First of all, Mr. Novak, SITEL has always been a company promoting high technology in Czech Republic, could you briefly summarise its history?
SITEL company was established in 1991. Since then, the company has grown from 15 to 400 employees. We could say that SITEL is a typical construction investment company with a wide range of business activities within the telecommunication sector such as metallic and optical cables, telecom transmission system, telecom exchanges, cable TV technology, data - network technology, Mobil and satellite technology.
The company has got two owners - my college Mr. Fiser and myself with each of us holding 50% of shares. As I said, we have 400 employees in the Czech Republic and approximately 70 employees in Slovakia.
But there is , I'm sure you know it, an international company called SITEL. They are in France, Belgium etc., are you in contact with them?
We have different contacts with different companies abroad. I've heard that there is a huge company called SITEL in USA, but there is no co-operation between us and I don't know anyone there either.
So your company is 100% Czech ?
Yes. Our head office is here in Prague but we also have local offices in four or five other Czech towns and three Slovak towns - Bratislava, Kosice and Zvolen. We also have a company in Ukraine with a Czech representative office based in Kiev and an office representing Russian federation in Moscow. Another company we have is SITEL International in Chicago. There we have a same suppliers licence as in Czech Republic, but only for the state of Illinois.
Our readers are businessmen and they like facts and figures, so tell us more about the financial aspect of your company - what is the turnover, the profit and maybe how were the numbers changing during the last three years?
Our turnover has been around 40 MIL. USD when we talk about Czech Republic. Should we count the other companies, it would be between 50 and 60 MIL. USD. As regards the profit, statistically speaking, during last four years the average profit has been between CZK 400 MIL. and CZK 450 MIL.
You are the owner, what is your strategy, where do you see the future of your company and in which activities?
Our strategy for near future is based on what we've been up to now, which is providing different telecom services on the territories of Czech and Slovak Republics. Till now, our main customers were Czech and Slovak Telecoms and providing services for these two represented about 60% of our capacity volume. The rest ( 40%) was aimed at other big clients, for example power plants, army, police, railway companies and so on. It is true, that the volume of investment funds is decreasing in Czech Republic as well as in Slovakia, but on the other hand, the telecom sector had seen an unusual investment boom during these last four years. It was caused by Cesky Telecom finding a strategic partner who brought with him the necessary capital for new investments and a very defined set of rules about how this capital should be used in the most effective possible way. So I think that the investments made brought the required effects in a relatively short time. The result of this is that telecom nets in Czech Republic are digitalized by 80%. In my opinion, this puts Czech Republic amongst the top European countries, speaking about the quality of telecom technology and services. And now I am coming to the central point your question. From what I said, it can be concluded, that what we had to do for our main client is done, because their telecommunication net is almost finished. In view of this and in view of how Cesky Telecom looks at this, the amount of investments into this sector is falling down again. Considering this, we have to look for new clients and activities.
You were talking about telecommunication sector in Czech Republic and there is a question about this I would like to ask you. Two months ago, Cesky Telecom got the full monopoly by the new law. It's known that European Union is not very happy about it. What do you think?
This is quite a complicated question for me to be
able to give you a simple answer but I will try
to generalise. Cesky Telecom made an agreement with
a strategic partner, on the condition that this
partner will bring with himself a previously agreed
upon amount of capital and as a reimbursement will
be granted voice services exclusivity till the end
of 2000. In other then voice activities, the Czech
telecom market has already been liberalised. It
happened after the government decision, I think
it was in 1994, but I'm not exactly sure, that data
services were partly liberalised, therefore it can
be said that data services telecommunication market
in Czech Republic is now liberalised fully. As regards
Cesky Telecom's exclusive rights to voice services,
opinions of experts differ. To put it simply, because
this exclusivity will expire at the end of 2000,
the voice services market should be fully liberalised
on 1st January 2001. Practically speaking, this
is not possible. There are two main reasons for
this. Firstly, and this is closely connected with
the new telecommunication law and its rules that
grant an absolute choice of an operator and the
transferability of numbers. Under this new law and
in agreement with European Union, Cesky Telecom
is allowed to use a period of two following years,
in which to put these services into practice. This
is the point of expert's disagreement. Obviously,
the competition says it's too late, because Cesky
Telecom's technical equipment allows them to do
this in much shorter period of time. As opposed
to that Cesky Telecom says: Yes, we understand these
demands, but the problem is that we could do it
within a month if we were a private company with
one telecom exchange. But since we are spread all
around Czech Republic and this isn't a simple software
matter, we are not able to do it any sooner. The
result of this are two rather extreme opinions of
two parties that should be trying to find a compromise.
In my eyes, this is a problem. And secondly, there
should be a very defined set of conditions under
which can a competitor coming from abroad invest
his capital and conditions under which the investment
made will be protected. Telecommunication sector
requires high technology, therefore the volume of
investments is extremely high. Imagine that digging
out one metre of cable track costs 10 USD! Conclusion
is that if I have the money and I want to invest
it, I want it to be protected as well. But under
the law that we have now, no one is allowed to come
and invest at all, up till now, we have always had
one state enterprise and the legislative didn't
count on possible changes to this. You see, there
are many more gaps in the law and it is necessary
to specify the conditions in those. I don't this
is a problem only in Czech Republic, but a problem
of the other ex-communist countries as well. It
is just that these gaps in the law have come to
light thanks to the huge investment boom in Western
Europe. They are building up certain interconnective
rings and obviously partly they have to go across
Eastern European countries. This creates a problem
but also puts pressure on us to improve and I think
it's just a question of time when it will. There
is another problem, which I would call subconscious
Czech mentality. This considers whole Czech economy
system though. The reaction of majority of especially
older generation to coming of any older investor
is: We are giving away our own gold!, but you cannot
be angry at the people for this, because whilst
other people in other countries were normally living
and normally working, we were building up socialism.
