New Netia president spells out strategy to combat competition

"In the early phase of development, the No. 1 priority is to organize (ourselves) in the market in such a way that (we) have the main growth engine."

   Netia, Poland’s second-largest fixed-line telecom operator, must focus on financial and operational issues to prepare it for future competition, the company’s new president said last Friday.

   Netia had to come up with “a commercial proposition to other sectors in the market … that would be attractive to investors,” said Mattias Gadd, who became Netia’s new president and chief executive officer (CEO) on Jan. 1. He replaced former president and CEO Meir Srebernik, who had spent seven years with the company.

   Gadd also said Netia was well established in the global financial markets and that the firm had secured financing until mid-2002. Netia is listed on the U.S. Nasdaq and the Warsaw Stock Exchange (WSE).

   The new Netia boss said he spent five weeks reviewing the company’s operations and would submit his recommendations to the firm’s supervisory board during the first quarter of the year. He added that it would be premature to give details about Netia’s business plans before he completed his review.

   Gadd said he was not concerned about competition because true competitors would not enter Poland’s fixed-line market until it was fully liberalized. The country has been slowly opening its telecom market to other operators for local calling services after decades of domination by state monopolist Telekomunikacja Polska (TPSA). The markets for domestic long-distance and international long-distance service will be fully liberalized in 2002 and 2003, respectively.

    When asked if Netia’s strategy would include acquiring other local operators to expand its fixed-line base in the country, Gadd said the company had not identified any takeover targets. “In the early phase of development, the No. 1 priority is to organize (ourselves) in the market in such a way that (we) have the main growth engine,” he said.

   Andrzej Kasperek, a telecoms analyst at Bank Handlowy, said Netia’s strategy must include a mobile phone business for the company to be key a player on the local telecoms market. “Fixed-line telephony hasn’t got as good prospects as mobile,” he said.

   Furthermore, Kasperek said the company’s huge debt would prevent it from expanding its services or from buying a fourth third-generation mobile phone license in Poland. “With huge debt, Netia can’t think about expansion or entering new markets, especially mobile telephony.” He added that he could not provide an assessment of Netia’s current financial status since the company has not yet released its preliminary financial results for 2000.

   Netia has 300,000 subscribers for its fixed-line telephone service. The company also has 24,000 subscribers for its Internetia Internet service.