Vodafone memo highlights FDI dilemma
The letter, besides specifically pointing out four areas of contention, concerns the draft telecoms law and generally highlights the dire position of the country's law making body - something that has received negative attention in both Warsaw and Brussels.
"As we all know, this is very important from the point of view of making long-term investment in the new technologies sector," says Elżbieta Sadowska, spokeswoman for Polkomtel, the operator of the Plus GSM brand. Vodafone owns a 19.6 percent stake in the firm and has expressed interest that, along with TeleDanmark (also an owner of 19.6 percent), it would like to gain majority control of the nation's number three operator.
The UK-based operator had this stake in mind when it sent the letter late last Wednesday, stating: "Vodafone would like to express its utmost concern regarding development in Poland concerning the regulation of the electronic communications sector."
The letter went on: "As investors, Vodafone would wish and expect to be able to rely on a regulatory environment that is harmonized across the EU, including new member countries such as Poland."
On four counts the company protests the draft law, which was being debated in the Sejm as the Business Journal went to press, saying it is not in line with EU regulations.
Thus was the letter sent to Gunter Verheugen, EU commissioner for enlarge-ment, Marek Belka, prime minister, and Krzysztof Opawski, infrastructure minister, among other senior figures.
The memo spotlights a major problem in Poland across all industries, according to Bob Creamer, analyst at CDM Pekao: "The telecom law is a mess." Vodafone, however, declined to comment further for this article.
Creamer, though, says that in the telecoms sector in particular, the lawmakers are too inexperienced to produce an adequate law, chalking up the law's inadequacy to incompetence rather than any political wranglings that often kneecap the legislative process. "The real issue is the people creating the law don't know anything about telecoms," he asserts.
Taking that into account, Vodafone's move does not come as a shock. "I am not at all surprised that they are [protesting], and going at it through the EU is one of the more praiseworthy ways of doing it," he says.
Vodafone's action should also concern some of Polkomtel's other state-owned share-holders, namely KGHM, PKN Orlen, PSE, TelBank and Tel-Energo, as sources close to the Polish shareholders expressed concern that Vodafone's dissatisfaction with the Polish legal process could make gaining a majority stake in the mobile operation a less attractive prospect. Thus, the price of the whole company could fall.
Creamer adds to the debate by saying the telecoms law itself could also put downward pressure on valuations of mobile phone companies because a new law could open up the doors to mobile virtual network operators (MVNO). Should the law be strict enough, MVNOs could steal some business from the country's existing three operators - something Vodafone would probably like to prevent.
"As we all know, this is very important from the point of view of making long-term investment in the new technologies sector," says Elżbieta Sadowska, spokeswoman for Polkomtel, the operator of the Plus GSM brand. Vodafone owns a 19.6 percent stake in the firm and has expressed interest that, along with TeleDanmark (also an owner of 19.6 percent), it would like to gain majority control of the nation's number three operator.
The UK-based operator had this stake in mind when it sent the letter late last Wednesday, stating: "Vodafone would like to express its utmost concern regarding development in Poland concerning the regulation of the electronic communications sector."
The letter went on: "As investors, Vodafone would wish and expect to be able to rely on a regulatory environment that is harmonized across the EU, including new member countries such as Poland."
On four counts the company protests the draft law, which was being debated in the Sejm as the Business Journal went to press, saying it is not in line with EU regulations.
Thus was the letter sent to Gunter Verheugen, EU commissioner for enlarge-ment, Marek Belka, prime minister, and Krzysztof Opawski, infrastructure minister, among other senior figures.
The memo spotlights a major problem in Poland across all industries, according to Bob Creamer, analyst at CDM Pekao: "The telecom law is a mess." Vodafone, however, declined to comment further for this article.
Creamer, though, says that in the telecoms sector in particular, the lawmakers are too inexperienced to produce an adequate law, chalking up the law's inadequacy to incompetence rather than any political wranglings that often kneecap the legislative process. "The real issue is the people creating the law don't know anything about telecoms," he asserts.
Taking that into account, Vodafone's move does not come as a shock. "I am not at all surprised that they are [protesting], and going at it through the EU is one of the more praiseworthy ways of doing it," he says.
Vodafone's action should also concern some of Polkomtel's other state-owned share-holders, namely KGHM, PKN Orlen, PSE, TelBank and Tel-Energo, as sources close to the Polish shareholders expressed concern that Vodafone's dissatisfaction with the Polish legal process could make gaining a majority stake in the mobile operation a less attractive prospect. Thus, the price of the whole company could fall.
Creamer adds to the debate by saying the telecoms law itself could also put downward pressure on valuations of mobile phone companies because a new law could open up the doors to mobile virtual network operators (MVNO). Should the law be strict enough, MVNOs could steal some business from the country's existing three operators - something Vodafone would probably like to prevent.
