Bulgaria’s transition from analogue to digital TV has hit a bump before even starting. A strategic investor interested in building the required infrastructure has been vetted by the Government and agreed to buy all the analogue broadcasting stations in Bulgaria.

But mere months later, when authorities had only to get the last formalities out of the way, the situation was turned on its head and the Government looks ready to fight to the end against its chosen investor.

Administrative obstacles have prompted Bulgarian Telecommunications Company (BTC) to delay the deal to sell its broadcasting subsidiary NURTS to Oesterreichische Rundfunksender (ORS) and withdrew on March 6 all the paperwork from the Communications Regulation Commission (CRC), where it was waiting regulatory approval.

BTC’s decision came after the Commission for the Protection of Competition (CPC) said that it would need at least four months to rule on the deal. "There are serious doubts that after the deal the new owner will charge higher prices for the service provided by NURTS. Given the real possibility that NURTS might not be regulated by CRC in the future, unless it is designated as an operator with a serious influence on the market, the Commission believes it has sufficient grounds to begin an in-depth investigation of the case," the watchdog said.

No time
In December 2008, BTC decided to sell NURTS to ORS, in a deal whose financial details were not disclosed, but which was estimated to be worth 80 million euro. ORS also said it would invest 100 million leva in upgrades.

Currently, only NURTS can broadcast analogue TV and radio nationwide, forcing media and telecoms to use its equipment where they do not have their own. That includes public television BNT, public radio BNR and private channels Nova Televiziya and TV2, among others. ORS is thus handed a market where it would have no competitor.

The company has 800 re-broadcast points throughout the country, including the experimental multiplex where multiple channels are compressed to fit in one broadcast frequence, and employs 500 people.

The deal is important for the transition to fully-digital TV, which must be completed by 2012. Despite its old infrastructure, NURTS is in the best position to switch to broadcasting a digital signal, especially compared to start-up companies, and have it reach the widest audience, telecom analysts have said. Whoever owns the company will have an advantage when it starts building multiplexes and delaying the deal is a threat to the entire process.

NURTS is required by law to re-broadcast the public TV and radio stations. CRC was expected to pass that requirement onto ORS together with the re-broadcast licence. By delaying the deal, BTC is preventing an institutional clash. "We are avoiding a situation in which CRC gives ORS the licence, only to have CPC block the deal. Then we’d have to stop broadcasting everything," the head of the regulation and competition department at BTC, Pavel Velchev, said.

ORS, a joint venture between Austria’s public television channel ORF and banking group Raiffeisen, will still set up a subsidiary – Bulgarian Broadcasting Services – and remains interested in the Bulgarian market. It is also building the digital TV infrastructure in Austria.

BTC’s decision came as no surprise to the regulators. One source told Kapital weekly that ORS was misled during negotiations. The source said clearly ORS was led to believe that the company could bid to re-broadcast digital TV, but the recently-amended Electronic Communications Act makes that impossible. The reason is that the law bans content providers, such as ORF that has 60 per cent in ORS, from offering re-broadcasting services.

Kapital weekly, issue 10