January 2000

Poland Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

The process of restructuring and reorganising the telecommunications sector in Poland according to the rules of the internal market of the European Union continues. The ongoing changes are stimulated by the preparation and adoption of the National Programme of Preparation for EU membership for Poland. In general, regulatory developments in this quarter continue the privatisation process in the telecommunications sector that is taking place in Poland. The developments are steps towards greater liberalisation of the telecoms market.

1. Telekomunikacja Polska S.A. privatisation

The next stage of privatisation of the public telecommunications network, TPSA, began in August 1999, when the Ministry of Treasury offered 25-35% of TPSA shares for sale. The deadline for proposals was August 23,1999. Some large European and American telecom operators were interested in strategic investment in TPSA. Among interested parties are France Telecom, SBC, British Telecom, Deutsche Telecom and Japanese NTT DoCoMo. After calls for tender, there were two potential foreign strategic investors on the short-list: France Telecom and SBC. At the beginning of November 1999 SBC quit its negotiations, and France Telecom remained as the only potential strategic investor. Minister of Treasury Emil Wasacz expressed, during press conferences, his hesitation to accept the offer of France Telecom. On 22 December 1999, he informed, during a press conference, that France Telecom’s offer was unsatisfactory. A new tender will be called at the beginning of January 2000. It is probable that the level of shares percentage offered for the new tender will increase. It is expected that the new strategic investor will appear by the first half of 2000.

2. Long distance operators

2.1 Minister of Posts and Telecommunications invited a call for tender on 8 October 1999 for long-distance public telecommunication service operators of fixed telephone lines including interconnections by means of SS7 (ISUP2) signals. As a result of the tender three operators were nominated. 14 copies of tender documentation have been sold to the interested parties, namely: Netia Network S.A., Netia Holdings S.A., Polkomtel S.A., Telekomunikacja Energetyczna TEL-ENERGO S.A., Punder Ltd (for Telekom Austria AG), Elektrim S.A., Poland Telekom Operators NV, France Cables & Radio S.A., KOLTEL Sp z o.o. Bydgoszcz, PKP Dyrekcja Telekomunikacji Kolejowej Lublin, Polska Telewizja Kablowa, El-Net S.A., Tele Danmark International, Grupa Polpager Sp. z o.o.

2.2 During a press conference on 26 November 1999, one day after the tender deadline, the Ministry of Posts and Telecommunications announced the list of three companies. The potential long distance operators are as follows:

• Netia 1 Sp z o.o., ul. Poleczki 13, 02-822 Warszawa
  Netia 1 Sp. z o.o. (Co Ltd) is a consortium of Netia Holdings and its 6 dependent companies, BRE Bank SS.A. PKO BP and Stoen SA.
• Niezalezny Operator Miedzystrefowy Sp z o.o.. ul. Jutrzenki 177, 02-231 Warszawa
  Niezalezny Operator Miedzystrefowy is a consortium of Tel-Energo, Polskie Sieci Elektroenergetyczne and Polski Koncern Naftowy
• NG Koleje Telekomunikacja Sp z.o.o., ul. Grojecka 17, 02-021 Warszawa
  NG Koleje Telekomunikacja is a consortium of Polskie Koleje Panstwowe (The Polish State Railways), National Grid (the British power consortium) and its filia Energies, Centrala sp z o.o. (dependent of the Polish Telecom Operators - PTO).

2.3 The fee for each license is 23 000 000 Euro. Licenses will be valid for only 6 months, from 1 July 2000 to 31 December 2000. The advantage of such licenses is their primary position on the open long-distance market. Needless to mention, until 1 January 2003, ownership of 51% of shares by domestic firms in consortia is obligatory. Thus, there is no possibility of competition by powerful foreign companies for almost two years. Yet, the level of 23 million EURO seems to be high for such a short term, and it is possible that some firms will resign during the second and third phase of negotiations. Indeed, there are doubts as to whether National Grid will participate and whether its Polish partners can afford to pay for license ("Rzeczpospolita", 23 Dec.1999).

3. National Numeration Plan

The National Numeration Plan is under sector negotiations and will be implemented during the first quarter of 2000. The new numeration system will identify every long-distance operator giving equal possibilities to future clients to choose their operator.

4. Y2K

The Ministry of Internal Affairs and Administration, the national co-ordinator for solving the Y2K problem in Poland, has continued activities of the National Action Plan concerning Y2K, which the Polish Government accepted in April 1999 (http://www.dli.mswia.gov.pl). Information concerning the National Plan includes updated reports on the government's administrative preparations for Y2K, a timetable of deadlines for Y2K preparation in power supply, telecommunications, transport, banks, finance, health and social care sectors and other related issues. Reports were issued in September 1998, April 1999, and July 1999. The Minister of Internal Affairs and Administration announced the last report on 9 November 1999.