O2 Czech Republic

Mobile phone operator Eurotel is established as a joint venture between the Czechoslovakian telecom ministry, Bell Atlantic, and US West. The Czech Ministry of Posts and Telecommunications is split into the Czech Post and SPT Telecom. SPT Telecom becomes a joint stock company and is partially sold to Czech investors. Cesky Telecom acquires full control of Eurotel; TelSource sells its stake in Cesky Telecom. The company Cesky Telecom, a.s. is a former state monopoly that still dominates the telecommunications market in the Czech Republic. The firm offers fixed-line voice services, broadband Internet and data services as well as mobile service through its subsidiary Eurotel. Cesky Telecom was established in the early 1990s to oversee the national telecommunications network after the fall of communist power and the breakup of Czechoslovakia. The company inherited an underdeveloped network and proceeded to modernize it at a rapid pace with the help of Dutch and Swiss partners. The firm has struggled for nearly a decade to achieve full privatization; more than one planned sale has fallen apart before it could be completed. The state still retains a 51 percent stake in Cesky Telecom while the remainder is publicly held. The company is one of the most heavily traded stocks on the Prague Stock Exchange. Since the Czech telecommunications market was opened to competition in 2001, Cesky Telecom has been striving to retain its leading position by offering professional Internet, data, and mobile services to offset the drop in usage of fixed line service. Czechoslovakia's telecommunications network was neglected during the communist period. Most central planners did not consider services to be a genuine form of production, so they failed to invest in the communication infrastructure. Instead, investment was targeted at primary forms of production such as industrial enterprises. Telephone services served as a stable source of revenue that was channeled to more valued entities in the central planning system. In particular, the telephone service was used to subsidize postal services, which operated at a loss. Telephone tariffs were not related to the cost of providing service. Charges for domestic calls were low and charges for international calls were extremely high. As a result of this neglect, there were only 1.6 million telephone lines in Czechoslovakia in 1980--10.6 lines per 100 people in the country. About 700,000 new lines were added over the next decade, bringing the average up to 14.9 lines per 100 people, but over the same period the waiting list for a telephone line nearly doubled. Only 33 percent of households had their own telephone in 1990. Residents of some remote villages hardly ever held a telephone in their hands. In late 1989, the Velvet Revolution brought about the collapse of communist power in Czechoslovakia. That year SPT Praha (short for Sprava post a telekomunikaci Praha, the Ministry of Posts and Telecommunications) was created as a state-owned monopoly for postal and telecommunications services. In 1990, SPT entered into a joint venture with Bell Atlantic and US West to establish Eurotel Praha as a mobile telephone service provider. The American partners held a 49 percent share in the enterprise. Eurotel acquired the exclusive right to operate a network on the 450 MHz system, an analog standard. Separatist impulses led to the dissolution of Czechoslovakia on December 31, 1992 and the formation of independent Czech and Slovak Republics. The Czech Ministry of the Economy assumed responsibility for telecommunications. In 1993, SPT Praha was split into two separate entities: the Czech Post and SPT Telecom. This finally put a stop to the subsidy of postal services with telephone revenues. SPT Telecom was now in charge of an aging analog telephone network composed of deteriorating copper wires. The waiting list for telephone installation had grown to 800,000 people. Despite these problems, the telecom entity prod