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As they pleased

National project on mobile telephony: how did it fail?
What happened with the joint company Albania-Kosovo in mobile telephony – initiated by the prime ministers of these two countries? How did the PTK shares shrink ten-fold in “Plus”? Was this a project that added value to PTK as it was proclaimed in Prishtina, or simply a cooperating initiative between two prime ministers in order to benefit through patriotic rhetoric?

Prishtinë, 23 November 2011

The fourth mobile telephony operator in Albania was created on behalf of PTK. After it was hailed as a project that would change the practice of taking money out of the country by this very profitable sector, the prime ministers, Berisha and Thaci, agreed to indirectly build a joint operator in mobile telephony. Less than e year after this operator began work, it became clear that PTK was used only as a name to add points to the tender for the fourth operator.

A consortium established ad-hoc, brought PTK together with some businesses and individuals from Albania, in order to win the license for the fourth mobile telephony operator in Albania. This undertaking by the Kosovo Government, almost entirely closed to the public, promised a participation of PTK with 30% in this project, but as soon as the implementation of the project began, the shares of PTK dropped ten-fold, from 30% to 3%.

From the document for the establishment of the consortium it can be understood that the Kosovo Government clearly knew from the very beginning that PTK was obliged to invest not only in acquiring the license, but also in the further development of the company. Initially, the Kosovo Government pushed PTK into this business, through adding 2.4 million Euros in order to fill in the offer of 7.2 million Euros, the amount this consortium has offered for acquiring the license. Through this it was proclaimed that PTK secured 30% of the shares in the fourth mobile telephony operator in Albania. Later on, after “Plus” becomes a licensed and operational company, instead of having an increase in investment value, “brand” and in “know-how” of PTK, the Government of Kosovo changes its mind and decides not to allow PTK to undertake the investments required for this operator.

This investment, according to PTK officials, could amount to 20 million Euros, as a first investment phase, which in total was determined to be at little above 60 million Euros, but which potentially could bring PTK much higher income, and in particular add the value in privatization, as Government officials had claimed at the beginning of this initiative. This is because Vala would practically be considered now part of a market beyond our country borders.

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Be as it may, after having acquired the license, “PLUS” gives back to PTK the invested money and as a result also takes 27% of shares, reducing it thus from the main shareholder in a symbolic participant in shares with only 3%. The procedure with which this evaluation and action has been made is entirely unclear, as many other things related to this operator.

Although in the respect of investments and participation in shares, PTK has practically taken a very low profile, saying that only in preferential basis this company was offered 3% of shares, PTK in front of the public has always been presented as an important shareholder in this operator. After having given the license to this consortium, the first press statements by the Telecommunications Regulative Authority of Albania mention PTK as winner of the tender. On the other hand, in a statement issued by PTK on 31 May 2010, no information is released indicating that PTK has not undertaken the necessary investments in this operator, but it is implied that other shareholders will be investing. In this statement it is only mentioned that “PTK is on the right track of becoming the leader in the region in compliance with its vision and mission”.

Privatization of PTK as a reason for withdrawal:

Chief Executive of PTK, Shyqyri Haxha, justifies this withdrawal with the privatization of PTK. He says that the Board of Directors and the government did not consider it necessary any longer to invest outside of the country. It is about a little more than 20 million Euros investment that would keep PTK’s shares in “Plus” in the first phase of investments.

At that time, during the period of 2008-2010, the Government of Kosovo has taken in the form of dividends larger amounts from PTK than would be necessary to keep the shares in the Albanian market. Thaci Government at one time had taken 200 million Euros from the budget of PTK, and at another time another 80 million Euros.

Patriotism: 3% loaded

The presence of one mobile telephony company in a market outside of the country is considered to be an extraordinary advantage in the mobile telephony market. This fact practically transforms a company from a local business, in a company transcending beyond national borders, and for investors in this sector this fact changes the perception in a positive respect. Why then, a withdrawal from the “Plus” project, when the Government had proclaimed an absolute conviction that this investment would add value to PTK? The company “Plus” has given no information regarding these actions, despite of our insistence for several months.

