Spectator on facebook

Spectator on facebook

ETel grabs seat before markets freed

International telecoms group eTel moved into the Slovak market with the launch of its subsidiary eTel Slovensko February 15, pledging a five million euro investment in the sector.
The move comes just weeks after British telecoms giant British Telecom (BT) opened a subsidiary in the country, and is further evidence, analysts and eTel itself say, of the growth potential of the Slovak telecoms market prior to full sector liberalisation in 2003.
"This is the right place at the right time," said Tibor Tarábek, managing director of eTel Slovensko. "The Slovak market is fully comparable with the market in Poland, and there is already great growth and potential."
Despite the fact that former state-owned telecoms firm Slovenské telekomunikácie (ST) holds a fixed-line service monopoly until January 1, 2003, experts say the telecoms sector in Slovakia, though much smaller than that of its regional neighbours, has seen enormous growth over the last few years.


Tibor Tarábek (left), managing director of eTel Slovensko, and the firm's CEO Conor Daly are bullish on prospects for ST competitors.
photo: Courtesy eTel

International telecoms group eTel moved into the Slovak market with the launch of its subsidiary eTel Slovensko February 15, pledging a five million euro investment in the sector.

The move comes just weeks after British telecoms giant British Telecom (BT) opened a subsidiary in the country, and is further evidence, analysts and eTel itself say, of the growth potential of the Slovak telecoms market prior to full sector liberalisation in 2003.

"This is the right place at the right time," said Tibor Tarábek, managing director of eTel Slovensko. "The Slovak market is fully comparable with the market in Poland, and there is already great growth and potential."

Despite the fact that former state-owned telecoms firm Slovenské telekomunikácie (ST) holds a fixed-line service monopoly until January 1, 2003, experts say the telecoms sector in Slovakia, though much smaller than that of its regional neighbours, has seen enormous growth over the last few years.

The Telecoms Ministry is expected to announce a tender for fixed-wireless access (FWA - radio-transmitted telephone signals) licences before the end of the month, allowing for growth of competition in 'last mile' services to companies (in which FWA licence holders supply signals to each customer). The two mobile operators, Globtel and Eurotel, have also seen a rapid increase in their numbers of subscribers over the last 18 months (see story below).

Analysts are convinced that the telecoms market can continue to grow, and that companies like eTel will be staking out their ground until 2003 and liberalisation of the market.

"The market should be very attractive for e-Tel. They will probably use the same strategy as BT or GiTy [a telecoms firm which has holdings in other central European states] and base their business plans on providing services for small companeis," said Boris Kostík, analyst at brokerage house Slávia Capital.

"Many companies, including eTel, are coming here and establishing themselves just prior to full market liberalisation. They are setting themselves up with a market stronghold before liberalisation, and waiting to see how the market will shape itself over the next 18 months or so.

"What we'll probably see them doing is focusing on investment and their sector of the market [i.e. voice-over and data services], and then watching to see how the market develops before deciding what direction to go and what strategy to take once there is liberalisation."

Peter Štubňa, IT manager at GiTy, said that "while Slovakia is a small country with a relatively small telecoms market, there is growth and potential growth here".

ETel's Tarabek confirmed that his firm would be implementing a strategy with the liberalisation date in mind. "ST is obviously our main competitor. We cannot offer a standard voice service to an end-user, we have to change the voice into data first and then transmit it as data, but when the monopoly ends we can expand our services," he said.

"After [monopoly] legislation changes and there is full liberalisation, the market will grow even faster than it has been up to now."

Central European connection

Telecoms firms operating in Slovakia have often seen the country's market as a piece of a larger regional operation scheme. German collossus Deutsche Telekom, the majority owner of ST, has holdings across the region, including extensive operations in Hungary and a strategic stake in the Croat state telecoms firm Hrvatski Telekom (HT).

British Telecom has a network of firms across central Europe, including the Czech Republic, as do firms such as Nextra, owned by the Norwegian Telenor, and other players in the ISP and Internet sector who have crossed over into providing telecoms services as technology in the two fields comes closer together. ETel focuses solely on central Europe and has subsidiaries in Hungary, Poland and the Czech Republic.

However, these firms and analysts have said that while the region as a whole has great potential for telecoms, monopolies on fixed-line services are still a problem for companies coming into the regional markets.

"Definitely, the markets across central Europe are growing, but they are a bit inhibited by the fact that there are still telecoms monopolies [on fixed-line services] in the region, including Slovakia," said Ondrej Datka, telecoms analyst at Patria Finance in Prague.

But with Česky Telecom's monopoly on fixed-line voice services having come to an end in January this year, firms are now watching the development of that market to help them prepare for 2003 in Slovakia.

"We are watching what is happening in the Czech Republic carefully. ETel has a full PTO (Public Telecoms Operator) licence there now, and is offering a full range of telecoms services. We are learning from the experience there," said Tarábek.

GiTy's Štubňa added: "We are taking the experience of GiTy in the Czech Republic [the firm last year won an FWA licence in the Czech Republic - ed. note], and what is happening there now and applying it here. The Czech Republic [telecoms market] is one or two years ahead of Slovakia, and it is natural that firms like ours will want to transfer experience from there to Slovakia ahead of deregulation."

Company benefits

While telecoms firms are looking forward to seeing the end of ST's monopoly, the presence of companies offering voice services, is soon likely to begin benefitting firms using the products, experts say.

"There will be large benefits for businesses, with more telecoms firms setting up here and offering these services. The future lies in having a telecoms company which can provide a comprehensive portfolio of services, including voice-over, data transfer and ISP services as well as others," said Kostík.

"It would be logical for one company to have a single server providing all these services in one package so a client can use a voice service and at the same time have a video link. It would make sense for companies because they could then cut back on some costs. It's just economies of scale."

ETel's Tarábek agreed, saying the increasing competition on the market for providing services, especially integrated packages including IP, ISP, voice-over and data transfer, will ultimately have rewards for end-users.

"Telecoms is evolving and there is a feeling that the future of telecommunications lies in this kind of package. This is good for companies who will then have a single provider for all services. "

Top stories

Police will check overpriced EU presidency

The presidency will also be scrutinised by state auditors.

The ceremonial launch of the Slovak presidency's logo.

Inspectors to focus on firms with foreign staff

Scrutiny follows media report by Serbian journalist concerning conditions in a Galanta-based plant.

Labour Minister Ján Richter

Bratislava councillors want gambling regulation, not ban

Seventeen councillors do not agree with total prohibition of gambling in the capital, they want to continue in its strict regulation.

SaS denies Russian media reports on its support of Slexit

The opposition party has objected to news in some Russian media stating that it supports the departure of Slovakia from the EU, i.e. Slexit.

Richard Sulík