A perfect example is Skoda Auto. For me as a customer
it is important that I can afford their car, that
it is reliable and that I will get services I expect
and I don't care whether 90% of the company belongs
to someone Czech or not. |
The competition is fierce in this business. What are your advantages?
I would say that our main advantage is the fact that we are providing turn key services. If you looked into the commercial register in Czech Republic, there are about 600 companies within the telecommunication sector, each providing different services in construction and installation, but majority of them are concentrated only on one part of this sector. Only a very few of them have a wide range of complete services to offer to customers. We are one of these and that's our advantage. Our second advantage is that we continue to take further care of our customer, providing further services like first line maintenance and guarantee. And third one is our very close and long term co-operation with different companies in different countries and very advanced ones indeed, for example Erickson, Siemens, Nokia and so on. And because of our close relationship, we can offer their high technology to our clients. Of course, it isn't for free, because these companies have to protect themselves by not giving this technology to everyone. They have to train people and give them licences and all this costs money, but it also allows our management and our company to grow. So this is a set of our advantages.
You said at the beginning that the amount of investment is decreasing and that you have to find different fields of activity, do you plan to do this outside of Czech Republic?
Yes, that's exactly so. The companies Sitel Ltd (Prague, Czech Republic), Interactive Services Inc.(Hinsdale, Illinois, USA) launched a new joint-venture company SitelNet Inc. with two primary business activities - installation, maintenance and emergency of voices, data and video networks on the territory of USA and termination of VoIP (voice over Internet Protocol).
I will just mention couple of examples. I have already told you about our SITEL company in Chicago. It is an officially established company, but in reality, we have only one employee there and second one is on the way. It is not easy on such a hard market as United States. You can found a company in half a day, but to do real business is a different matter and to be successful takes a lot of courage and indurance on our part. There were two reasons for us to go there and try it. One, we've had a long relationship with Lucent technologies, we know their technology very well, therefore we can continue with these contacts on US ground. It's not only about Lucent technology, it's about other companies as well and the purpose is to get acquainted with all the new technologies that are there, transfer them into Czech Republic and offer them to the customers here and possibly provide their further transfer to other countries such as Russia and Ukraine.
Basically to be a bridge for technology.
Yes, yes. This is one thing. The other thing is that we want to send young and perspective employees there to learn the language, to get a different kind of experience, to learn to behave with confidence and naturally and to find new contacts for themselves. As regards other European countries, we take part in a number of trade fairs and exhibition regularly. We exhibit our products and offer our services there and we've made many contacts there. We have found out that this is not perfect though. You acquaint yourself with people but unless someone stays in the country and keeps these contacts alive, they die out. That takes some work. SITEL is also a company that can only use what it makes. It is true about every company, of course, but some of them have a strategic partner who could eventually come and invest. We don't have a partner and in this sense, we can really use only what we make ourselves.
And are you looking for a strategic partner?
We haven't decided on this yet. If we feel that we need one and are not self sufficient anymore, we will look for one. We are on the edge between yes and no now.
Our readers are always interested in new business opportunities, from which areas of activity would you like to attract some investments or partners?
In view of the complex development in communication technology, if we, as a company, want to stay on the market, we have to widen our activities most definitely. This of course puts higher demands on the management as well as on the staff, they have to be thought about these new things, learn about the usage and so on... And if it happens that we run out of our own investment funds, we have to start looking for a partner immediately.
Do you have any idea when is it going to happen?
I would be immensely glad to know.
Is it rather far in the future......
I don't think so, because the technology is developing very fast and on the spot decisions are required. In my opinion, it will happen this year. Let me give you an example. At the moment, we work for some foreign operators. So far, we have been successful, considering the demands. We have proven that we understand the technology, that we are able to communicate with them and we react speedily, that we keep our promises and that our prices are competitive. Especially in view of western competition. Here, companies from Eastern Europe have a competitive advantage and this creates problem which works both ways , because when big and stable western companies enter eastern markets, middle sized and small companies will be smitten off the market. This should be considered from a social point of view as well.
As a more personal issue, as an expert, what are you most proud of, what has been your biggest achievement since establishing the company?
You see, I am not sure whether one can derive any feeling of satisfaction in this position at all, because to keep such a company going, to keep it professional and on the market, it takes an enormous amount of work. It's a fight for survival. Today, everything is perfect, but no one knows what will happen tomorrow. It's dangerous business. These are negatives. What is positive and satisfying is one's independence, the right to decide and the fact that one has to carry out the consequences of one's decisions. In our company the process of decision making is quite simple, as opposed to holding companies for example, and that brings me a certain satisfaction. And if I say so myself, looking at the position of SITEL, I don't think that we've been deciding badly so far.
What would be your message to our readers?
For my college Mr. Fiser and myself I would say that we're honored to be able to present our opinions to such a professional audience. I would like to give a little recommendation as well. You don't have to be afraid to invest into Czech Republic, because majority of foreign investors is successful and their productivity is much higher than the one of domestic companies. And even though there are some imperfections, it is not all that bad. This could also be a jump start to other countries. And for the real readers: Stay healthy and keep your optimism! |
