Danes sign partnership deal with Szeptel
By : Roseanne Gerin
The Internet division of Danish telecoms giant Tele Danmark (http://www.teledanmark.com) signed an agreement with telecoms firm Szeptel (http://www.szeptel.pl/info/umowa_tdc.html) last Thursday for a future partnership in developing the Polish operator's nationwide fiber-optic network.
The contract envisages an eventual connection between Szeptel's nationwide backbone and Tele Danmark's pan-European network. The agreement, valid for two years, also gives Tele Danmark the option to buy a stake in Szeptel in the future.
"Tele Danmark is discussing the possibility to invest in Szeptel at some later stage, but there is no agreement at this point," said Ole Jakob Thorsen, the vice president of Tele Danmark Internet in Central Europe.
The announcement comes at a time when Szeptel is gearing up for a public offering of 5 million-10.5 million shares to provide capital to build its nationwide fiber-optic backbone for voice communication and data transmission services. The offering, which is being directed to European financial investors, will be completed in late April. Tele Danmark would not buy shares in the offering, Thorsen said.
Szeptel's network build out will cost about $250 million during the next five years, $70 million of which will be required during the next two to three years. The Szepietowo-based operator has almost 400 kilometers of its fiber-optic backbone constructed, including more than 20 kilometers inside Warsaw, Binkowski said. He added that Szeptel expects to have 2,500 of the total 5,000 kilometers constructed by 2002.
Bank Gospodarki Zywnosciowej (BGZ), which holds a 9.9% stake in Szeptel, expressed interest in purchasing additional shares, according to Piotr Kapla, a telecoms analyst at Centrum Operacji Kapitalowych Banku Handlowego (COK BH). Neither Szeptel nor BGZ would confirm that the bank was planning to buy more shares. BGZ is one of the new share issue's brokers.
Szeptel planned several share issues since last June, but postponed them due to lack of investor interest.
"It's a local company and a small company and investors are not interested," Kapla said. "This is the reason why Tele Danmark is staying on the edge, and they don't want to invest capital." Bank Handlowy owns a 6.37% stake of Szeptel, according to the Warsaw Business Journal's Book of Lists.
With Szeptel's difficulties in finding investors, Kapla said the company may have signed the agreement with Tele Danmark to present some "good news" to prospective investors for a successful share offering.
But Andrzej Binkowski, Szeptel's director of business development, said the company was not compelled by investors to sign such a deal and that Tele Danmark had approached the Polish operator first before the two companies began talks last December. He also said that Tele Danmark didn't invest capital in Szeptel due to the Danish company's poor financial performance last year and its forecast for another dismal year in 2001.
Tele Danmark, whose strategic partner is the U.S. telecom firm SBC Communications, has been present in the Polish telecoms sector since 1996 as a shareholder of Polkomtel (Plus GSM), the country's second largest mobile phone operator. The Danish firm's Internet division also owns 51% of Internet service provider Net2Net, which it purchased from Polish IT firm Softbank for E23 million in February
