Top Polish telecom operator to appeal regulator moves that undermine revenue

Poland's dominant telecommunications operator, Telekomunikacja Polska SA (TPS.WA), will appeal recent decisions of the telecommunications market regulator that would cut the company's revenue base, an executive said Thursday.

Within the past two weeks, the regulator issued two crucial decisions forcing TPSA to cut its interconnection fees and offer wholesale line rental services at discount prices.

Analysts estimate the regulator's decrees could cut TPSA's 2007 revenue by an estimated 300 million zloty ($1=PLN3.1865).

TPSA director for regulatory issues Grażyna Piotrowska-Oliwa told reporters that TPSA was not "ready to sponsor the regulator's moves favorable only to its competitors."

She declined to specify how the tougher regulatory setup would impact TPSA's financial performance but said analysts' estimates were relevant.

In its Wednesday research note, BZ WBK brokerage said that in the worst-case scenario over the long-term, the decisions of the regulator could cut TPSA revenues even by 3% to 4%. BZ WBK said that to cope with falling revenues the company would have to cut its workforce by some 5,000 from the current 33,600.

On July 5, the regulator published a decree on reference interconnect offer, or RIO, obliging TPSA to cut fees for access to its network for other competitors by 35%.

Earlier Thursday, the regulator issued a decision on rules and fees for wholesale line rental, or WLR, of the TPSA infrastructure to its fierce competitor Tele2.

TPSA will now have to offer WLR services to Tele2 with a 47% discount.

The measure allows the alternative operator to rent fixed lines at wholesale prices and then collect subscription fees from clients instead of passing it on to TPSA.

Piotrowska-Oliwa said that to meet technical requirements stemming from the decrees TPSA would have to invest some PLN160 million this year but the planned level of capital expenditure could not be changed.

TPSA capex for 2006 is planned at PLN3.3 billion, while revenues are forecast at PLN18 billion, down from PLN18.3 billion in 2005.
Source:marketwatch.com