The Moldovan telecom market experienced years of growth, particularly in the fixed-line and mobile broadband sectors. In recent years, high unemployment rates and economic difficulties have led to constraints on consumer spend, which have severely impacted telecom revenue. This decline continued into the first half of 2019, with a fall in overall revenue of 5.4%. Although the penetration rate is well below the average for many European countries, there are many opportunities for further growth. The market is highly competitive, with 94 active ISPs, although Moldtelecom and Starnet have dominant positions. The number of cable broadband subscribers is increasing, though fibre is now by far the strongest sector. The mobile market has also grown rapidly, and the sector accounts for the majority of total telecoms revenue.
Despite recent progress, Moldova remains one of the poorest countries in Europe. With a moderate climate and good farmland, Moldova’s economy relies heavily on its agriculture sector. Moldova also depends on annual remittances of about $1.6 billion from the roughly one million Moldovans working in Europe, Russia, and other former Soviet Bloc countries. With few natural energy resources, Moldova imports almost all of its energy supplies from Russia and Ukraine. The government’s goal of EU integration has resulted in some market-oriented progress. Moldova experienced better than expected economic growth in 2014 due to increased agriculture production, to economic policies adopted by the Moldovan government since 2009, and to the receipt of EU trade preferences.
Moldova’s growth has also been hampered by endemic corruption, which limits business growth and deters foreign investment, and Russian restrictions on imports of Moldova’s agricultural products. Over the longer term, Moldova’s economy remains vulnerable to corruption, political uncertainty, weak administrative capacity, vested bureaucratic interests, energy import dependence, Russian political and economic pressure, heavy dependence on agricultural exports, and unresolved separatism in Moldova’s Transnistria region.