Polish Netia To Start 3G Infrastructure Work By Year-End

WARSAW -(Dow Jones)- Netia Mobile, a unit of Poland's second-largest fixed-line operator Netia Holdings (NET.WA), said it will start building infrastructure to provide third-generation mobile services by the end of the year.

"We'll start as soon as we pick up the network equipment vendor," Wojciech Madalski, Netia Holdings' chief executive and a chairman of Netia Mobile's supervisory board told reporters at a news briefing Wednesday.

He added Netia will likely select the vendor in the third quarter of the year, and "is currently negotiating with several players."

In May, Netia Mobile won a tender for Poland's fourth license for 3G mobile services, but got official documents only Wednesday, as the market regulator had first to deal with 20 protests submitted by the tender's other participants, who contested the legality of the process.

Netia edged out Hutchison Whampoa Ltd. (0013.HK) and Poland's incumbent operators, Polska Telefonia Cyfrowa (PTC.YY), Polkomtel SA (PKT.YY) and Centertel, the mobile unit of Telekomunikacja Polska SA (TPS.WA).

Netia Holdings also revealed the capital structure of Netia Mobile, where Netia Holdings will have a 30% stake, while its partner, a private equity firm Novator, will own a 70% stake.

The funding capital of Netia Mobile will be EUR300 million, with Netia's participation at EUR70 million, and Novator's at EUR210 million.

Out of that amount, the operator will pay 345 million zlotys ($1=PLN3.2939) for the license and the rest will be used to cover initial operational costs.

The costs of the network infrastructure estimated at over EUR650 million, will be covered by banking loans, Madalski said.

"And also, from the financing provided by the network equipment vendor," said Madalski.

Madalski said that the building of the network would take about 12 months to provide between 15% to 20% coverage, measured by subscribers.

"But of course, our aim is to have much more," said Madalski, adding that the coverage will initially focus on large cities.

Netia Mobile will operate under its own brand.

-By Malgorzata Halaba; Dow Jones Newswires, +4822 622 2767; malgorzata.halaba@dowjones.com

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Posted to the site on 24th August 2005