Elektrim unveils new package of services
Telecom and power group Elektrim announced last week the rollout of its fixed-line telephony, cable television and broadband internet-access package for Warsaw residents and businesses.
The firm said it would invest $100 million-$130 million over the next three years to upgrade its network for "El" the new name of Elektrim's group of integrated service, fixed-line telecom companies.
Elektrim plans to offer bundled services to 40,000-50,000 households by the end of 2000, and to 600,000 homes in 2003, said Jacek Glinka, the firm's director of fixed-line telephony. The bundled package combines the services of Elektrim's subsidiaries cable TV company Aster City Cable, fixed-line telecom El-Net and internet service provider Aster City Net.
Elektrim's broadband, or high-speed internet access service will be delivered first to Warsaw residents via Aster City's cable network. Of the current 270,000 Aster City subscribers, about 2,000 already receive internet access through their cable TV wires.
The company is seeking to corner 40-50% of the cable television market and 10% of the fixed-line telephony market within five years, Glinka said. The company also wants to grab a 40% slice of Warsaw's broadband internet services for residential clients, he said.
Elektrim is targeting both residential and corporate clients with its bundled services. Packaged service would be provided immediately wherever the network in Warsaw allowed, Glinka said. But he added that the complete modernization of Aster City's infrastructure would take three years. After the rollout in the capital, Elektrim will concentrate on offering its bundled services in other major hubs, including Krakow, Szczecin and Bydgoszcz, he said.
The three elements of the service package would be available to customers at a combined price that would be lower than the standard fees for basic telecom service, according to Elektrim. Clients can mix different services and pricing plans, Glinka said. However, he did not state the cost. Prices are expected to be released this week.
Despite the fanfare surrounding the event, analysts voiced cautious reactions to Elektrim's ambitious plans. With Telekomunikacja Polska's (TPSA) phone lines installed in most homes, the incumbent operator would maintain its fixed-line monopoly since customers would be reluctant to switch to El-Net's calling service as part of the bundled service package, said Flawiusz Pawluk, a telecom analyst at BGZ Brokerage House.
"It would be a tough decision (for customers) to give up TPSA phones and pay an extra fee (to a cable operator) for internet access," he said, adding that TPSA receives the lion's share of internet-access customers. He also said it would be difficult for El-Net to gain residential clients since it currently offers phone service only to a few hundred corporate clients in Warsaw office buildings. Furthermore, Pawluk said that it took El-Net more than a year after the company received its operating license to connect business subscribers in Warsaw, hinting that a rollout to residents might take just as long.
Bob Creamer, a telecom analyst at Raiffeisen Capital & Investment Polska, also called into question Elektrim's plans for expanding telephony service in Warsaw through El-Net, which so far has offered voice service only to business clients through a contract with telecom systems integrator Millennium Communications. El-Net may have some difficulty keeping its existing corporate clients, he said, since Elektrim's rival, Netia, signed an agreement in August to acquire Millennium. "Millennium was a provider of many customers of El-Net in Warsaw, and some will now go to Netia," Creamer said.
Mounting competition from broadband provider United Pan-Europe Communications (UPC), the parent company of the country's largest cable television operator Polska Telewizja Kablowa (PTK), also could throw Elektrim a curve, Pawluk said. UPC plans to invest $8 million-$10 million on upgrading its infrastructure to offer broadband internet service to subscribers of PTK's Wizja TV service. Modernization efforts have already started in Warsaw and Krakow.
In addition, Pawluk said that besides UPC, fixed-line operator Netia has a nationwide data transmission license. Pawluk said Elektrim's plan to get 40% of the broadband market in Warsaw was "incredible and impossible" in light of the growing competition coming in the next few years. "If (Elektrim) gets 20%, it would be good, but it probably won't get more than that," he said, adding that UPC would be more likely to succeed with broadband service due to its better management structure.