“Preportr”, has also made continuous efforts for several weeks to contact the Minister for Economic Development, in order to clarify this, but this was impossible since Minister Beqaj has continuously refused to meet, mentioning his tight agenda as his reason for this.

From all documents and interviews obtained by “Preportr”, it becomes obvious that this process has been coordinated from the prime minister level. The decision that is found in the archive of the Kosovo Government, signed by Prime Minister Hashim Thaci, says: “...the request by the Board of Directors of Post Telecom of Kosovo is hereby approved on opportunities for extending its activities also in the Albanian market – participation in the tender for the license for the fourth mobile telephony operator in Albania”.

On the other hand, the Chief Executive of PTK, Shyqyri Haxha, tells about an agreement between the two governments, the one in Tirana and the one in Prishtina, which was reached well before the opening of this tender. “The Albanian State wanted a local company which would retain the profit in Albania, since the other three operators take large amounts outside of the country”, says Haxha. This perhaps shows more that the Government of Albania had taken the decision on which the winner would be well before the beginning of procedures for the tender. Nevertheless, what happens with time brings to surface decisions which put into question the benefits of PTK from this project.

Who are the shareholders of “Plus”?

It appears that the purpose was never for PTK to enter in the Albanian market, at least not as important as the purpose of enabling others to do the same. Among those who got the opportunity to begin the business in the mobile telephony are not only companies, but also physical persons.

A document that “Preportr” has secured shows exactly who the shareholders of the Albanian “Plus” are. The establishing document of the consortium that acquired the license for “Plus” operator shows the distribution of shares as of beginning, in other words, when PTK still had 30% of the shares.

This document shows that Union Group and ACI Engineering have 12.5% of shares each. Furthermore, the same document says that Albania Drink Distribution has 16.0% of shares and Infosoft Systems Sh.A. has only 4% of shares.

However, the most interesting part of this document is the fact that Saimir Mane – with residence in Trade Center Universi (suburb of Tirana) appears to be the owner of 25% of shares of “Plus”. In 2008, as a physical person, after having sold a trade center to the famous Serb businessman Miroslav Mishkoviq, Mane got involved in a consortium with the public operator Vala, respectively PTK, valued back then at one billion Euros.

The document on establishing the consortium for the fourth operator in Albania says that Mane has the center in QTU, although after a transaction published in Albania this center was sold to Delta Group, established by Mishkoviq, the ex-deputy prime minister during the regime of Milosheviq.

In this “national project”, from the status of main shareholder with 30% of shares, PTK now is an irrelevant shareholder. From the legal aspect, it is difficult to understand according to which procedure the shares experienced a drop of 27 points. PTK officials go so far to say that even the three remaining percent of shares is a result of the generosity of “Plus”. On the other hand, through a press statement, PTK says that it has invested in the so-called “Know How” model, although it was never reported what was the value of the “know how” and of other assets of PTK involved in this consortium, such as the brand, or even the expertise.

Shyqyri Haxha, Chief Executive of PTK, says that after initially the shares were taken from PTK, “Plus” has offered PTK to buy shares again. “Now those shares are more expensive”, he says.

“Plus” minus PTK

On the other side of the border, the involvement of PTK in the fourth mobile telephony operator in Albania is almost inexistent, although it proved to be fundamental for the license of the company. “Preportr” has made numerous efforts through telephones or electronic post to arrange an interview with representatives of “Plus” in Tirana, but this was impossible. When the news was published regarding the winning of the license in Tirana, PTK appears on the forefront as the fourth operator, overshadowing thus businessmen close to the Albanian government, who seemed not to complain about this.

The situation changes after the initial public interest is consumed when “Plus” operator becomes functional. In the website of “Plus” the first press statement of this company does not mention one word about PTK. “The company was established in 26 of June 2009...PLUS has been awarded the GSM license resulting from the highest bid of 7.2 million Euros in the international tender held on 23 of January 2009” is stated in the website of the Albanian mobile telephony operator. During one of several phone conversations with the spokesperson of “Plus”, Jonilda Filipi, she only confirmed that “PTK has shares in this company”, without giving any details regarding the involvement or the importance that PTK has in the fourth mobile operator in the Albanian market.

