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Sunday, 3 December, 2000, 14:15 GMT
Polish mobile sale in crisis
Phones in Warsaw's Wroclaw Central Square
Tender is not to existing Polish phone firms' liking
Eastern Europe's first 3G mobile licence sale has suffered a major setback with only the three existing operators submitting bids for five licences.

The result will be seen as an embarrassment for the Polish government, which had hoped to raise 3.25bn euros from the sale.

It is now likely to net just 1.95bn euros after foreign bidders failed to materialise by Saturday's bid deadline.

The three local bidders - whose shareholders include Deutsche Telekom, France Telecom, Vivendi and Vodafone - had threatened to boycott the sale altogether amid criticisms of the government's handling of it.

'Too early for 3G'

The three companies submitted their bids by the deadline - before renewing calls for the tender to be cancelled.

Poland's existing mobile phone operators are:
Polska Telefonia Cyfrowa, whose owners include Deutsche Telekom and Vivendi
Polkomtel (Vodafone and TeleDanmark)
and Centertel (France Telecom and Poland's TPSA)

"The ministry should think about the possibility of cancelling this tender because of the changes made at the last minute as the risk exists that other candidates may file complaints in court and this would put the offers in jeopardy," Polkomtel spokesman Leszek Kaminski told journalists.

The operators have complained that the high licence fee would make Universal Mobile Telecommunications System (UMTS) services, which allow fast internet connections for mobile telephones, too expensive for Poland's developing market.

The average monthly wage is under $500 and just 14% of the 39 million population have mobile telephones.


There is not enough capital in Poland to join such a costly long-term investment

Telecom analyst
"It is too early for the third generation," said PTC General Director Boguslaw Kulakowski before the bid deadline. "It would have been better to wait. The second generation has not yet used all of its possibilities."

The three bidders have also objected to a condition in the 3G tender requiring them to open their networks to future licence holders after they have installed infrastructure covering 30% of the country.

"The requirement to provide roaming after the new incomers cover 30% of Poland is unacceptable and we would object," said Wladyslaw Bartoszewicz, head of Polkomtel - the Vodafone-backed operator.

Government 'satisfied'

The licences were to have been awarded through a "beauty contest" based on the operators' business plans at a fixed price of 650 million euros ($569m) per licence, instead of an auction.

Poland's telecommunications minister Tomasz Szyszko said just two weeks ago he expected seven or eight bids for the licences.

However, the Polish authorities claimed on Saturday that the number of bids was satisfactory.

"We are satisfied," said Miroslaw Marcinkiewicz, a top telecommunications ministry official told journalists.

"We are not astonished by the number of bids. This is due to the weak situation of the European telecommunications market."

Overestimating

But the problem was not only with Europe, but with the ministry overestimating Poland's market, according to telecoms analysts.

"There is not enough capital in Poland to join such a costly long-term investment," one analyst said.

"Foreign bidders were indeed interested in trying to forge partnerships with Polish companies to bid, but these companies are too poor."

Spain's Telefonica had tried to find Polish partners, as demanded by the tender requirements, to submit a bid, but according to the Gazeta Wyborcza daily the local companies could not obtain the necessary bank guarantees.

Italian operator TU Mobile had been expected to submit a bid with the Polish internet company 7bulls.com, but according to media reports apparently had trouble securing sufficient financial backing.

It will take about $2.2bn to launch a UMTS network including the cost of the licence, according to analysts.

The telecommunications ministry is expected to determine within days whether the bids met the tender conditions.

Only two valid bids are required for licences to be awarded.

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See also:

24 Oct 00 | Business
BT loses in Italian mobile auction
13 Nov 00 | Business
BT sale as Swiss halt auction
17 Aug 00 | Business
German phone auction bonanza
24 Jul 00 | Business
Dutch licences 'go cheap'
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