Forthnet sure of staying power

Forthnet, the Internet service provider turned telecoms operator, is confident that it can see off its rivals in the telecommunications industry just as it successfully outlasted the competition in the Internet business, Pantelis Tzortzakis, managing director said. «We can do it again,» he told Kathimerini English Edition in an interview. The market appears to share his sentiments. Since December 28, Forthnet’s shares have risen by a meteoric 68 percent as investors gave their nod of approval to the company’s telecommunications venture. Starting out as an Internet service provider (ISP) in 1996, Forthnet decided to expand into the telecommunications sector in 2000 in partnership with Telecom Italia subsidiary Stet International Nederland. Their joint venture, Mediterranean Broadband Services, in which Forthnet holds a 40-percent stake, acquired a fixed wireless telephony license in 2000. Permits also went to mobile phone operator Vodafone (formerly known as Panafon-Vodafone), Europrom, Quest Wireless of IT group InfoQuest, and electricity utility Public Power Corporation. In addition, a slew of smaller companies received official approval to offer voice services. The decision to open up the domestic telecommunications market last year was in line with European Union directives. Forthnet eclipsed its rivals when it became the first alternative carrier to offer fixed telephony services to corporate users last December. Since last month, the service is now available to household users as well. Rates in general are 15 to 20 percent cheaper than those charged by incumbent OTE. Tzortzakis is unfazed by the competition whether from OTE or the other alternative carriers. «Five years ago there were about 200 ISP companies; now there are only three, Forthnet being one of them. The rest have disappeared one way or the other. We believe the same will happen in telecommunications,» he said. Tzortzakis sees room for only three operators in the fixed-voice sector in Greece. He is confident that Forthnet will number among the trio. He says the fact that the company debuted ahead of the other alternative carriers is an advantage by itself. «Generally in Europe, the first alternative carrier is the winner while the second just survives. We have the first-move advantage,» the Forthnet managing director pointed out. Just as importantly, the company is backed by a solid capital base, good technical know-how and a substantial customer list from its Internet activities. Forthnet expects a significant number of Internet clients to migrate to its voice services. «We have 30,000 credit card-paying Internet customers, 1,700 leased-line corporate clients and 12,000 shareholders, all of which represents market potential for our telecoms services,» Tzortzakis noted. Tentative figures suggest the company could sign up 15,000 to 20,000 customers for its voice services by the end of the month. He says the company has set «a conservative target» of a 5-percent market share by 2005. It plans to invest 37 billion drachmas in its telecommunications activities. John Noikokyrakis, telecoms operator at Omega Securities, said aspiring telecoms operators like Forthnet and Quest Wireless have an edge over the other alternative carriers. «They already have a corporate customer base which they will definitely target. It will also be easier for them to generate positive cashflow,» he said. Dimitris Stoimenos, head of research at Eurosec, said Forthnet’s network of 128 hubs around the country means it has a bigger range than any other company, which at the same time helps it to save on telecoms-related capital expenditure. He said the competition between the alternative carriers and with OTE will probably come in long-distance and international calls. He said studies showed that alternative carriers in Europe generally hold some 32 percent of the market in long-distance calls and 44 percent of international traffic.

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