The Romanian Ministry of Communications awarded two 900 MHz Global System for Mobile communications licenses to the consortia of Mobil Rom, led by France Telecom International Mobiles, and to MobiFon, led by Montreal-based Telesystem International Wireless Services. AirTouch Communications Inc. is a minority partner in MobiFon.
Competition for the licenses was heated because Romania-with more than 23 million people-has been relatively untouched by wireless communications. Government-owned Telefonica Romania, the incumbent operator, claims only 13,000 users on its Nordic Mobile Phone 450 network and current penetration of basic phone service is one line per seven people.
The U.S. Embassy in Bucharest reported sources in the ministry said MobiFon submitted the strongest technical bid. The embassy said MobiFon benefited too because partner Ana Electronics has strong political connections.
Mobil Rom is comprised of some powerful local firms, said the embassy.
Government officials “have repeatedly stated their desire to apportion the award of these licenses between an `American’ consortium and a `European’ consortium,” added the embassy.
TIW is the majority owner in MobiFon, with 39.9 percent, and AirTouch holds a 10 percent interest with an option to purchase an additional 10 percent. The remaining 50.1 percent shares are held by Romanian partners, including the Romanian post office, which provides strategic points of access to customers; Logic Telecom S.A., a Romanian data network operator; Ana Electronic, a nationwide consumer electronics retailer; ISAF, an engineering firm, and Romanian Investment Fund, said TIW.
France Telecom owns 51 percent of Mobil Rom. Partners are Media Pro, with 30 percent; Computer Land of Romania, with 10 percent; Tomen Telecom Romania, with 6 percent and Alcatel Network Systems Inc. with 3 percent. Mobil Rom said it expects wireless subscribers to number about 1.3 million by 2006.
AirTouch spokeswoman Susan Rosenberg said the Romanian government wants the GSM networks built quickly, and AirTouch has the ability to deliver.
“We have already begun work on the network design and the first stages of the implementation,” said Mario Bertrand, president and general manager for TIW in Europe.
Licensing was long-awaited by all parties involved. The initial schedule for introducing digital cellular called for a tender more than a year ago, but delays ensued for a number of reasons. It took longer than expected to clear the 900 MHz spectrum, which previously was used by the military, there were disputes between the communications and finance ministries regarding license fees and legal questions arose concerning the rights of incumbent Telefonica Romania. The most recent delay, from Oct. 25 to Nov. 15, occurred as a result of national elections.
Both GSM operators are required to pay the government $50 million in the near term and $5 million per year for 10 years. In five years, the two GSM licensees must provide coverage in certain specified cities and routes and cover 65 percent of the Romanian territory, which extends nearly 92,000 square miles, said the embassy.
Michele Beaubien, a TIW spokeswoman, said MobiFon is in discussions with the ministry and Mobil Rom to establish specific and equal rollout deadlines. MobiFon plans to launch in Bucharest and at least eight other major cities concurrently.
Two strong contenders that did not receive licenses were Zephir Mobil, a consortium of Motorola Inc., Tele Danmark, Telenor of Norway and the Radiotel group of Romanian communications firms; and a partnership between STET of Italy and Bouygues Telecom of France. The U.S. Embassy said one reason Zephir suffered is a perception that Motorola is more of an equipment maker than service provider, and that Motorola could supply equipment to one or both of the licensees.
The Embassy said it expects Lucent Technologies Inc. will provide network equipment for MobiFon, as Lucent and AirTouch have a “global understanding” when it comes to building and operating GSM systems.
