Infigate to follow through on plan

German telecom company Infigate plans to complete negotiations with a new investor by the first quarter of 2002 to finance the construction of its international fiber-optic data transmission network in Poland, a company official said last week.

Miklos Feher, Infigate's director of marketing and sales, said the company would likely complete talks with one of the four or five Polish and European firms it is holding negotiations with to finance the planting of 1,200 kilometers of fiber-optic cable in Poland. This also includes the construction of a Warsaw "telehouse" for the installation and storage of heavy-duty telecom equipment. He declined to name the companies Infigate is negotiating with.

The Polish network is part of Infigate's project to build two fiber-optic rings for international data transmission in Central Europe. Essen-based Infigate has been looking for a new investor to finance its Polish network ever since its strategic partner, Deutsche Bank (DB) Industrial Holdings, the private equity and venture capital arm of Deutsche Bank that owns 66% of Infigate, put Polish construction plans on hold when the global capital markets for telecom investments dipped.

Infigate's Polish office was informed not to proceed with design and construction plans about two months ago, according to Christoph Michalak, the company's country manager for Poland.

"The main investors from the German side are convinced that it's a huge expense," he said. DB Industrial Holdings also took into account the general situation on the Polish IT and telecom markets, with several failures of dotcom companies and some telecom firms teetering on the edge of bankruptcy, when it decided to stall the project, he said.

Michalak also said it would not be easy to find new funding for Infigate's network in Poland, especially since the Polish operation has been talking to "analysts or bankers with no experience in telecom projects (who) only see the risk revenue."

DB Industrial Holdings, which has invested about E100 million in the regional project, is no longer in the picture in Poland since the firm's parent company scaled back its investments in the telecom sector, Feher said.

But Olaf Castritius, a DB Industrial Holdings director, disagreed, saying that his company would likely decide next year whether to give the go-ahead to Infigate's construction in Poland.

"The construction in Poland has always been seen as a second step once the first step in the Czech Republic, Hungary and Austria was fully developed," he said, adding that his firm put the Polish part of the network on hold due to recent developments in the financial markets.

The past year has been a trying one for telecom companies and equipment manufacturers as many start-up firms have lost their funding in the wake of belt tightening in the global capital markets. Construction projects for communications networks that span several countries have created excess fiber-optic capacity, prompting a spending dry up.

Roseanne Gerin