U:fon files for insolvency but keeps trading

23 Nov 2011

IHNED.cz reports that the Czech Republic’s fourth mobile network operator MobilKom (U:fon) has filed a petition to start insolvency proceedings, laying the blame for its woes squarely at the door of the regulator, the Czech Telecommunication Office (CTU), which it claims repeatedly delayed its competitive entry into the GSM market. The cellco has reportedly initiated its own insolvency proceedings in the wake of its failure to adequately redress its poor credit history. During the course of the financial restructuring though, the operator says that services to existing and new customers will remain unaffected. The group’s owner, Divenno Cyprus Holdings Limited operating via another Czech operator Dial Telecom, which took over from Penta Investments in July 2011, is backing the recovery plan. MobilKom owes an unspecified amount of money to the China Development Bank and was required to repay a sum thought to be in the hundreds of thousands of euros, IHNED.cz says. The cellco currently offers CDMA-based services that are incompatible with the GSM standard employed by its three larger rivals – Telefonica O2 CR, T-Mobile and Vodafone – but has been frustrated in efforts to launch its own GSM service or offer a MVNO service. For two years the operator has petitioned the CTU for new frequencies to support not only 2G voice but also LTE data services – to no avail. MobilKom’s sales and marketing director David Spies says the regulator’s heel-dragging is one of the big reasons for the firm becoming insolvent.

TeleGeography’s GlobalComms Database writes that operating under the brand name U:fon, MobilKom became the fourth mobile operator in the Czech market when it launched commercial data-based services in May 2007. MobilKom received its CDMA licence in 2005 and later signed a deal with Chinese equipment vendor ZTE to build out its nationwide CDMA network. The start-up was issued with a prefix code and mobile numbers by the CTU in late 2006 to offer services in the 410MHz-430MHz band. Work on the CDMA2000 1xEV-DO Rev A network began in early 2007, focusing on mobile data and push-to-talk (PTT) services (from September 2007). However, its network only covered 75% of the population, compared with the >99% coverage offered by rival GSM operators, resulting in significant problems. Indeed in January 2010 MobilKom admitted defeat in its quest to directly take on the might of established rivals and said it would instead reinvent itself to become the country’s first mobile service provider offering wholesale services. MobilKom closed its branded stores and integrated its marketing and sales departments in a move to reduce costs. The operator currently has over 100,000 subscribers.

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