Tender documents for two new cellular licenses in Poland should hit the table this week, unlocking the door to telecom competition, but an American company is protesting the government’s decision.
Ameritech Corp. is urging the Polish Communications Ministry to uphold a letter of intent signed four years ago affirming the partners in monopoly cellular operator Centertel-Telekomunikacja Polska SA, France Telecom and Ameritech-be granted a license to operate a digital cellular network as a natural upgrade to Centertel’s analog network.
Telekom Polska, the state telecommunications operator, owns 51 percent of Centertel while Ameritech and France Telecom each hold 24.5 percent. Centertel’s current network operates on the Nordic Mobile Telephone-450 network.
In 1991, the only available spectrum for cellular was at 450 MHz, said Herbert Hribar, vice president of operations for Ameritech International. At that time, Ameritech and France Telecom donated a combined $75 million to the Polish government and Centertel received a license and the letter of intent to later receive a nationwide Global System for Mobile Communications license. Additionally, the two foreign partners invested $280 million building out the Centertel network.
But the Ministry has called the letter non-binding and said the joint venture must file a tender if it wishes to compete for one of the two GSM licenses.
At the heart of the dispute is a communications law passed by Poland’s Parliament in July requiring the two GSM licenses be awarded through competition, said Hribar, noting that a clause in the document “allows the existing operator be awarded a reserved license.” As such, the Centertel partners would be awarded a license, maintains Hribar, while the other GSM license should be tendered and competition would ensue.
What Hribar characterized as discussion with the Ministry last month, he now calls a dispute. “We are insisting that it (the license) be awarded.” Hribar noted Ameritech has expressed to the Ministry it will make concessions for the GSM license, including “an appropriate license fee” in the interest of fair competition.
Ameritech will meet with the Polish government Nov. 21 in Poland to attempt reaching accord through internal discussions. In the event no agreement is reached, Hribar said arbitration will begin at that time.
Further complicating Ameritech’s mission, Telekom Polska said it does not intend to seek a GSM license. Lack of funds has been cited as a key factor in that decision. Nonetheless, Ameritech remains determined to pursue GSM with its current partners. Presently two representatives from each of the Centertel partners comprise its management board. Telekom Polska wants three positions, said Hribar, leaving three between the foreign partners.
“We’re willing to concede for restructuring to accommodate their desires,” Hribar commented.
Tender documents were scheduled to be available early this month, said Hribar. The Ministry reported applications are due around the first of the year, and licenses could be awarded in February. Previously, tender documents were scheduled to be available in August and the Polish government was expected to issue licenses by the end this year.
Evaluating criteria include companies’ technical and economic expertise, financial strength and amount they are willing to pay as a license fee, said Hribar.
In August, the U.S. Department of Commerce reported U.S. telecom firms are expected to figure prominently in the GSM bidding, noting start up for these networks will likely exceed $1 billion. Communications giants AT&T Corp., Motorola Inc. and U S West Inc. were said to have expressed interest.
Poland plans to license one DCS-1800 operator next year as part of its plan to liberate the country’s telecom environment. The commerce department said this announcement, made previously this year, “may have somewhat undercut interest in bidding for the GSM licenses.”
The London office of Economic Management Consultants International Inc. reported Centertel had 57,500 subscribers in June. EMCI predicts that number will grow to 75,000 by the end of the year.