivan Shishman St., 3 floor
1000 Sofia
Phone: 359-2-980-9666
Fax: 359-2-980-6431
E-mail: office@bol.bg
htpp://www.bol.bg

BiT Inc.
Ms. Anna Trandeva
CEO
NDK Admin. building, 10 floor
1463 Sofia
Phone: 359-2-954-9090
Fax: 359-2-954-9335
E-mail: info@bitex.com
htpp://www.bitex.com

Digital Systems Ltd.
4, Triaditsa St., 2 floor
Phone: 359-2-981-1301
Fax: 359-2-980-6889
E-mail: order@digsys.bg
htpp://www.digsys.bg

GOCIS Ltd.
Mr. Ivan Genov
General Manager
63, Shipchenski Prohod Blvd.
1574 Sofia
Phone: 359-2-971-3173
Fax: 359-2-738-214
E-mail: office@gocis.bg
htpp://www.gocis.bg

Inter- BG- Com Ltd.
Mr. Ivailo Kotlarov
Executive Director
45, Geo MIlev St.
1111 Sofia
Phone: 359-2-973-3110
Fax: 359-2-915-2270
E-mail: office@interbg.com
htpp://www.interbg.com

NET IS SAT Ltd.
Mr. Bozhidar Ignatov
Managing Director
18, Rozova Dolina St.
1421 Sofia
Phone: 359-2-963-3180
Fax: 359-2-962-5530
E-mail: contacts@netissat.bg
htpp://www.netissat.bg

Spectrum Net Ltd.
Mr. Teodor Zahov
President
1, Universiada Blvd.
1797 Sofia
Phone: 359-2-974-3238
Fax: 359-2-975-3026
E-mail: info@spnet.bg
htpp://www.spnet.bg

Orbitel Ltd.
Mr. Victor Francess
Executive Director
1, Macedonia Square, 18 floor
1040 Sofia
Phone: 359-2-980-9077
Fax: 359-2-980-4258
E-mail: sales@orbitel.bg
http://www.orbitel.bg/


Trade Associations

Bulgarian Association of Information Technology (BAIT)
Mr. Vassil Hristovich
Chairman
13, Shipka St., Entr. B, fl. 1
1504 Sofia
Phone: (359) (2) 946-1513
Fax: (359) (2) 438-694
E-mail: bait@nat.bg
http://www.bait.bg/about.htm

American Chamber of Commerce in Bulgaria
Information Technology Committee
Mr. Tom Higgins
Chairman
Bulgarian American Enterprise Fund
3, Shipka St.
1000 Sofia
Phone: (359) (2) 946-0119
Fax: (359) (2) 946-0118
E-mail: baef@aol.com
http://www.amcham.bg/

Internet Society
Mr. Veni Markovski
Chairman of the Board
31, Tsar Ivan Shishman St., 3rd Floor
1000 Sofia
Phone: 359-2-980-9666
Fax: 359-2-980-6431
E-mail: isoc@isoc.bg
http://www.isoc.bg/

Bulgarian Internet Association
Mr. Bojidar Sokolov
Chairman
4, Cherni Vrah Blvd.
Muzej i horata
1421 Sofia
E-mail: bia@web.bg

Trade Publications

Computerworld
IDG Bulgaria
Mr. Vladimir Vladkov
Chief Editor
1, Hristo Smirnenski Blvd., Block B
1421 Sofia
Phone: (359) (2) 963-0886, 963-0889
Fax: (359) (2) 963-2841
E-mail: idg@mbox.digsys.bg
http://www.idg.bg/public_html/bg/bulcw.htm

Computers (newspaper)
Ms. Natalia Veleva
Marketing
21, Shipchenski Prohod Blvd.
Entr. V, Floor 1, Apt. 31
Sofia 1113
Phone: (359) (2) 971-4791
Fax: (359) (2) 971-4794
E-mail: computer@sbline.net

