An AirTouch Communications Inc. consortium is scheduled to launch Spain’s first private cellular system on Oct. 3, on the heels of the government operator’s launch of a similar service.
The Airtel consortium defeated at least five other consortia last fall, paying $705 million to win the Global System for Mobile communications license. Airtel will compete against well-known Compania Telefonica Nacional de Espana, which was scheduled to launch its GSM system this summer.
Telefonica also operates two analog systems. The Nordic Mobile Telephone system was switched on in 1982; it currently has about 30,000 subscribers. Telefonica’s Total Access Communication Service began in 1990 and reports about 581,000 subscribers.
Cellular penetration in Spain is about 1.05 percent, compared to 6 percent in the United Kingdom, one of Europe’s strongest cellular markets, according to analyst Michael Krier at Economic and Management Consultants International Inc.
Spain has a population of nearly 40 million and is about the size of Arizona and Utah combined. AirTouch, which owns 15.8 percent of Airtel, sees Spain as a market with opportunity; Airtel’s annual revenue is expected to reach $800 million by 2000.
BT plc (also known as British Telecommunications) holds 6.3 percent of Airtel. Together, AirTouch and BT bring technical experience to the project and will manage operations, said Airtel spokesman Jose Luis Hurtado. The company has been installing equipment throughout the nation since February, planning to cover 95 percent of the nation by the end of 1997.
Earlier this year, Airtel was in conference with the Spanish government about the licensing fee, according to international news sources. Requiring new players to pay high license fees while not requiring the same from existing, government operators is of concern to Karl Van Miert, commissioner for competition issues for the European Commission.
Van Miert reportedly also has raised the matter with the governments of other European Union member-states Italy, Ireland and Belgium.
Other Airtel owners are Banco Santander and Banco Central (13.71 percent each) FECSA and Union Fenosa electric companies (7.89 percent each) a group of Spanish savings banks (16.84 percent), Entrecanales and Cubiertas construction companies (10.51 percent each) Inversiones Fersango (4.73 percent) and Corporacion Alba (2.63 percent).
Telefonica is owned 30 percent by the government of Spain and 70 percent by other groups, such as Patrimonio del Estado, the finance ministry’s industrial holding company. Earlier this year, the partially privatized Spanish banking group Argentaria expressed an interest in buying up to 10 percent of the cellular business of Telefonica. The large telecom firm has plans to divide into eight operating companies.
Although the Spanish government ended Telefonica’s monopoly on cellular in 1993, the company is expected to still control 90 percent of telecommunications investments for the next seven years. Telefonica has hired AT&T Network Systems Spain to install switching equipment during the next three years that will modernize Telefonica’s infrastructure by updating and installing 1.4 million digital telecom lines.
