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British Telecom expands horizons to Slovak IP market

Moving into what it says is one of the fastest growing areas of the Slovak economy, global telecoms giant British Telecom has said that the best way for the government to gain its confidence is to stick to its plans for telecom sector liberalisation .
Announcing the launch of BT Slovakia, part of the BT Ignite company set up to focus on IP (Internet Protocol) and broadband services last year, BT Emerging Market Director Frank Bosmans said that BT's success with its newest business is dependent on Slovak adoption of European Union directives on telecoms regulation.

Moving into what it says is one of the fastest growing areas of the Slovak economy, global telecoms giant British Telecom has said that the best way for the government to gain its confidence is to stick to its plans for telecom sector liberalisation .

Announcing the launch of BT Slovakia, part of the BT Ignite company set up to focus on IP (Internet Protocol) and broadband services last year, BT Emerging Market Director Frank Bosmans said that BT's success with its newest business is dependent on Slovak adoption of European Union directives on telecoms regulation.

"The signal which would give us the most confidence would be if they [the government] stuck to their timetable for liberalisation," he told The Slovak Spectator.

"Our performance over the next three years is dependent on the adoption of EU directives. If all that goes smoothly and quickly then our profits will meet our projections, but if not, if there are delays, then obviously that situation will be very different," he added.

BT Slovakia's launch comes two years ahead of full liberalisation and the cessation of former state-owned operator Slovenské telekomunikácie's (ST) monopoly on fixed line services. Experts, however, have in the past questioned the date for full liberalisation, and claimed that the pace of legislative change has dragged.

"There is a question over financial and human resources and whether there are enough competent people to push all the necessary legislation through. Look at the current problems the TÚ (Telecoms Office) is having with [cable operator] UPC - [which tried to raise its prices by 40%, more than was justified said the TÚ - ed. note]. All resources are devoted to that now, and not to other things, which is not good," said Boris Kostík, research analyst at Slávia Capital brokerage.

However, BT said that it did not see any major problems on the horizon for the sector.

"I don't anticipate any problems, because Slovakia as a country wants to get into the EU and it will be forced to follow EU directives. We would very much like them to play by European Union rules, and we think they will," said Bosmans.

BT's senior advisor on European regulation, Armando Telléz-Vellasco, added: "The most important area for us is interconnectivity [the use of ST lines for BT-provided calls and the prices charged by ST for that - ed. note], and I think that we are not the only telecoms company to be looking at that. But provided that the Slovak government takes on board the EC's directives, then we are very happy to be working here."

Slávia's Kostík agreed. "I don't see any reason why the government wouldn't want to meet the [2003] date. It's not like in the Czech Republic where the government set the date for deregulation as 2001 and then put it back a year because it still had to sell its majority stake in [monopoly operator] Český Telecom. The Slovak government doesn't have a majority stake in ST, and therefore shouldn't have such a problem," he said.

BT's Telléz-Vellasco added, though, that the company would be closely watching the government's follow-through on deregulation plans.

"We have the licence for what is currently allowed on the market, and provided that the government takes on board the EC directives then that will allow us to go further into the market. But under the timetable we don't see that [moving further into the market] as happening in 2003."

The government has pledged itself to opening its telecoms sector, along with a number of other facets of the economy, and has plans to create a rival to ST this year, Energotel, in preparation for liberalisation (see story pg 7). It is also planning a tender for three or four FWA (Fixed Wireless Access) operator licences. However, indecision and conflicting reports from the Telecoms Ministry and sector regulator TÚ over the time and method of the sale have irked potential bidders, and have raised questions over the potential sales of other licences in the sector, namely the third-generation mobile service UMTS.

BT has cautiously ruled itself out of both participation in Energotel's eventual privatisation and any UMTS sales in Slovakia. However, it has said it has preliminary interest in the FWA licence tender, a move which would fit into its Slovak strategy of focusing on IP and broadband products.

"BT is looking at the terms of the tender and when exactly it will be announced. Having access to customers for us is important, and when we have the information [on the licences] we will either submit a response or engage in cooperation with a partner [on this] if we decide," said Stephen Tucker, BT country manager for the Czech and Slovak Republics.

The immediate effect

Analysts have said that BT's entry onto the market is likely to bring an immediate effect in the IP market, one which BT says will grow seven-fold over the next three years.

"The main thing I think they want is VOIP [Voice Over IP services], and so far there aren't any real global players on the Slovak market for this, except Deutsche Telekom [DT] and they have a lot on at the moment with the restructuring of ST [in which they bought a majority stake last year - ed. note]," said Kostík.

"The entry of BT onto the market will be extremely significant, and we can expect to see the market become quite challenging."

BT's potential rivals said that while obviously new competition for them, the arrival of such a major world telecoms player was good for Slovakia.

"They are obviously a competitor in some areas, but what BT will have to do is get the end-users, the final customers. Initially it will mean better prices and better services for the customers. They are entering a market selling international capacity to big companies and wholesale," said Dag Ole Storrosten, head of Telenor-owned ISP Nextra.

"But it's positive for Slovakia because it shows that the market is attracting the big guys. BT are big. They have a strategy and that now includes Slovakia, which maybe before was considered a bit too small."

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