Personal Computer World
PAM Publishing Company Ltd.
Ms. Natasha Marinova
Editor
19 Serdica Street
1202 Sofia
Phone: (359) (2) 835-877, 831-957
Fax: (359) (2) 835-152
E-mail: pcw@mbox.digsys.bg
http://www.pcw.bg/

PC WEEK Bulgaria
Saga Technology
Ms. Anna Bakalova
Executive Director
3, Vassil Levski Blvd.
1000 Sofia
Phone: (359) (2) 980-1446
Fax: (359) (2) 981-1924
E-mail: saga@sagabg.net
http://www.sagabg.net/

PC Magazine Bulgaria
Saga Technology
Ms. Anna Bakalova
Executive Director
3, Vassil Levski Blvd.
1000 Sofia
Phone: (359) (2) 980-1446
Fax: (359) (2) 981-1924
E-mail: saga@sagabg.net
http://www.sagabg.net/

ComputerNews, Internet
TopTeam Ltd.
Mr. Vasko Tomanov
Executive Director
4, Cherni Vrah Blvd.
Muzei Zemiata i horata
1421 Sofia
Phone: 359-2-656-764
Fax : 359-2-973-3848
E-mail: draga@web.bg
http://www.internet.web.bg/

Computer Magazine
New Technik Publishing Ltd.
Mr. George Balansky
Managing Director
11, Panayot Volov Street
Phone/Fax: (359) (2) 943-4128
E-mail: office@newtech.bg
http://www.newteck.bg/


7. Trade Promotion Opportunities

American Tech 2001
May 8-11, 2001
Kempinski Hotel Zografski
Organizer: Via Expo Ltd.
Ms. Maya Krasteva
Manager
Via Expo Ltd.
3, Chehov Square
4003 Plovdiv
Phone/Fax: (359) (32) 96-00-12
E-mail: via-expo@mbox.digsys.bg
http://www.viaexpo.com/

U.S. Sofia Catalog Promotion at American Tech 2001
May 8-11, 2001
Kempinski Hotel Zografski
Organizer: CS Sofia

E-Commerce Conference
October, 2001
Kempinski Hotel Zografski
Organizer: Via Expo Ltd.
Ms. Maya Krasteva
Manager
Via Expo Ltd.
3, Chehov Square
4003 Plovdiv
Phone/Fax: (359) (32) 96-00-12
E-mail: via-expo@mbox.digsys.bg
http://www.viaexpo.com/

BAIT EXPO 2000
November, 2001
Festivalna Hall, Sofia
Organizer: BAIT
Ms. Irina Radoeva
Executive Secretary
13, Shipka Street, Entr. B, floor 1
1000 Sofia
Phone: (359) (2) 946-1531, 946-1451
Fax: (359) (2) 43-86-94
E-mail: bait@spnet.net
http://www.bait.bg/about.htm


8. Regional Opportunities

CeBIT 2001
March 22-28, 2001
Hannover, Germany
Organizer: Deutsche Messe AG
http://www.cebit.de/

Demographics & Economic Situation

Source: Factbook.net

More reports from Factbook

Bulgaria
Market studies	Economic reports and analyses
Autoparts Market	Economic Trends & Outlook - 2001
Autoparts Market Summary 2001	Business Travel
Aviation Market	Internet Opportunities
Car Market - 2001	Contacts
Building Materials Market - 2001	Investment Climate - 2001
Cellphone Market	Leading Sectors- 2001
Computer Hardware Market -2001	Political Environment - 2001
E-Commerce -2001	Trade Financing - 2001
Franchising Market	Trade Regulations
Internet Market Access	Trade Statistics
Internet End User Market	FDI & Convergence Indicators - 2001
Internet Services Market
Internet Software Market
Software Market
Tourism Market -2001
Value Added Telecom Market -2001

Source: US Dept. of Commerce Jan 2001

Factbook.net