The end-year dividend

The only thing that is said about the profits of PTK from what it still has in “Plus” is not the amount of money it has received so far, but merely the fact that they are received at the end of each year. According to the representative of PTK in “Plus”, Elvis Pista, “every joint stock company divides the dividend at the end of the year”, and according to him this applies for PTK as well. This means that if we suppose the annual profit of “Plus” is 100 million Euros, then the 300 hundred thousand which belong to PTK will be kept in the bank account of the fourth mobile operator of Albania until the end of the year, thus making it impossible for PTK to operate this cash throughout the entire year.

In fact, the officials of PTK in interviews repeatedly say that PTK has “the status of the privileged” in “Plus”, something never confirmed by officials of “Plus” in Tirana, or through some solid information or document. However, what seems to ensure PTK “the status of the privileged” according to Pista is that PTK can request internal auditing or have access to any form or element in “Plus”.

What for kosovars?

In press statements and interviews given for “Preportr”, the representatives of PTK refuse to speak in absolute terms regarding the prices that Vala consumers will pay when using “Plus” network, although they insist that these consumers will have preferential treatment. PTK’s information regarding “Plus” operator is extensive, but at no point any light is shed on the real charges consumers will have to pay.

The launch day of “Plus”, which was chosen to be the national Flag Day, 28 of November, PTK’s Chief Executive says that prices with “Plus” operator “will be 200% cheaper than the existing ones”.

“A summer with prices much cheaper in the communication aspect is what Post Telecom of Kosovo offers as shareholder in the fourth operator in Albania”, says PTK on May of 2010. On the other hand, “Plus” has never issued any information regarding the charges that Vala consumers will have to pay when using the network of this operator.

An advertisement of PTK reminds its consumers to connect with “Plus” operator. “Connect...connect with Plus”, where two beautiful girls “dazzle” kosovars during the summer, in an add aired in Kosovo televisions. Through this “magic” PTK promises to kosovars cheaper prices when visiting Albania. This has never been confirmed by “Plus”, although it has been more than one year that this operator is functional.

The chief of information office in PTK, Menduh Abazi, says that the involvement of PTK in the Albanian market has been done with the aim of “offering cheaper prices for all consumers of Vala entering the Republic of Albania and obtaining the ‘status of the privileged’”. But when asked how this can be confirmed, Abazi quotes a famous theoretician of the free market, Adam Smith , not giving any price for any particular product.

The issue of the status of the privileged has never been confirmed by representatives of “Plus” in Tirana, whereas even when asked about the issue of cheaper prices for kosovars travelling to Albania, the same applies.

When PTK talks about prices with “Plus”, it usually uses an uncommon method in this market. Percentages are usually given, but operators of mobile telephony in their promotional marketing give particular prices for specific products. PTK sees it sufficient to just say that phone messages will be 50% cheaper. A simple verification by “Preportr” journalists shows that this is not true. A visit to Albania shows that kosovars with SIM cards of Vala 900, who connect to “Plus” network pay the same prices as with other operators, such as Eagle Mobile or Vodafone. If you connect with “Plus” and you send a phone message, a kosovar client is charged with 0.40 cents, same as if you are connected with other operators.

Earlier on, for Vala 900 roaming services from Albania one had to pay 1.95 Euros, whereas now one should pay 0.50 Euros for calls towards Vala and Kosovo Telecom (land line).

Abazi says that now with Plus, phone messages are 50% cheaper, although he does not say exactly what those prices are.

Apart from this, even if Vala 900 clients want to connect with “Plus” network, this is very difficult since the fourth mobile operator can hardly be found in the list of operators. PTK officials, unofficially have justified “Plus” saying that the installation of antennas has just recently began and the area that this operator covers now in the Albanian territory is quite large compared to the time they used to.

This company has almost no network at all along a part of the Albanian coast, and the coast remains one of the main reasons for the visits of kosovars in Albania. It appears that this is the reason why the information office of “Plus” in Tirana did not agree to speak at all about the percentage of coverage of the Albanian territory by the antennas of this operator.

It is easily understandable that PTK’s formula: “Connect...connect with Plus” expires the moment kosovars step into the Albanian territory, after they themselves verify how much they have spent through phone calls or sending/accepting phone messages.