Cesky Mobil Oskar GSM Mobile Network, Czech Republic
The third mobile phone network in the Czech Republic, known as Oskar, was launched in March 2000, following its owner's victory in the licensing process that took place in mid-1999. Cesky Mobil is a joint venture between Priority Telecom, a division of Amsterdam-based United Pan-Europe Communications (UPC); Telesystem International Wireless (TIW) of Canada, and Investicni a Postovni Banka (IPB), one of the largest commercial banks in the Czech Republic. It started with an initial equity of $380m and beat off competition from other bidders such as Telenor, Orange and Vodafone. Cesky Mobil is expected to pay a license fee of approximately $30m.
On launch the service covered 50% of the Czech Republic's population, although it now provides 98.4% of the Czech population with coverage. The company originally said it was considering launching the service before the end of 1999, but then later decided to postpone the roll-out.
The third player in the Czech Republic GSM market, Cesky Mobil hopes to steal 150,000-200,000 potential clients from the incumbent operators through a strategy of simple and low-priced tariffs. By 2002 it had won 858,400 customers. EuroTel is the largest mobile phone operator in the Czech Republic, managing to recruit 483,000 new clients in 1999. Its younger competitor RadioMobil lured almost 500,000 clients in 1999 and at the beginning of 2000 reported 875,000 users of its Paegas network. Both GSM 900 operators cover more than 99% of the Czech population. Cesky Mobil has announced that it plans to spend a total of $850 million over five years in order to compete effectively in the market.
CONSTRUCTING THE GSM INFRASTRUCTURE
$450 million of the total $850 million has already been spent in two large contracts awarded for the construction of the GSM infrastructure. Siemens built the mobile phone network for the densely populated areas of West Bohemia and Prague, while Ericsson created the network east of Prague. Both contracts involved the installation of base stations, switches and software to offer voice and data services. The network is GSM 900/1,800MHz, with Ericsson receiving $200m and Siemens $250m.
Although Cesky Mobil is entering a market with high penetration already, the company's launch actually comes at an opportune moment. The mobile industry is just beginning the transition from simple voice provider to data and internet access provider, with all the repercussions which that entails. By entering now, Cesky Mobil can put itself on fairly equal footing in the new mobile market.
As well as offering voice services, Cesky Mobil will be adding GPRS software and bandwidth to its network, allowing wireless internet access and faster data transfer rates. WAP services are also offered, and there is a migration strategy in place for 3G systems. WAP data can be sent over the circuit-switched connection of GSM until the packet-switched GPRS network is available in July 2000, which will add significant speed to the service.
In a separate contract Lucent Technologies' Kenan Systems supplied the network's billing and management solutions. The implementation took place in just 11 weeks, enabling Cesky Mobil to meet the licensing conditions needed to enter the market in March 2000.