Potential partners bowing out of nat'l telecom plan

Three alternative fixed-line telecoms that last week signed an agreement to join forces will not become part of the government-supported project to create a new national telecom group rivaling dominant operator Telekomunikacja Polska (TPSA). Independent operators Elektrim Telekomunikacja (ET), Netia and Telefonia Dialog formed a partnership to share their infrastructures, jointly develop telecom services and improve telecom market regulations by acting as a lobbying group. The companies' networks collectively cover one-half of Poland. The operators are set to enter more detailed sub-agreements with each other. The agreement is open to other independent operators as well. The pact will enable the firms to act as a counter-force to TPSA, while not requiring them to merge their struggling business operations, as would the government's plan to create the new national telecom company known as Krajowa Grupa Telekomunikacyjna (KGT). KGT seeks to combine both state-controlled telecom holdings and some independent operators to give the companies a chance to survive on Poland's telecom market where TPSA still controls a near monopoly in fixed-line services. Of the three companies that signed the agreement, only Telefonia Dialog is controlled by the state through its owner KGHM Polska Miedź, a silver and copper producer.

"We can't create any telecom group on the national stage," said Jolanta Ciesielska, Netia's spokeswoman. "It is impossible at this stage because all three operators have (their) own financial problems." Tel-Energo, a state-controlled telecom that is in the process of merging with the government-owned long-distance operator Niezależny Operator Międzystrefowy (NOM), is leading the efforts to create KGT. The firm anticipated that some independent operators, including Netia and ET, would join the new group. Andrzej Arendarski, the president of Tel-Energo and NOM, told the WBJ in early May that Tel-Energo had "provisional contacts" with Netia, ET's El-Net and other small independent operators, and that it would be logical for them to merge into one entity and join the group. But Marcin Gruszka, Tel-Energo and NOM's spokesman, said that Tel-Energo was no longer considering joining forces with the companies, although there were still some talks about the firms working together. "Their financial situation is not interesting for us," he said. "We don't want such huge debt."

'Consolidation is inevitable' Analysts have been critical of the KGT project since the prospective participants' high debt levels would continue to drain the new company. But both analysts and market players contend that consolidation is the only way for independent operators to survive on the market. "I am certain that consolidation is inevitable if the independent operators are to balance the dominant position of TPSA," said Katarzyna Muszkat, the president of Telefonia Dialog. "KGT is one of the options but then in the end it may not prove to be the optimal one." "Who knows? In the future maybe it could be vice versa and Tel-Energo will join us," said Marian Dąbrowski, ET's vice president, who called the three operators' agreement "an act of consolidation." Tel-Energo submitted a proposal for creating KGT to the Treasury Ministry in mid-April. The ministry is still mulling the matter, although Tel-Energo said it is prepared to submit a more detailed financial analysis after it receives initial feedback from the government. "It's a very serious project that should be analyzed in every detail, and that's why it's taking so much time," Gruszka said, adding that the KGT would probably be created in 2003.