Warsaw cancels 3G auction

date: 07 December 2000, source: Christopher Bobinski, FT

Poland on Wednesday cancelled its third generation mobile phone tender and decided to grant licences to the three local operators who had put in bids for the five concessions on offer.

Miroslaw Marcinkiewicz, the head of the tender committee, yesterday denied this represented a fiasco for the tender.

"I would call it a moderate success," he said, pointing out that three operators - Centertel, PolKontel and Polska Telefonia Cyfrowa PTC - had agreed to pay E650m each for the licences which will become operative on January 1 2003.

Originally, seven operators had been expected to tender.

As a gesture to the three bidders, Tomasz Szyszko, communications minister, has decided to limit the number of concessions to four. In a statement, the minister said that the fourth licence would be auctioned in 2002 so that four operators could start offering a service at the beginning of 2003.

Poland's telecommunications law stipulates that no new tenders can be organised next year. The terms of the auction for the fourth licence are unclear. It will become the sole responsibility of the industry's regulator who takes control of the sector in the new year.

In a further concession to the operators, the terms of the licence payment have been softened, with the government expecting 40 per cent of the E650m ($578m) fee to be paid next year, rather than 50 per cent as originally planned.

The three operators said they considered the government decision to be "correct". Previously the operators had protested that the terms of the tender were unclear. PTK is jointly owned by France Telecom and Telekomunikacja Polska while PTC has Vodafone and TeleDanmark as foreign investors.

Netia, a local operator who failed to put in a bid, recently threatened to appeal against the results of the tender and this may well have helped to prompt the government's action - on top of the scant overseas interest.

"Our biggest disappointment was the failure of Telefonica Moviles of Spain to put in a bid," Mr Marcinkiewicz said yesterday. He added that the government hoped that a foreign operator would purchase the fourth licence in 2002.

He also explained that the market for 3G licences was volatile. "There was great interest in the United Kingdom but in Sweden the government offered the concessions for a symbolic fee," he said.

However, analysts noted yesterday that a recent struggle between the state treasury and Eureko, the foreign strategic investor in Poland's PZU insurer, over control had made foreign companies wary of investments in the country and that this had clouded the prospects for the 3G tender.

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