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November 16, 1994

AIRTEL PROMISES INVESTMENT OF $735m IN BID TO WIN ONE OF SPAIN’s CELLULAR PHONE LICENCES

By CBR Staff Writer

Madrid-based Airtel, the consortium formed by British Telecommunications Plc, Banco de Santander and Ameritech Corp aims to secure one of the two cellular operator licences up for grabs in the coming months. Airtel currently employs 40 staff and has a member of each of the three founding companies on its governing committee. It has also declared that it is open to the possibility of a fourth partner. At the moment it appears that Airtel will be competing with three other consortia: SRM, made up of BBV, Secontel Group, Gas Natural, Vodafone Group Plc, Mannessmann AG and Cofira SA; which has merged with Cometa, formed by Prisa Group, La Caixa, Caja de Madrid, FCC, Bankinter, El Corte Ingles, La Vanguardia and GTE Corp, which withdrew after objecting to being diluted to 11%; Sistelcom, formed by BCH, AirTouch Communications Inc, Union Fenosa SA, AT&T Corp and Fecsa SA; and Reditel formed by eight savings banks, BellSouth Corp, Ineuropa and oil company Repsol. With respect to the mobile phone market, Spain is currently trailing a long way behind its European neighbours, reporting only 250,000 users in 1993. It is hoped that this figure will reach 500,000 by the end of this year and 2m users by the year 2000 when the volume of business should be worth around $3,625m. Airtel is the natural progression of the company created by British Telecom and Banco de Santander to operate in the field of data transmission services. According to the president of Airtel’s governing committee, Carlos Constantini, the consortium’s bid will be based on a commitment to sustain a long-term presence in the Spanish market, a commitment to the Spanish economy and an ethical commitment to the end-user through high quality of service.

Job creation

Airtel calculates that it will have to invest around $725m in the first 10 years, but admits that there are many variables affecting this figure, such as the geographical area to be covered, the time periods over which coverage is to be completed and the cost of lines to be rented. It pledges the creation of 300 jobs in its first year of operation, a total of 1,500 jobs within 10 years, and says it will be relying on Spanish companies or Spanish-based multinational companies for all the necessary elements and components to get operations going, as well as for technical support. Constantini declares that Airtel will respect whatever decision is made by the Ministry of Public Works, Transport and the Environment as to how the second operator is to be chosen, but strongly advocates a two-stage system, whereby a first selection would be made on the basis of the technical merits of contenders, prior to a tender stage, which would also take into consideration the commitment of operators to continue in the market. The Ministry is keen that only two companies, Telefonica de Espana SA and the consortium formed by Retevision and Red Electrica should offer infrastructure services. Airtel states that it is prepared to use these services, providing that they are of a high quality, while it believes there should be greater freedom in this area, including the option for an operator to set up its own network.

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