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FIBRE OPTIC CABLES GIVE START-UP FIRM COMPETITIVE EDGE ON HIGH SPEED DATA AGAINST ST

Energotel gearing up for end of ST monopoly

WITH NINE months to go until the end of Slovak Telecom's monopoly on fixed-line services, alternative telecom provider Energotel is already establishing a presence on the Slovak market.
Energotel, formed of the internal telecom networks of Slovakia's energy, gas and oil firms, already has a broad fibre-optic network around the country, and a core clientele among Internet service providers and international firms.
The firm plans to generate an income of Sk370 million this year, more than the combined income in 2001 of the companies from which it was formed, say Energotel officials. In addition, Sk350 million should be invested in 2002 to expand the network and update equipment.

WITH NINE months to go until the end of Slovak Telecom's monopoly on fixed-line services, alternative telecom provider Energotel is already establishing a presence on the Slovak market.

Energotel, formed of the internal telecom networks of Slovakia's energy, gas and oil firms, already has a broad fibre-optic network around the country, and a core clientele among Internet service providers and international firms.

The firm plans to generate an income of Sk370 million this year, more than the combined income in 2001 of the companies from which it was formed, say Energotel officials. In addition, Sk350 million should be invested in 2002 to expand the network and update equipment.

Because Energotel's network is entirely fibre-optic, company officials say they can offer clients data transfer speeds exceeding 30 Mbits per second. The ISDN service offered by Slovak Telecom (ST) has a maximum data speed of 128 kbits per second, although ST plans to launch a high-speed digital subscriber line (DSL) service by the end of the year.

Energotel director Márius Hričovský sees the firm's main potential for growth among large companies and organisations that need high transmission capacities, as well as firms needing high speed data transfer.

"Our potential clients today are, for example, Internet service providers, wholesalers of telecom capacity and international firms operating networks. We are also looking at large firms that have multiple branches in Slovakia, for example banks and insurance providers. We also believe that government offices could and will be our clients," said Hričovský.

The firm's weak point, however, remains the 'last mile' cable connection between Energotel's lines and final users. This connection is owned by ST, although as of January 1, 2003 ST will lose its monopoly on fixed line voice services and have to start renting capacity to operators such as Energotel.

ST's head of strategic planning, Peter Poliak, says Energotel has the potential to offer real competition to his firm. "They have enough facilities to provide high speed services like leased lines and high-speed Internet access. Because of that, Energotel in the future can really compete in the business segment with those who use high speed services.

"It's not about the mass market or mass services, just large enterprises," he said.

Hričovský confirmed that Energotel had no plans to expand to residential service.

"Households will really only have [a connection with us] when, for example, they are connected through ST to the Internet, and the Internet provider buys the long-distance connection from us," said Hričovský.

Energotel was assembled in February 2000 as a 100 per cent daughter company of the state-owned oil pipeline firm Transpetrol. The company, then called Transtel, took over the internal telecom networks connecting state electricity provider Slovenské elektrane (SE), gas giant SPP and Transpetrol.

Electricity producers and distributors under the SE umbrella already have a fibre-optic network leading to nearly every town of more than 20,000 inhabitants, and to every district and regional government seat, while SPP and Transpetrol both have fibre-optic networks running along their respective pipelines.

The scheduled opening of the Slovak telecom market at the start of next year, say analysts, has been a long time coming. Dag Storrosten, the director of Nextra, Slovakia's largest Internet service provider, says: "Some forces are trying to make privatisation move fast, and some are trying to delay it. Obviously challengers in the market will try to speed up the process. Those who have a good position will try to delay it as much as they can.

"The low growth is this market is partly due, of course, to the overall economy. It's also contributed to by fairly high prices for the Internet. But I think what is contributing mostly is the very low level of real competition in the telecom market."

Hričovský sees benefits in the market's opening: "The advantage for the market is the creation of a competitive environment in the area of services, with not all services offered by Slovak Telecom.

"We don't do everything, but for defined services, such as renting capacity or leasing lines, this is where the competitive area has been created. It means whoever has the interest can choose from different providers. Up until now, there was only one."

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