Mobistar, a partnership of Belgian telecommunications manufacturer Telinfo and France Telecom Mobile International, won the second license to operate a Global System for Mobile communications network in Belgium. Mobistar will pay $296 million for the license.
Mobistar will compete against current cellular operator Belgacom Mobile, a partnership of government-owned Belgian telephone operator Belgacom, with 75 percent ownership, and AirTouch Communications Inc., which holds a 25 percent stake.
France Telecom Mobile International, a subsidiary of France Telecom Group, will provide 40 percent to 50 percent of Mobistar’s capital. Telinfo has the option to claim up to 10 percent in Mobistar, 25 percent of the capital will be offered to a few of Belgium’s regional public investment companies and the remaining 15 percent to 25 percent will be available for additional Belgian partners, reported the U.S. Embassy in Brussels.
The Belgian Institute for Post and Telecommunication evaluated the vying consortia based on three chief criteria, including license fees, valued at 49 percent in relative importance; tariffs, valued at 31 percent; and quality of service, rated 20 percent, the embassy said. The license fee was set at a minimum of $115 million.
Mobistar actually ranked second highest in its license fee offering, but won out with an evaluation totaling nearly 96 percent, cited by the BIPT for its proposed tariff structure and promise for local employment.
Mobistar plans to target a broad consumer market. The new operator said its calling plans will reflect higher subscription fees and lower peak-hour airtime costs for business users, with just the opposite for residential users. Overall, Mobistar expects its rates will undercut Belgacom Mobile’s current rates by 35 percent to 38 percent, according to the embassy.
Mobistar pledged to hire 300 people in the short term and eventually create 900 jobs directly linked to the GSM business and 3,600 indirectly related jobs.
In June, Mobistar indicated that if licensed, it would begin service in 1996, cover 97 percent of the population in nine months and reach a penetration rate of 25 percent of the population by 2005. Coverage will extend to the inside of buildings in major Belgian cities, added Mobistar. Currently, about 1.4 percent of Belgium’s 10.1 million people have a mobile phone.
At issue with incumbent cellular provider Belgacom Mobile is the amount of its license fee. While Belgacom Mobile initially received its license for free, the government has since decided Belgacom Mobile must pay the same fee as the new GSM operator. John Goossens, chief executive officer of Belgacom Mobile, voiced disappointment, according to an embassy report. He contended Belgacom previously stated it was willing to and has paid the minimum of $115 million.
Belgacom plans to hold a press conference later this month regarding the license issue and forthcoming competition, said Susan Rosenberg, an AirTouch spokeswoman. To note, AirTouch had stipulated in the Belgacom Mobile agreements it was not committed to contribute to the license fees.
Belgacom Mobile began Nordic Mobile Telephone-450 analog cellular service in 1987 and in 1991 was awarded a monopoly on cellular operations. Rosenberg said Belgacom began offering GSM service January 1994. Late last year, the Belgian government announced plans to open the market to competition.
As of June, Belgacom Mobile claimed 173,000 subscribers, of which 120,000 were digital users, said Rosenberg. As of May 1994, both analog and digital networks covered 80 percent of Belgium’s land mass.
The embassy reported the following consortia also competed for the second GSM license: Belcell, comprised of Telecom Finland, Norwegian operator Telenor, Baring Communications Equity of the United Kingdom and undetermined Belgian investors; Eurogo, which included Unisource Mobile, SBC Communications Inc., PTT Luxembourg and Belgian partners undetermined; Mobilis, headed by BellSouth International and Sait Radioholland and 12 Belgian partners; and Voditel, headed by Vodafone plc, which included Belgian engineering and utilities group Tractebel, Bacob Savings Bank, Belgian insurance companies Mercator and P & V, Deutsche Telekom subsidiary DeTeMobil, Cofira and USCC in Brussels.
