Szeptel and Telbank discussing merger

Szeptel does not plan to merge with data transmission firm Telbank or join the new national telecom group this year, although the local telecom's shareholders have not yet made any firm decisions on the matters, Cezary Przybysławski, Szeptel's general manager, told the WBJ last week. Szeptel will focus on providing calling service to its clients in northeastern Poland and continuing the development of its data transmission services this year, while trying to recover financially, Przybysławski said. But he added that Szeptel and Telbank were discussing the possibility of a merger. "Now we will concentrate on our areas," he said. "This is all we can do this year." Szeptel, a Szepietowo-based voice operator, and Telbank, a specialized data transmission provider for Polish banks, have been the subjects of possible merger talks since last year.

Instant access A merger with Telbank would give Szeptel instant access to its nationwide 2,500-kilometer data transmission network, a loop that Szeptel aspired to build but had to abandon last year due to lack of funds. The companies have some common shareholders, including BRE Bank, which owns 22% of Szeptel and 11% of Telbank, and Bank Gospodarki Żywnościowej (BGŻ), which holds about 15% of Szeptel and 13% of Telbank. Szeptel's other shareholders include additional Polish banks and private individuals. Further speculation about a possible merger was fueled in March when a Polish newspaper reported that Szeptel's vice president, Andrzej Wyszyński, said the consolidation with Telbank was inevitable. Paweł Byra, the office director for Telbank's board, said Szeptel made the speculative comments to increase its share price since his firm is a profitable company, unlike Szeptel, which racked up a zł. 17 million ($4.25 million) loss in 2001. Speculation about a possible merger is still increasing since the National Bank of Poland (NBP), Telbank's majority owner, must sell its 74% stake by the end of this year. Polish law prohibits public banks from owning stakes in companies operating on a commercial basis. According to the NBP, the investment bank CA IB is now seeking an investor to buy the NBP's shares of Telbank as well as the other shareholders' stakes. But Szeptel cannot afford to purchase Telbank, Przybysławski said, due to its own high debt level and cash needs to finance a new data transmission line along Poland's eastern border.

No to KGT Similarly, this year Szeptel will not join the National Telecommunications Group (KGT), a collection of government-controlled telecom companies that may include small private operators. KGT, which is in the process of being created, will serve as a rival to dominant operator Telekomunikacja Polska (TPSA). Przybysławski said that when Szeptel presents its new strategy for 2003 in the early fall, the firm should have a better idea of whether shareholders intend to include it in KGT.