GSM licensees prepare for spending bonanza
Equipment suppliers and advertising agencies will be the main beneficiaries of this largesse and are preparing to vie for contracts the consortia will award through tenders beginning at the end of this month.
The consortia, Polska Telefonia Cyfrowa SA (PTC) and Polkomtel SA, each plan to spend about $1 billion on equipment to make their systems operational. The companies could also spend up to $3 million each for advertising as they battle in what is expected to be a competitive market.
The Communications Ministry awarded the Global Systems Mobile (GSM) digital telephone licenses to the two consortia on Feb. 1.
But private businesses will not reap the only rewards from the GSM licensees. Together, they will pay $676 million to the government by the end of the year 2000 as part of their five-year business plans. Included in this amount is the $130 million each paid for a 15-year license.
The bulk of the private spending will go toward creating the infrastructure to enable the consortia to hook up a potential 1.3 million customers by the year 2000.
Two weeks ago, both consortia sent invitations to leading telecommunications producers to participate in equipment tenders. The list of potential suppliers includes Alcatel, AT&T, Ericsson, Motorola, Nokia and Siemens. Each consortium could choose one or more suppliers.
Tadeusz Kubiak, director general of PTC, said his consortium will select an equipment supplier in March. DeTeMobil, which has a 23% stake in the group, had predicted that PTC's network would open in autumn and have more than 500,000 subscribers by the year 2000.
PTC's other major partners are Elektrim, with a 33% stake, and US West with a 23% holding.
Polkomtel expects to choose a supplier by the end of May. The group plans to start its network by the end of the year. It expects to cover 10 major cities and the roads between them within a couple of years, said Hans Wurtzen, managing director and chief executive officer at TeleDanmark.
Polkomtel's major partners are Petrochemia Plocka, Polska Miedz, TeleDanmark and Air Touch, each with a 19% share, and Polish Power Grid Co.
with 12%.
While the advertising and marketing side of the GSM networks will be worth far less than equipment and infrastructure, agencies are salivating over the prospects of up to $3 million in spending per licensee.
There is a "massive opportunity" for the ad agency that successfully pitches itself to one the of GSM consortia, said David Williams, managing director of Bates, Saatchi & Saatchi in Warsaw.
The opportunity here differs from that in Western European countries because Poland's telecommunication market isn't as saturated or developed as others, he added.
For example, there are 15 telephones for every 100 Poles, one-fifth the amount found in France or Germany. In rural areas, that number drops to 5.5 per 100. And cellular use here outpaces Western Europe.
Williams said the average major consumer brand spends about $3 million in advertising to launch a product in a competitive market. The GSM systems are likely to be the same, although they could grow even further once the networks are fully developed.
He predicts the consortia will be among the top spenders in advertising in Poland.
If Hungary's experience is any indication, Williams might be on target. The two GSM license holders in Hungary spent a total of $7.5 million on advertising in 1994, their first full year of operation.
However, Marek Janicki, managing director of McCann-Erickson, said he expects a smaller outlay in Poland because it will take more than a year for the GSM networks to cover the country. Advertising will be concentrated where the service is available, he said, and expand as service expands.
At the same time, the whole main-line telephone network is improving, Janicki said, and the average Pole who has gone this long without a telephone will probably wait for the cheaper main-line telephone service.
Therefore, GSM license holders will probably target "those who can afford it," he said.
McCann-Erickson, which also handles the advertising for GSM licensee Pannon in Hungary, received an invitation to tender from PTC, Janicki said.
Neither PTC nor Polkomtel would comment on their marketing plans.
The consortia, Polska Telefonia Cyfrowa SA (PTC) and Polkomtel SA, each plan to spend about $1 billion on equipment to make their systems operational. The companies could also spend up to $3 million each for advertising as they battle in what is expected to be a competitive market.
The Communications Ministry awarded the Global Systems Mobile (GSM) digital telephone licenses to the two consortia on Feb. 1.
But private businesses will not reap the only rewards from the GSM licensees. Together, they will pay $676 million to the government by the end of the year 2000 as part of their five-year business plans. Included in this amount is the $130 million each paid for a 15-year license.
The bulk of the private spending will go toward creating the infrastructure to enable the consortia to hook up a potential 1.3 million customers by the year 2000.
Two weeks ago, both consortia sent invitations to leading telecommunications producers to participate in equipment tenders. The list of potential suppliers includes Alcatel, AT&T, Ericsson, Motorola, Nokia and Siemens. Each consortium could choose one or more suppliers.
Tadeusz Kubiak, director general of PTC, said his consortium will select an equipment supplier in March. DeTeMobil, which has a 23% stake in the group, had predicted that PTC's network would open in autumn and have more than 500,000 subscribers by the year 2000.
PTC's other major partners are Elektrim, with a 33% stake, and US West with a 23% holding.
Polkomtel expects to choose a supplier by the end of May. The group plans to start its network by the end of the year. It expects to cover 10 major cities and the roads between them within a couple of years, said Hans Wurtzen, managing director and chief executive officer at TeleDanmark.
Polkomtel's major partners are Petrochemia Plocka, Polska Miedz, TeleDanmark and Air Touch, each with a 19% share, and Polish Power Grid Co.
with 12%.
While the advertising and marketing side of the GSM networks will be worth far less than equipment and infrastructure, agencies are salivating over the prospects of up to $3 million in spending per licensee.
There is a "massive opportunity" for the ad agency that successfully pitches itself to one the of GSM consortia, said David Williams, managing director of Bates, Saatchi & Saatchi in Warsaw.
The opportunity here differs from that in Western European countries because Poland's telecommunication market isn't as saturated or developed as others, he added.
For example, there are 15 telephones for every 100 Poles, one-fifth the amount found in France or Germany. In rural areas, that number drops to 5.5 per 100. And cellular use here outpaces Western Europe.
Williams said the average major consumer brand spends about $3 million in advertising to launch a product in a competitive market. The GSM systems are likely to be the same, although they could grow even further once the networks are fully developed.
He predicts the consortia will be among the top spenders in advertising in Poland.
If Hungary's experience is any indication, Williams might be on target. The two GSM license holders in Hungary spent a total of $7.5 million on advertising in 1994, their first full year of operation.
However, Marek Janicki, managing director of McCann-Erickson, said he expects a smaller outlay in Poland because it will take more than a year for the GSM networks to cover the country. Advertising will be concentrated where the service is available, he said, and expand as service expands.
At the same time, the whole main-line telephone network is improving, Janicki said, and the average Pole who has gone this long without a telephone will probably wait for the cheaper main-line telephone service.
Therefore, GSM license holders will probably target "those who can afford it," he said.
McCann-Erickson, which also handles the advertising for GSM licensee Pannon in Hungary, received an invitation to tender from PTC, Janicki said.
Neither PTC nor Polkomtel would comment on their marketing plans.
