Elektrim unveils plan to acquire 5 local tech cos.
Telecom, energy and cable concern Elektrim announced at a press conference last Friday that its unified internet strategy will incorporate the services of five homegrown internet-related and information technology (IT) companies, all of which were acquired in the last two weeks.
Elektrim said it signed a letter of intent with the Dutch firm Eastbridge to purchase 50% stakes in Polish companies AGS New Media and Easy Net for a total estimated value of $52.5 million. AGS New Media is a software provider of internet solutions, including e-commerce, electronic publishing and intranet services, while Easy Net is a business-to-consumer e-commerce retailer which operates the Empik (www.empik.com) web site. The company's site sells books, compact discs, multimedia, photography, perfumes, apparel and toys.
Elektrim officials were vague about the development of the firm's internet plans, but said the company would start a portal a web site that enables users to access the internet with Polish-language content and e-commerce services for its corporate, residential and mobile phone customers and would likely establish an internet access service. The company said it plans to offer its individual customers a range of internet-related services, including news, mail, shopping and chat rooms. The company also said it will offer travel, computer hardware and software, books, music and financial products and service via e-commerce.
Elektrim will spend a total of $100 million-$200 million on the "service part of the (internet) business," said Barbara Lundberg, Elektrim's president and CEO, at last Friday's news conference.
"We're betting what's unique for us is that Polish content has enormous value," Lundberg said at the conference.
Two weeks ago, Elektrim purchased stakes of 85% in each of two Polish internet-related companies, Internet Polska and NASK Service, and a 60% stake in IT company CT Creative Team.
From these five deals, Elektrim will glean about 150 internet and IT analysts, programmers and software and web designers who will provide expertise and technological know-how for the company's internet project, the precise details of which were not discussed at the news conference.
Analysts indicated prior to the conference that Elektrim's recent acquisitions would help pave the way for its internet project by supplying local labor.
"They're not world players on the internet market, but they should provide Elektrim with local expertise," said Andrzej Kasperek, an equity analyst at Erste Securities Polska.
"If Elektrim wants to become the country's leading provider (of internet services) then it should focus on local content created by local companies," he said. "It's likely at this moment that Elektrim will build its (internet) group with small local companies and spend less money than newspaper rumors (had stated)."
Some telecom analysts had speculated prior to the news conference last Friday whether Vivendi the French telecom, media and environmental services giant that is a joint partner with Elektrim in the Polish firm's telecom subsidiary, Elektrim-Telekomunikacja would be named as a strategic partner in Elektrim's internet plans. Elektrim owns 51% of Elektrim-Telekomunikacja, while Vivendi holds a 49% stake.
Given Elektrim's ties to Vivendi, local analysts did not dismiss a potential move by the French firm to inject Elektrim with either capital or expertise for its internet project.
But Bob Creamer, a telecom analyst at Raiffeisen Capital & Investment Polska, pointed out that Vivendi's close relationship with British mobile operator Vodafone AirTouch might preclude a deal with Elektrim since Vodafone has a stake in the Polish mobile operator Polkomtel (Plus GSM). Elektrim owns about 50% of rival operator Polska Telefonia Cyfrowa (Era GSM) along with Deutsche Telekom, which holds a 45% stake.
In January, Vivendi and Vodafone AirTouch agreed to establish an internet company to develop and operate a European multi-access portal in its quest to become "the world's leading mobile multimedia operator," according to a prepared statement issued by Vivendi in January.
To avoid a further conflict of interest with Deutsche Telekom, Vivendi would have to replace Elektrim with another partner, Creamer said. This month the German operator lost its third case against Elektrim in Polish courts. Deutsche Telekom argued that Elektrim improperly ignored the German operator's first-refusal rights in accumulating a 51% stake in Era and seeking to transfer its majority stake to Elektrim-Telekomunikacja, its joint venture with Vivendi.
Prior to the press conference, Antoine Lefort, Vivendi's spokesman, declined comment on the possibility of the French firm's involvement in Elektrim's internet plans, but added that Vivendi was "looking for every opportunity in Europe" to expand its internet business. "We are happy with our 49% in Elektrim-Telekomunikacja and that's all, folks," he said.
Elektrim's internet campaign comes at a time when other major Polish telecom firms are gearing up for internet projects as well. TP Internet, the internet subsidiary of national telecom monopolist Telekomunikacja Polska (TPSA), announced plans to start its own internet portal in May. Netia, the largest private fixed-line operator in Poland and TPSA's main rival, also announced last week that it would launch an internet portal with media holding group EuroZet.
