A German-Italian consortium won the outstanding 49 percent stake in the Czech Republic’s second cellular operator, beating out strong contender California-based AirTouch Communications Inc.
Deutsche Telekom’s cellular arm, DeTeMobil, will hold 84.5 percent of the 49 percent stake; STET International will own 12 percent; two Czech companies will hold 3.4 percent. The consortium estimates its investment at $200 million, with a goal of serving a half-million customers by 2005.
Like other developing economies in Eastern Europe, the Czech Republic is creating competition for its established operator, Eurotel. The government created two licenses for cellular Global System for Mobile communications service-one went to Eurotel and the other to Ceske Radiokomunikace, a radio infrastructure operator. However, Ceske was only awarded 51 percent ownership, and was required to find a 49 percent international partner.
AirTouch sought the opportunity through an alliance with Cekom plus a.s., a consortium of Czech firms that includes distributors of electricity and gas. AirTouch promoted both its strength as an international cellular operator and Cekom’s immediate access to hundreds of network transmitter sites, according to Vern Tyerman, vice president of AirTouch Europe.
The Ceske partnership hopes to have commercial subscribers online by autumn. Although SBC Communications Inc. expressed an initial interest in the license, the company said it didn’t bid for the partnership.
This isn’t the first time Deutsche Telekom has tried to get into Czech telecommunications. Last year, the $41 billion Bonn-based company tried to buy a 27 percent stake in Czech SPT Telecom, a company that holds an interest in Eurotel. However, the sale went to a Swiss consortium.
Analysts who have observed the Czech Republic’s progress since its 1992 break-up from “its poorer cousin to the East,” (Slovakia) note dramatic changes in the Czech telecom environment. Prior to World War II, the nation enjoyed an impressive standard of living and was considered “a garden spot” in the region, according to International Technology Consultants Inc. of Bethesda, Md.
“The Czech people are demonstrating their eagerness to re-enter the ranks of European leadership. Massive progress has been made in legislation, and institutional reform has been very successful so far,” ITC said. Politically, the country probably has the most stable environment of any of the former communist-bloc countries, ITC said.
Deutsche Telekom has said its interest in the Czech Republic, which adjoins Germany’s southeast border, is in line with trade relations already developed between the two countries.
