Telecoms sector liberalisation received a boost at the June 14 government session after cabinet announced it was considering offering three third generation UMTS (Universal Mobile Telecommunications System) mobile phone licences as part of an approved telecoms strategy.
The licences, slated to be doled out between 2001 and 2002, would be for frequencies between 1900 to 2170 MHz to allow new and existing operators using this frequency band to move to UMTS, an advanced mobile phone system allowing quick Internet access and higher connection speeds. The frequencies are currently used by the Slovak armed forces, who will be asked to free up the bands.
Speaking at a press conference June 14, Deputy Telecom Minister Dušan Faktor said: "We would be interested in granting three licences. I think that the telecommunications market in Slovakia could sustain a third operator, and it would benefit consumers."
Slovakia's current two mobile operators, Globtel and EuroTel, are expected to be offered two of the licences, while the government, according to Faktor, will offer a third mobile operator's licence to interested parties before the end of this year, bringing Slovakia into line with European Union standards. Both Globtel and EuroTel currently operate services on the 900 Mhz and 1800 Mhz range.
Speculation is already growing over who may make a bid for any new licences. With the mobile phone penetration rate in Slovakia approaching 20% and expected to grow rapidly over the next few years, and the privatisation of fixed-line monopoly Slovenské Telekomunikácie (ST) due to be finalised in the next few weeks, the UMTS licences are expected to be fiercely fought over.
"For the third generation licences we're looking at the same players that are already on the central European market," said Dušan Meszáros of Commerzbank Capital Markets in Prague. Currently German giant Deutsche Telekom, along with Dutch firm KPN, Britain's Vodafone and France Telecom are heavily active in the region. France Telecom already owns a 64% stake in Globtel.
The government will be seeking to avoid a repeat of the fiasco of 1999 when it tried to offer a third mobile-phone licence. An original tender was abandoned when then-Telecoms Minister Gabriel Palacka, citing lack of interest in the tender, split the licence between EuroTel (in which ST holds a controlling stake) and Globtel. Palacka later resigned amid allegations of corruption.
"If a tender for the third [second-generation] licence fails again, then there will be no interest other than France Telecom and whoever gets hold of ST," added Meszáros.
A decision will be made on the winner of the ST tender at the end of June, while an announcement on the sale of the 51% stake will be made by the middle of July. The two bidders for the share are Dutch firm KPN and Deutsche Telekom.