Ministry extends UMTS document purchase
Communications Minister Tomasz Szyszko extended to Oct. 17 the purchase period for the tender documentation for Poland's third-generation mobile phone licenses, even though 18 consortia had already bought the papers.
The sale of 18 sets of documents surpassed the ministry's expectations, Szyszko said last Friday, adding that he would place an ad about the extension in Monday's issue of national newspaper Rzeczpospolita.
According to Marek Podhorecki, an independent corporate telecommunications consultant and former Communications Ministry employee, ministry sources said the following 18 firms had purchased the documents as of last Friday: the Polish mobile operators Polkomtel (Plus GSM), PTK Centertel and Polska Telefonia Cyfrowa (Era GSM); independent telecom firm Netia Holding; 3G; Spanish telecom operator Telefonica; Turkish phone companies Turkcell and Rumeli; Futura.com; HSBC Investment Services Polska on behalf of Hong Kong telecom Hutchinson Whampoa; American law firm Salans Hertzfeld & Heilbronn; the three Polish law firms Domanski, Zakrzewski, Palinka, Wardynski i Wspolnicy and Calus, Kratluk, Szmelter; 7bulls.com; Raiffeisen Bank Polska; Canadian mobile operator Telesystem International Wireless; and Italian mobile operator TU Mobile.
At E50,000 a piece, the sale of the documents has yielded the government E900,000. All prospective bidders are required to purchase the documents, which describe the tender's conditions and requirements before placing bids. Szyszko said some of the money would cover the preparations for the tender, but he did not say how the surplus would be spent.
The second extension of the purchase deadline was due to the ministry's realization that a small profit could be gained for the government, Podhorecki said. "This is E50,000 (for each set of tender documents), not some kind of lunch money for corporate executives," he said. "If you have firms interested in purchasing the tender documents, it would be foolish if the ministry said that the (purchase period) is closed because the deadline is up. All this money goes into the state budget account." He added that by next week, the number of purchasers could increase to 25.
The sale period for the documents was originally scheduled for Oct. 10 to Oct. 12, but was extended to Oct. 13 to allow time for more interested parties to place bids for the five universal mobile telecommunications system (UMTS) licenses. All prospective bidders are required to purchase the documents before placing a bid for a license. The Oct. 17 deadline pushes the cut-off date for placing bids to Nov. 17, since there must be a 30-day period for interested parties to place bids. The ministry expects six to eight consortia to bid.
The ministry's expectations are not unreasonable considering the high number of prospective parties that purchased the papers, as most buyers will look to other players to form possible bidding consortia, Podhorecki said. He pointed out that the four law firms were acting on behalf of international clients, including one that likely bought the documents for Norwegian telecom Telenor, to feel out the market for Polish partners. Foreign operators that operate telecom services in Poland are required by law to have a majority stake of their entity owned by a Polish company. Other major players would also seek out partners to share the expected high costs of implementing UMTS networks, he said.
"It's a good strategy for big hitters to adopt a wait-and-see attitude to seek out lasting Polish players," Podhorecki said. "They will sit on the bench and wait for Polish companies with true interest and financial clout to come out and look for partners. (Some) will first get a legal or financial adviser to do the legal footwork for them before they approach (others)."
Although they bought the documents last week, Poland's three incumbent mobile operators continue to be displeased with the number of licenses being sold, the E650 million price tag per license and the mandatory "internal roaming" clause that requires them to share their networks with newcomers that hold UMTS licenses. Szyszko said, however, that the ministry took their arguments into account, and as a result lowered the license price, extended the validity of the licenses from 15 to 20 years, lengthened the payment schedule and changed the taxes on the licenses.
But Podhorecki pointed out that the Polish mobile operators must get approval from their shareholders to place bids. "The key issue is whether shareholders will support it because there will be no profit (from UMTS) for several years," he said.
