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Minister fights back in GSM 1800 furore

The second tender to find a third mobile telephone operator for Slovakia dissolved in confusion and recriminations on June 7 when Telecom Minister Gabriel Palacka cancelled the tender commission formed on June 15 to select a winner. The sale of the license to operate a GSM 1800 MHz mobile network was expected to bring over 300 million Slovak crowns ($7 million) into the state budget.
Palacka now has the power to decide himself who, if anyone, will be awarded the license to operate on the GSM 1800 frequency in Slovakia. The nation already has two firms, EuroTel and Globtel, active on the Slovak mobile phone market using the GSM 900 frequency.

The second tender to find a third mobile telephone operator for Slovakia dissolved in confusion and recriminations on June 7 when Telecom Minister Gabriel Palacka cancelled the tender commission formed on June 15 to select a winner. The sale of the license to operate a GSM 1800 MHz mobile network was expected to bring over 300 million Slovak crowns ($7 million) into the state budget.

Palacka now has the power to decide himself who, if anyone, will be awarded the license to operate on the GSM 1800 frequency in Slovakia. The nation already has two firms, EuroTel and Globtel, active on the Slovak mobile phone market using the GSM 900 frequency.

During the week following Palacka's move to abolish the commission, the Slovak media published allegations that Palacka had been under pressure to manipulate the results of the tender. On June 9 the private TV Markíza broadcast a report claiming that Palacka had been accused of corruption by his own ruling coalition mates, and that the power to decide the GSM 1800 tender had been moved to the Coalition Council.

Palacka responded on June 10 with a public statement saying he would file charges for libel against Markíza and the state-run STV station. Palacka protested "against the false accusations and the dirty innuendoes of corruption which some media have shamelessly spread. The fact that no one piece of concrete proof has been unearthed illustrates more the hyenism of some media than corruption at the ministry."

Deputy Prime Minister for European Integration Pavol Hamžík confirmed for The Slovak Spectator on June 10 that the Markíza report had been false. "No coalition member proposed that Palacka be replaced. The Coalition Council agreed that Minister Palacka is fully responsible for handling the tender, and will evaluate the results when the conclusion of the tender is officially announced."

Accusations fly

The confusing element in this GSM tender, the second unsuccessful attempt to sell a GSM 1800 license since last autumn, is the fact that the state owns a 36% share in Globtel that it is trying to sell. Boris Kostík, a telecom specialist for Bratislava brokerage house Slavia Capital, told The Slovak Spectator that if a third operator were allowed to enter the mobile market, it could drive down the value of both Eurotel and Globtel - and of the state's Globtel stake.

The Globtel stake, and the state's interest in protecting it, drew murmurs from ruling coalition politicians as well. Hungarian Coalition Party leader Béla Bugár told the daily paper Sme that "the decision of the minister [to abolish the tender commission] was neither good nor sufficient... this government doesn't need even the shadow of suspicion that some members of the government could be mixed up in corruption."

But ministry spokesman Pavol Prikryl said on June 8 that the furore was groundless, adding that the tender commission had been abolished under standard rules. "A commission is appointed for each tender. When a tender is over, regardless of whether it ends in success or not, the tender commission is then dissolved. It's a standard procedure," Prikryl explained.

Kostík too said that he believed Palacka would not attempt to end the tender commission in order to allow himself to decide the winner alone because "he can't afford to do that. It would negate transparency."

Stanislav Vanek, the director of the ministry's regulatory department and the secretary of the recently-abolished tender commission, told The Slovak Spectator on June 9 that the Globtel shares would be among the factors influencing the ministry's eventual decision, but added that the main concern of the ministry was to find an operator for the third license as soon as possible. "We've already held two tenders and they both failed," he said. "Right now, the GSM 1800 frequency is not being utilised and we must utilise it, even if it means giving it [the license] to EuroTel and Globtel."

Prikryl agreed that dividing the license between Globtel and Eurotel was an option, but added that announcing a third tender was still possible. If a new tender was called, Prikryl said, it would require a new tender commission with a composition "which does not necessarily have to be identical to the previous one," the news agency SITA reported.

Despite the best efforts of the Telecom Ministry to quiet the media hubbub, however, the Slovak press has managed to find signs of corruption at every turn. The abolition of the commission, for example, coincided with a limited personnel shuffle at the ministry. According to the daily Sme, Vanek had been planned as the next director of the Post and Telecom Section at the ministry, but Milan Luknar was elected instead. Vanek was also the secretary of the tender commission, but lost that position upon its conclusion.

Vanek, however, told The Slovak Spectator that he had willingly pulled out of contention for the position of Director of the Post and Telecom Section. "I was in the running for the position," he said, "but I decided to withdraw because I am over 60 and I think that younger people should be responsible for this kind of activity." Vanek returned to his former position as Director of the Regulatory department.

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