YOU ARE AT:Archived ArticlesCZECH REPUBLIC TO ISSUE TENDER FOR SECOND GSM CELLULAR SYSTEM

CZECH REPUBLIC TO ISSUE TENDER FOR SECOND GSM CELLULAR SYSTEM

The Czech Economics Ministry is firming its plans to issue a tender for companies interested in becoming partners in one of two groups that will hold licenses to operate Global System for Mobile communications cellular networks in the Czech Republic.

The U.S. Embassy in Prague reported the tender will be called this month and completed in February or March.

Current analog operator Eurotel S.R.O.-owned 51 percent by Czech telephone monopoly SPT Telecom and 24.5 percent each by U S West Inc. and Bell Atlantic Corp.-will own one GSM license. The second GSM operator will be a partnership between Czech radio transmission company Ceske Radiokomunikace and the consortium winner of the upcoming tender.

Ceske is owned 69.4 percent by the country’s National Property Fund and the remaining portion by individual shareholders, privatization funds and restitution and foundation funds of employees, the U.S. Embassy said.

The ownership structure of the new GSM partnership has not been determined but Vladimir Sedlacek, head of the telecommunications section of the ministry, said Ceske will own a minimum of 35 percent. Ceske has requested a 50 percent stake, the U.S. Embassy reported.

Luca Tassan of Economic and Management Consultants International Inc. in the United Kingdom said both Ceska and the Czech government favor selecting a foreign partner with telecommunications experience. The U.S. Embassy noted the ministry will weigh heavily applicants’ technical skill and management experience.

Among parties expected to wager the tender are Danish telephone operator TeleDanmark, Norwegian phone company Telenor, Stet International of Italy, the U.K.’s Cable & Wireless plc and CEKOM, a consortium of Czech utilities companies.

“The licenses will stipulate a three-month preparation period before the companies would start offering services,” added the U.S. Embassy, which “would give Ceske Radiokomunikace and its partner a chance to prepare to compete with Eurotel.” It is expected system implementation for a GSM network will reach about $200 million.

Earlier this year, officials said the two GSM licenses would be awarded following the ministry’s endeavor to sell a 27 percent stake in SPT to a foreign partner. In June, the Netherlands and Swiss Post, Telegraph and Telephone entities together paid nearly $1.5 billion for a combined new share in SPT.

Eurotel operates the country’s analog cellular network, based on the Nordic Mobile Phone-450 standard. Service began in Czechoslovakia in late 1991, said Tassan. When the nation split two years ago, forming the Czech Republic and Slovakia, Eurotel divided its operations into Eurotel Prague and Eurotel Bratislava.

The network covers 95 percent of the combined territories, but is limited by high equipment and service costs. However, “it is expected that, with competition, up to 15 percent of the Czech population would use the mobile system by 2005,” noted the U.S. Embassy. Collectively, Eurotel claims about 37,000 users, U S West said. Nokia Corp. has been the chief infrastructure supplier for Eurotel’s network.

Cellular penetration in the Czech Republic currently is only .3 percent, according to Tassan, which for a population of about 10.4 million, is reaching only about 1 in 330 people. The country last year reported one landline telephone per 3.2 people.

Neighboring Slovakia plans to issue a second GSM license in the next two to three years, Tassan noted.

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