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UMTS, GSM SEEN AS STRONGER PULL TOGETHER

Ministry announces combined telecoms licence

Deputy Telecoms Minister Dušan Faktor announced August 12 that a combined package of a third licence for a GSM and UMTS mobile phone operator would be offered in a tender at the end of this year.
A tender will be launched in the last quarter of the year, Faktor said, with the winner receiving the licences in the first quarter of 2002. The main criterion for selection of the winning bid will be price offered.
"Price will be the most important factor, but of course we will take into account other factors such as the experience of the interested providers," the deputy minister said. The ministry is expecting between one and two billion crowns for each licence, within many experts' estimates.

Deputy Telecoms Minister Dušan Faktor announced August 12 that a combined package of a third licence for a GSM and UMTS mobile phone operator would be offered in a tender at the end of this year.

A tender will be launched in the last quarter of the year, Faktor said, with the winner receiving the licences in the first quarter of 2002. The main criterion for selection of the winning bid will be price offered.

"Price will be the most important factor, but of course we will take into account other factors such as the experience of the interested providers," the deputy minister said. The ministry is expecting between one and two billion crowns for each licence, within many experts' estimates.

Two other licences for UMTS operations will be granted to existing mobile service providers, Slovenské Telekomunikácie (ST)-owned EuroTel and France Telecom-controlled Globtel.

The government has decided to offer the two licences together after its own studies suggested it would not be able to attract a bidder for the GSM or UMTS licences alone.

Slovakia's relatively small market size in the region - the country has a population of 5.4 million compared to 10 million in Hungary, 15 million in the Czech Republic and 40 million in Poland - makes it less attractive for many operators.

"Our analyses show that room for another operator on the market exists, but that the only way to attract this provider is to offer them the whole [combined] package," said Faktor.

The Slovak mobile market has grown rapidly in recent years, with EuroTel and Globtel both seeing rises of around 40% year-on-year in customer numbers in the first six months of this year alone. Both firms believe that by the end of 2001, mobile penetration will be at around 30%.

The presence of a third operator on the market has been debated since summer 1999 when a tender for a licence was controversially cancelled by then-Telecoms Minister Gabriel Palacka, who split the licence between Globtel and EuroTel. Palacka later resigned over the affair.

Granting of UMTS licences has also been discussed by the government. The third-generation service allows data to be transferred over wavebands to mobile phones far quicker than existing fixed lines, and gives sophisticated multi-media capabilities to mobile phones. Eighteen months ago it was seen as a highly lucrative future telecoms sector, and in early 2000 UMTS licence auctions in Britain and Germany commanded huge bids, reaching as high as $35 billion in London.

However, a global turndown in the telecoms markets since then and growing scepticism in the industry over the price relative to the value of UMTS licences, led to later auctions in Austria and Italy bringing in much lower bids and a general revision within the industry of estimates for licence values.

Sector experts say that the earliest launch of UMTS services in Slovakia is at least four years away, with much work still to be done on infrastructure development, and that any new operator would want to come onto the market now, using GMS services, and build up a UMTS network.

"A new operator on this market would want to start operating as soon as possible. It will be a long time before UMTS is operating in Slovakia, but with a GMS licence you can launch services more quickly. If a UMTS licence is being offered, a GMS licence has to go with it. To offer a UMTS licence alone would have been difficult for one operator to accept," said Ondrej Datka, telecoms analyst at Patria Finance in Prague.

The Slovak telecoms sector is set for liberalisation in January 2003 with the end of former state-owned Slovenské-telekomunikácie's fixed-line monopoly.

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