Q-Telecom wants to find more than just a niche in the Greek market
When Info-Quest decided two years ago to expand into the telecommunications sector, problems were just beginning to surface in international markets. The stock market downturn, which put an end to cheap funding, and the recession in the domestic IT industry, however, did not stop the company from acquiring licenses for mobile telephony services and LMDS services. Info-Quest’s investments in its telecommunications venture, amounting to close to 150 million euros, have affected its results negatively. Nevertheless, Theodore Fessas, president and managing director, is optimistic based on Q-Telecom’s first five months of operation. The subsidiary presently has some 43,000 subscribers in mobile telephony and 17,000 in fixed-line telephony. «Nobody can predict exactly what will happen but we have set a profit target for 2005,» Fessas said. «At the end of 2003, we aim to have positive cash flow.» Info-Quest’s business plan for Q-Telecom forecasts the company making a profit only if it manages to sign up 500,000 mobile telephone subscribers by 2004, which would correspond to 5 percent of the total market. «Of course, we have very strict management and we avoid unnecessary expenditure,» Fessas said. He said Q-Telecom had benefited from the big fall in the prices of mobile telephony network equipment as a result of the crisis of the last two years. Furthermore, the conditions of the fourth mobile telephony license did not require the company to set up its own network as long as it can cover 20 percent of the population. «In the major cities, we have set up our own network and following an agreement with Vodafone (Panafon) we offer nationwide coverage,» he said. Many have wondered how Info-Quest can compete with rivals in more sophisticated telephony services, such as third-generation mobile telephony, at a time when it is difficult to raise funds. Fessas said it is too early to predict the course of third-generation mobile telephony. He said Q-Telecom is prepared to offer more sophisticated services, with its principal advantage a simple pricing policy with no monthly charges and competitive rates aimed at the average subscriber. Another advantage is the company’s package of complete telephony services via its LMDS fixed-telephony unit. Fessas said LMDS services will be on offer early next year. He said the fixed-telephony operation, in which subscribers call a four-digit number first, is developing satisfactorily. «The fact that we did not use IP (Internet protocol), which is usually used for Internet data, allowed us to offer voice services of a high quality,» he said. Regarding funding, he said the participation of the Cypriot telecommunications authority in the company’s share capital is expected to be settled by the end of the year. The entrance of a strategic investor is related to Info-Quest’s plans to spin off Q-Telecom, as it is an entirely different business from IT. Based on the terms of the mobile telephony license, the company must have a share capital of at least 147 million euros. Therefore, only with new capital from a strategic investor can Info-Quest spin off the telecommunications venture. Fessas said the telecommunications subsidiary is expected to contribute 10-20 percent of group turnover in the next two years. It is forecast to strengthen significantly consolidated EBITDA.