PKP to hive off telecoms arm
By : Magdalena Wierzchowska
Plans are still on track for Polish State Railways (PKP) to create an independent telecommunications company by June as part of the railway's transformation into a holding of separate entities.
But critics are already warning that the slow pace of reform could scupper PKP's chances to succeed in the competitive telecoms market.
As part of the Transportation Ministry's plan to restructure the railway, PKP has proposed creating its own telecommunications arm, Telekomunikacja Kolejowa (TK), which would emerge from its present telecoms and IT department.
But according to Zygmunt Marek Misko, director of the telecoms and IT division of PKP, the process of creating TK should have been started much earlier. "Time is the most important aspect here," he said, adding that as the number of new telecoms companies grows, TK's potential market share will be smaller.
Still, most analysts agree that PKP has huge potential to expand in the telecoms market. It owns 5,000 kilometers of fiber optics and 26,000 kilometers of copper cables that reach all major cities in Poland. It also has the third-largest fiber-optic network in the country after Telekomunikacja Polska (TPSA) and Tel-Energo, which is partially owned by the Polish Power Grid (PSE). This year PKP is expecting to reap a profit of zl. 1.5 million-zl. 2 million ($365,000-$487,000) from its telecom operations.
After receiving approval from PKP's management board, TK is now in the hands of the railway's supervisory board, which is expected to rubber stamp the deal in mid-April. By the end of May, the Transportation Ministry is also expected to agree to it, Misko said. After this, TK should be open for business on July 1.
While most analysts agree that funding for the venture will remain tight, PKP signed a deal last November with NG Koleje Telekomunikacja (since renamed Energis Polska after its purchase by pan-European Energis Group), for $46.5 million. As part of the contract, PKP will lease four cables in its fiber optic network to Energis for 15 years, Misko said.
Henryk Klimkiewicz, president of TOR railway consultancy, predicted the move would be a groundbreaker for PKP, which may begin to lease more of its infrastructure to other companies. "It's a good deal," Klimkiewicz said. "It's an example for PKP as a whole."
PKP's telecommunications arm has so far focused on operating the railway's communication system, and last year 80-85% of its revenue was generated from services to PKP. TK will also focus on similar areas, but as an independent company it will charge PKP for its telecommunication services.
At the same time, TK will sell the remaining data-transmission capacity of its network to other telecom operators. The company plans to focus on business-to-business trade, mainly to other operators, as services to individuals involve more costly investments in infrastructure, company analysts said.
