Not worth it
We at the WBJ talk a lot about telephone monopolist Telekomunikacja Polska (TPSA). We talk, or rather complain, rant and rave about it so often in this space that we lose interest.
So we are not going to discuss TPSA, directly. We are going to talk about the Treasury Ministry's unrealistic views in terms of TPSA's upcoming privatization, its unreasonable price expectation and why all of that will result in this entire country continuing to receive telecom service on par with that of a third-world nation.
In this week's WBJ, we report that TPSA's privatization, which was originally scheduled to be completed this year, will likely not go through because the two bidders refuse to pay the 40%-plus per share premium government officials are asking. It seems that when the whole privatization started, government officials were told that TPSA was worth zl. 30 a share, and they refuse to budge on the issue even though bidders France Telecom and SBC Communications have said that the company's future profitability is clouded by unsolved regulatory issues such as interconnection fees. By demanding that price, the ministry is failing to acknowledge that the market is valuing TPSA at zl. 21 a share because investors are concerned about the company's future and its ability to compete once independent phone operators are unleashed.
TPSA is one of the last telephone companies in Central Europe to be privatized. Postponing that privatization so far has meant that TPSA has remained a bloated, inefficient, ineffective monopoly that continues to be an alarming drag on Poland's economy. Every report issued about this country, every market survey, every analysis cites the low quality of Poland's telecom infrastructure. But on a more personal note, for anybody who doesn't have to deal with TPSA on a daily basis, we will give you some examples of what everybody is talking about. For instance, once a quarter the entire telephone switch in the Mokotow district goes down, preventing one of Warsaw' most active gminas for business from communicating with, well, anyone without a mobile phone. When the line between Wroclaw and Warsaw was down a month ago, our reporter there called TPSA to find out when the problem was going to be fixed. The answer from the operator: "We don't know, we can't get a line to Warsaw." And finally, one editor has tried to get his home phone, which slowly went dead, fixed for three weeks. In his most recent contact with TPSA, a customer service representative said that the telephone company had tried to send a repairman to the flat but no one was home. The editor's significant other asked how they were supposed to know a repairman was on the way. The answer from customer service: "Well, we tried to call you."
Our words to the Treasury Ministry: Sell it. Stop chasing the money and let a strategic investor come in and begin to make this valuable service really work.
