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TIW: WE WANT TO BE THE NEXTEL OF EUROPE

Global System for Mobile communications operators in Europe soon could face a formidable opponent for commercial business accounts if Canada’s Telesystem International Wireless Inc. follows through with its plans.

The company has emerged not only as the dominant specialized mobile radio service provider in Europe, but is poised to overtake the continent with the only digital enhanced SMR network with pan-European roaming.

Through its London-based subsidiary, Dolphin Telecom plc-formerly TetraLink Telecommunications Ltd.-the firm owns analog SMR networks in six European countries. With the United Kingdom, France, Germany and Spain already under its belt, TIW recently added Portugal and Belgium to its list when Dolphin acquired Protocall Ventures Ltd. from Metromedia International Group Inc. The acquisition brings Dolphin’s total subscribers to 190,000.

Additionally, TIW conducted an initial public offering in the United States on Nasdaq June 9, selling 6.74 million subordinated voting shares, for $144 million. For its part, Dolphin recently raised about $700 million in financing as well.

This amassing of networks and financing all points to one end.

“We want to be the Nextel of Europe,” said Mark Boutet, TIW director of communications. “We’ve got the financial capability of meeting our goals and objectives … all the pieces are falling into place.”

TIW, through Dolphin, hopes ESMR’s mix of digital cellular voice and mobile radio data capabilities-like high-speed data transfer, Internet access, e-mail and conference calls-will challenge incumbent mobile phone operators.

“To some extent, you can say we’re in competition with digital cellular,” Boutet said. “But to us, it’s a different kind of service.”

He explained the service itself will attract only a certain type of business user away from GSM operators. The key to real success is offering these services anywhere on the continent.

“By deploying a pan-European network, our biggest selling point is going to be that we can offer seamless roaming on one network at a very inexpensive price,” he said.

Playing in such a niche market is key to TIW’s strategy to compete in the European market. The company was created 1992 to enter the global communications game. Its strategy is to compete in developing countries by securing digital cellular licenses and deploying the latest technologies, as it has done in Latin America and Eastern Europe. But in developed countries with incumbent operators, TIW decided to avoid a toe-to-toe battle in the digital cellular game and instead identify a niche market, and it defined SMR as its door to European competition.

“We don’t see any interest in going into the cellular marketplace such as the U.K. with four operators and prices what they are,” Boutet said. “It’s a very competitive market and very hard to differentiate yourself. Why would we want to go there?”

Yet another question is why would anyone want to make a stand with SMR?

For years, SMR services in Europe have experienced a somewhat underwhelming response, due to fragmented frequencies and old-school analog technology. To whit: 190,000 subscribers in six countries is not exactly a coup.

Aware of the inefficiencies of European SMR as it exists today, TIW’s stated goal is to eventually migrate these networks to a new digital technology and then integrate them, regulations permitting.

“The first thing was to become the biggest SMR operator in Europe through acquisition at attractive costs,” Boutet said. “We’ve been consolidating the industry and have been very successful at acquisition. We are now the dominant operator in Europe and the only multimarket company. So we’re the only one in a position to offer a pan-European network.”

The next step is to upgrade these networks to the European digital enhanced SMR technology standard-Trans European Trunked/Terrestrial Radio, a protocol developed by Motorola Inc. and Nokia Corp., among others. A recent Strategis Group study predicts TETRA will be the dominant trunked radio standard in Europe in five to six years.

“SMR has been the poor child in Europe, historically,” said Dolphin spokesman Marc Godin. “Now, with a new standard and new equipment available, we can empower the technology with new features.”

TIW is building out a TETRA network in the United Kingdom, where it won a license in 1996. Nokia is providing the infrastructure and Motorola the handsets. Boutet said he expects the U.K. network to begin offering service in mid-1999. If it does, it will be the first commercially available TETRA network on the planet. A TETRA network upgrade in France should be completed later that year, he added, as will another in Germany by early 2000.

But buildout is only the first hurdle. “Our main challenge is a business challenge in terms of explaining the benefits of the service technology and building that market,” Boutet said. “Some of our competitors are the existing operators and we have to show our benefits to the existing sophisticated user.”

That these markets are already somewhat wireless-savvy is a plus, Boutet said, adding he feels confident TIW’s ESMR offerings will find its niche.

TIW’s SMR acquisitions and subsidiaries in Europe played a significant factor in the companies first-quarter subscriber base growth of 39 percent. Second quarter results were not available at press time.

Its IPO last month opened at a stock price of $21.37, rose to a high of $21.62, experienced a low of $18.87 and was $21.25 at press time.

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