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AT&T to Help Czechs End Lineup for Lines

By Andrew HeilSpecial to The Christian Science Monitor / July 13, 1995



PRAGUE

AT&T is lending ''technical support'' to the largest privatization project yet in post-communist Europe.

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But the American company seems anxious to downplay its vital role.

Faced with the specter of foreign domination in its telecommunications industry, the Czech Republic was expected to shy away from huge, multinational players. So AT&T entered through a side door. The Czech government selected a Dutch-Swiss consortium, TelSource, to be ''strategic partner'' for the country's state-owned telephone operator, SPT Telecom. AT&T is a nonequity partner in the consortium.

Transaction documents were signed on Monday, clearing the way for sweeping changes in SPT Telecom. The deal is welcome news to the 1 million individuals and businesses that are on telephone waiting lists in the Czech Republic.

TelSource won 27 percent ownership and effective control of Czech SPT with a bid of $1.32 billion, along with an estimated $131 million in expertise, and access to software and research that includes AT&T's famed Bell Laboratories.

''AT&T is not a participant in the consortium ... in a risk sense,'' says Ceef Steijger, an AT&T spokesman in the Netherlands. Otherwise, AT&T remains silent over its commitments.

Dutch PTT Telecom and Swiss Telecom are splitting the financial burden, and consequently making the headlines. AT&T escaped mention completely in some initial news reports, and the worldwide networking giant was not officially represented at a press conference announcing the government's decision.

''Let's not forget the important contractual participation of the American firm, AT&T,'' reminds Czech Economics Minister Karel Dyba, who oversaw the 10-month tender process.

AT&T will send approximately one-third of the 100-strong transition team to Prague, according to TelSource officials. Andre Kaser, vice president of Swiss Telecom, says AT&T's marketing know-how will also be especially valuable.

TelSource beat out a more lucrative offer from Italy's STET International, and bids from consortia including the German and French state companies, to cash in on the massive restructuring of the Czech phone system.

It has vowed to double the size of the existing 2 million-line network within five years and enable the company to ''cope with competition'' once SPT's long-distance monopoly runs out in 2000.

THE scale of the project made a big player attractive. But French and German firms have been involved in huge privatization deals that eventually forced Prague to backpedal, first with the Czech state airline and then Czech carmaker, Skoda.

Analysts speculate that AT&T is remaining in the shadows to avoid worries over another big, foreign bully calling all the shots. The benign image of both the Dutch and Swiss financial partners helped, but experts say that image could be deceptive.

''Definitely AT&T has a lot of power within the consortium,'' says Petr Skodny, a telecommunications expert at one of the world's leading management consultancies.

While other telecommunications ventures are clashing with regulatory watchdogs in Europe, AT&T seems to be forgoing direct ownership to establish itself in Central and Eastern Europe through alliances.

''They need something like this to establish a network in the region,'' Mr. Skodny says.

In December 1994, AT&T agreed to a joint-venture with Unisource, which brings together a host of international operators. Both PTT Telecom and Swiss Telecom are Unisource shareholders, and claim the ties will equally benefit their new, Czech customers.

''Unisource will develop a pan-European network,'' Mr. Kaser says, ''and we would like to interconnect the SPT network with this pan-European network.''