PTK Centertel determined to go head-to-head with the big boys
Polska Telefonia Cyfrowa's (PTC) Era GSM and Polkomtel's Plus GSM are facing a strong challenge from PTK Centertel's Idea, mobile phone industry sources said. The battle began with Centertel's recent expansion of its geographic range and new pricing structure.
Centertel, which operates under the brand name Idea, has long had its hands tied by dependence on the analog cellular network NMT450i and, in certain parts of Poland, the digital network GSM/1800. Now the company has a national concession for the GSM/900 frequency and the situation has changed. "So far Centertel has been limited by its geographic reach (10%), but now we will see in what way our offer (to customers) will affect competitors," said Jacek Kalinowski, a spokesman for Centertel.
The firm has dramatically changed its marketing approach for Idea and hopes to overtake its younger but larger competitors' reach by the end of the year, said Kalinowski. "We want to break the duopoly of Era GSM and Plus GSM," he said. "We've changed our image, brand and services."
Idea Optima, the new marketing scheme for individual clients, gives Centertel customers the choice of six tariffs with varying blocks of "free" call time, Kalinowski said. Idea Optima 30, for instance, includes 30 free minutes for a net subscription of zl. 40.50. "There is a monthly fee and the best choice depends on how many minutes you call each month, " he added.
Idea now also has a special corporate offer called Meritum. The offer makes sense now that the company has extended its reach nationally, Kalinowski said. Following a worldwide trend in the industry, Centertel has also abandoned separate day and time calling prices. "Constant (flat) tariffs are normally used all over the world," Kalinowski said. "Otherwise customers feel confused and don't know how to compare competing offers. That's why the options we now offer are simple."
"Centertel has set its tariffs in a very clear way," said Piotr Wozniak, an analyst at CDM Pekao Securities. In addition, calls to non-Centertel phones such as Telekomunikacja Polska (TPSA) or Era GSM ones are the same as within the Idea network. Moreover, unused "free" units shift to the next month, Wozniak said.
Competitors' response
"In changing its offer, Centertel made a very good move," said Ryszard Woronowicz, media specialist with Polkomtel, which operates its network under the brand name Plus GSM. "However, they are more expensive than previously."
Centertel, however, said that its service had fundamentally changed from a local to a national one. "Yes, it's true that Idea is more expensive now, but the new price is for national reach," Centertel's Kalinowski said. "But we are still cheaper than our competitors by about 15-20%."
Kalinowski said he expected stronger competitive reactions from PTC and Polkomtel, and appeared disappointed. While PTC, the operator of the Era GSM network, made one small adjustment, Polkomtel hasn't changed anything yet, Kalinowski said. "We introduced only one new tariff - Halo 20, including 20 off-peak minutes free," said Bogdan Markiewicz, deputy spokesman for PTC. In addition, free minutes were added to each of PTC's five tariffs. "When you come to our retail outlets now, you can choose between the same tariffs as before, but with free time packages."
These moves came in response to the new competition. "This is the answer to Idea's offer," Markiewicz said. "We want our subscribers to pick tariffs that match their needs."
Adjustments to Polkomtel's offer are also now necessary, but nothing radical, Woronowicz said. "I think Plus and Era maintain a (price) balance." Polkomtel will introduce some changes, he said, but there is no rush because "Centertel has to catch up with us."
Playing catch up
And Centertel intends to catch up. Since the beginning of March, the Idea network has reached 50% of the country's area and about 80% of the population, Kalinowski said. The firm wants to extend its geographical reach to 70% and population reach to 90% by the end of the year. "By the end of this year both will be comparable to our competitors' reaches," he said. He added that the company is aiming at 90% geographic reach and 95% population reach by June 2001.
Centertel has 800,000 subscribers and the company wants to attract 1 million more by the end of this year, Kalinowski said. But that will not be easy. Era GSM has about 88% geographic reach and 96% population reach. The firm reported 2 million subscribers this month and hopes to reach 2.7 million by the end of this year, Markiewicz said. Plus GSM has 1.6 million subscribers and Polkomtel wants to raise that by a million within the year. Plus GSM covers 93% of Poland and its population reach matches arch rival Era GSM's 96%.
Despite the gap, Centertel seems resolved to go head-to-head with the big boys. In taking on the PTC-Polkomtel "coalition," Wozniak said, the company will have to fight using two weapons. "Centertel will use prices to fight Era GSM for individual clients," and "high-quality services to fight Polkomtel for business clients."
"Now, Idea can offer wider service with higher quality," he said. "Moreover, Era GSM and Polkomtel will have to be aware of a new competitor."
