The government of Romania pushed the tender deadline for two Global System for Mobile communications licenses back by two months, doubled the price for the licenses and formed a special commission to recommend any additional changes to the bid documents, reported the U.S. Embassy in Bucharest.
The Romanian government imposed an upfront activation fee of $50 million, to be paid by each of the two digital cellular license winners in addition to a spectrum use tariff of $5 million per year for 10 years.
Previously, the Romanian Ministry of Communications announced a GSM tender was scheduled for this month. The new tender deadline is set for Sept. 26. The newly formed commission’s suggested addendum to bid documents was due Friday.
The original GSM tender was expected to occur about a year ago, but has been delayed repeatedly because of “a dispute with the finance ministry over license fees, legal questions concerning the rights of the existing analog cellular operator (Telefonica Romania) and turmoil at the communications ministry,” continued the embassy.
The tender date and license price changes, which were imposed after a tender package already had been distributed to 36 potential bidders, were executed by the Romanian government, which criticized the communications ministry for having set a short five-week bid deadline and for not presenting the tender to the full government cabinet, stated the embassy.
A large European company was rumored to have lobbied for the tender extension, added the embassy.
“The controversy over the GSM tender reflects the beginning of what is sure to be an intense competition for these potentially very lucrative licenses. With the price fixed, and technical and coverage requirements largely spelled out in the tender documents, differentiation among bidders will be much more subjective than in the usual procurement,” reported the embassy. “Bidders can be expected to bring heavy political pressure to bear in support of their proposals.”
Government’s reproach of the communications ministry was championed by the Senate and ruling Social Democracy Party (PDSR) President Oliviu Gherman. He led the effort to oust Ioan Muntean from a brief tenure as chief of the state telephone company. The move was part of a deal PDSR cut with the National Unity Party (PUNR). The other half of the parties’ bargain was to make Muntean the communications minister, said the embassy. As such Muntean, previously a PDSR official, became a PUNR member and “thus lacks a strong base with PUNR, and seems to have few friends in his old party,” reported the embassy.
The embassy report concluded, “The confusion and squabbling over the high profile GSM tender, coming on the heels of the well-publicized year-long delay in announcing it, contribute to a perception of amateurishness that tarnishes Romania’s image in the international business community.”
International Technology Consultants of Bethesda, Md., reported Telefonica Romania started analog service three years ago. ITC estimates the operator has about 3,500 subscribers. However, the U.S. Department of Commerce reported subscribers totaled 11,700 at the end of 1995.
