IHS Global Insight Perspective | |
Significance | Orange's Polish arm and Play, its smaller rival, have confirmed a tentative interest in setting up a joint venture for an LTE roll-out. |
Implications | Under the plans, which are subject to an antitrust clearance as well as the final licensing conditions, the partnership would bid for a 2.6-GHz licence and, if successful, be responsible for building an LTE network for the owners' retail services. |
Outlook | Rather expectedly, such close co-operation could later result in a full merger between Orange and Play. |
Mobile operators Orange Poland and Play plan to establish a joint venture (JV) for attending Polish regulator UKE's forthcoming 4G spectrum tender, report various media. The companies have requested approval from the country's competition authority UOKiK for their partnership, and the final decision on the co-operation will depend on its response, as well as the conditions of the tender, which are meant to be published within the next few weeks.
Outlook and Implications
- Poland's Second 4G Licensing: The collaboration between the two GSM/UMTS operators would concern the UKE's second 4G tender, through which the regulator intends to allocate spectrum in the range of 2.6 GHz; the first such licence was won by start-up business Aero2 in last October (see Poland: 5 March 2010: Poland Plans to Issue Further 4G Licences and Poland: 14 May 2010: Aero2 Takes Over CenterNet in Poland). Like Aero2, both Orange and Play are eyeing LTE as their 4G network technology. Although the UKE has thus far said nothing definite about the conditions, the market players are expecting it to distribute two blocks of 35 MHz each, which is arguably too much for a single carrier and as such might indicate that the regulator would like to facilitate a faster 4G deployment through some form of infrastructure-sharing. The realisation of the JV appears to depend largely on the final licensing terms, yet if these are in line what the companies are preparing for, then there could be indeed a plausible case for a roll-out partnership. This would probably see the JV bidding for a licence, and subsequently—the outcome permitting—acting as a wholesale operator to its owners, as well as possibly other interested retail providers.
- Paving Way for Consolidation? Theoretically, the LTE partnership could later lead to a full merger between Orange and Play, with the likeliest route being the former taking over the latter. Play's management speculated with the divestment idea in the beginning of the year, and back then Orange was the only one of the existing operators to indicate interest in an acquisition (see Poland: 7 January 2010: Play Could Be Sold During 2010—Spokesman). At the same time, the market could also consolidate through M&A activity in Polkomtel, of which domestic shareholders are varyingly keen to exit the business. The firm's only existing strategic investor, Vodafone, has not kept much noise about its future plans in Poland, and in the case it decided to waive the opportunity to increase its holding, then there would be room to a new telco shareholder, such as pay-TV provider Cyfrowy Polsat, of which main owner, billionaire Zygmunt Solorz-Zak, said last week that he might be interested in a controlling stake (see Poland: 4 June 2010: Owner of Cyfrowy Polsat Could Bid for Controlling Stake in Polkomtel—Interview). Polsat is currently a retail client on Aero2's UMTS900 network, and the local press has for a longer time circulated—still unconfirmed—reports that also the latter firm would be owned by Solorz-Zak. As regards other existing players, Orange and PTC would likely be prevented by anti-trust regulations from investing in Polkomtel, while Play would lack the resources to do so.