Bell Atlantic turns back on GSM

This week Bell Atlantic International Inc., which had been planning to bid for a license to operate a Global Systems Mobile (GSM) system, told the Business Journal that it was closing up shop in Poland, with some industry analysts saying this is only a sign of things to come.
Licenses and investment in the network are likely to exceed the $2 billion mark, making the GSM the nation's largest telecom investment project to date.
"The core of the matter is that, after a review of projects, Bell Atlantic made a corporate decision to pull out of Poland," said Ewa Budzynska, director of Bell Atlantic's Warsaw office. "We had to scale back. It was a decision that we couldn't be in all the countries at the same time."
The decision coincided with the Communications Ministry's announcement that the tender for two GSM licenses would not be awarded until March 1996. Earlier the ministry said the winners would be chosen by the end of the year.
"My personal opinion is that if the whole bidding process had started when it was supposed to start, Bell Atlantic would still be a contender," Budzynska said. "It was timing."
But even those who are still planning to bid for the tender are beginning to get cold feet, worried that the on-going dispute between partners in Centertel, the operator of a first-generation analog cellular system, could lead to further delays.
Earlier in the month, officials from Ameritech International - one of the minority partners in Centertel - hinted of legal action if it is not granted a GSM license on conditions promised years ago by then Minister of Communications Jerzy Slezak (WBJ Oct. 13-19).
Centertel is a joint venture between Ameritech (24.5%), France Telecom (24.5%) and the state-owned Telekomunikacja Polska SA (51%). When the company was founded in 1991 to operate a first-generation Nordic Mobile Telecommunications 450 system, Slezak issued a letter of intent saying Centertel would be granted a GSM license once the 900 MHz frequency (then used by the military) became available.
Since that time both the government and law have changed, and when the frequency became available and Centertel applied this summer for the license, the ministry said the letter of intent was no longer valid and that if Centertel wanted to operate a GSM system, it would have to bid for it.
At that time American and French ambassadors sent letters to Communications Minister Andrzej Zielinski, urging him to honor promises made by his predecessor.
That's when tensions between the foreign and Polish partners began to intensify, with TPSA President Jacek Gadomski openly criticizing his partners in a Parliament hearing, followed by the suspension of Centertel's general director and, then, threats of legal action from Ameritech.
The conflict has created the impression that telecoms in Poland are still a very political affair and has raised questions about the reliability of the Polish government's word. Although an independent committee chaired by Marian Dabrowski has been chosen to evaluate bids, Communication Minister Zielinski will have the final say in who wins the licenses.
"Because of this mistreatment, interest is waning," said a source close to the bidding procedure who requested anonymity. "Consortia will spend around a million dollars preparing their bids. If you had a relatively good assumption that there could be one spoiler, you would be pessimistic."
Bell Atlantic may not be the only consortium to turn its back on the GSM. Other contenders are also rumored to be reconsidering the issue in light of the delays and potential troubles on the horizon. Southwestern Bell was unavailable for comment at press time. Piotr Czarnowski, press spokesman for AT&T Telfa, said he could not comment on the rumors, and pointed out that AT&T has never officially confirmed its interest in a bid for the GSM license.
Some foreign companies, however, seem committed to going after the license, despite the uncertainty created by the possibility of legal action by Ameritech. Among them are US West, AirTouch International, Deutsche Telekom, Tele Danmark and Mannesmann.
The tender officially opens on Nov. 3, just two days before the first round of the presidential elections. Bids will be filed by all contenders on January 3, barring any further delays, and the selection committee will have 45 days to analyze offers and come up with the winners.