Winners picked for long distance
The three consortia awarded licenses for long-distance telephone licenses last week crossed the first hurdle to become competitors to Telekomunikacja Polska (TPSA). The second obstacle, analysts said, will be to build viable telecom enterprises.
"It is one thing if they got a license. it's another thing to build a sustainable business," said Sean Murphy, senior analyst on technology and engineering at the Nomura Research Institute.
While laying the infrastructure for telephone services is timely and costly, it is not necessarily difficult, Murphy said. What may be harder is for the winners Netia-1, Independent Interzonal Operators and NG Rail Telecommunications to put together attractive business plans that will lure investment capital.
Last week, the Communications Ministry informed the three groups that they would receive licenses and be able to begin providing service in mid-summer. The three groups were the only bidders for three long-distance licenses offered in late 1999.
"The monopoly for long-distance was broken," said Jolanta Ciesielska, a spokeswoman for Netia, which heads up the Netia-1 group. Netia, two Polish banks as well as power company Stoen and Swedish telecom Telia constitute the Netia-1 group.
The Netia-1 consortium also bid the highest amount about o23 million for its license. That top position which is about o5 million higher than the other two bidders won the group the privilege of choosing its own dialing code.
Netia's service is due to begin around July 1 and initially will serve only three cities: Poznan, Warsaw and Katowice, Ciesielska said. The company also plans to expand its services within the year to an additional seven cities, including Lodz, Szczecin, Gdansk, Krakow, Lublin, Wroclaw and Bydgoszcz. Netia will be able to do that through a nationwide data transmission license it won in April 1999. The company will use that license to offer its long-distance voice service in other cities, Ciesielska said.
But Murphy expressed some concern about this plan, saying that the Polish government may try to block companies from using data licenses for voice. That issue has become a major point of contention between Polska Telefonia Cyfrowa (Era GSM) and the Communications Ministry. Era wants to use a data license to provide international telephone service over the internet, but the ministry said that violates TPSA's monopoly on the service.
"Those limitations are likely to be used to defend existing carriers," Murphy said.
Independent Interzonal Operators, which consists of the Polish Power Grid (PSE), Telenergo and Polski Koncern Naftowy (PKN), refused to comment last week on its plans. The third consortium winner, NG Rail Telecommunications, is made up of Polish State Railways (PKP), Polish Telecom Operators (PTO), and British companies National Grid Group and Energis, the latter two of which each have a 23.75% share in the consortium.
According to a spokesman for PSE and Energis, who asked not to be identified, each entity is expected to invest some ?100 million over the next three years on building out the group's network. The spokesman also said the companies are planning to purchase about 5,000 kilometers of fiber-optic lines from PKP. Initially, NG's service will link about 12 cities.
