Банкеръ Weekly

Briefs

MOBIKOM TO BUILD A DITITAL NETWORK

The analogue cellular phone operator Mobikom intends to set up an etirely digitalized network. On Wednesday (November 19) the company demostrated the CDMA 2000 system, allowing the use of third generation services in mobile communications. Their large-scale application is expected to start in the summer of 2004. The overall realization of CDMA 2000 in Bulgaria will be entrusted to the Chinese company Huawei Technologies, it will take several years and will cost almost USD80MN. One of the necessary conditions for launching the construction of the new digital network is a permission from the Commission for Regulation of Communications, expected by mid-December as no legislative hindrances exist for adding the new terms to the granted licence and pay the respective amount of money for that. The problem regarding financing seems settled too, as several Bulgarian and foreign banks have showed interest towards the project. After its implementation, Mobikom's subscribers will be able to choose themselves if they would be using the analogue or the digital network, which will initially cover 50% of the country's territory and if they would exchange their old mobile phones with new ones. One of the big advantages of the digital network operating at 450 MHz is the wide frequency band which could make Mobifon one of the best and most reliable INTERNET providers in Bulgaria, experts point out. In addition to the high-speed INTERNET access, CDMA 2000 offers a mobile office, real-time video, high confidentiality of links, and low radiation. The mobile digital network operating at 450 MHz will considerably relieve the Bulgarian Telecommunications Company (BTC) regarding its obligation to provide telephone services in places where the construction of a telephone cable line is economically ungrounded and unprofitable. One of the shortcomings of the new technology is the fact that it will not offer the Roaming service, i.e. Mobikom's subscribers will be able to make telephone call only on Bulgaria's territory. By setting the digital network Mobikom hopes to bring back some of the clients it has lost. Currently, the company has 115,000 subscribers, down from 140,000 in 2002. Its market share is just 4% but with the introduction of the 'DЊЂ system over the next years it is expected to increase to 10 per cent, insiders forecast. Of course, the reflux of clients has influenced adversely Mobikom's financial results. The expectations are that its 2003 after-tax profit will be only BGN10MN, down from BGN23MN last year. In case a permision from the Commission for Regulation of Communications is obtained, the compay intends to invest a significant part of it in the construction of the new digital network. Otherwise, the BGN10MN profit will be distributed in dividend among its shareholders: the British Cable Wireless (with a 49% stake), BTC (39%) and Radioelectronic Systems (a company within the structure of the Interior Ministry), which holds 12 per cent.

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