14-12-2000

IPB shareholders sue finance minister over IPB

Minority shareholders of IPB Bank have filed a lawsuit against Finance Minister Pavel Mertlik in connection with the imposition of forced administration on the bank and its subsequent sale to another bank, CSOB, in June this year. The Association of IPB shareholders, which represents the interests of some 50,000 minority shareholders, claims that Mr. Mertlik misused his official powers. They base their accusation on the outcome of an investigation conducted by a special committee set up by parliament. They have also accused Mr Mertlik of breaking the law on state budget rules by providing CSOB with unlimited guarantees for IPB's assets. The finance minister has repeatedly defended all the steps taken, arguing that imposing forced administration on IPB and then selling it off quickly to CSOB was the most efficient solution.

Unemployment stagnating

The unemployment rate in the Czech Republic totalled 8.5 percent in November, the same figure as in October. In the same period in 1999, the unemployment rate stood at 9 percent. The lowest unemployment was, as it has been for a long time now, in Prague and regions surrounding the capital--around three percent--while the largest number of jobless people remains in the heavily industrialised and coal-mining area in the north. The highest unemployment rate is to be found in the Most region--over 21 percent.

Labour and Social Affairs Minister Vladimir Spidla expects unemployment to remain at approximately the same level until the end of the year, which would mean a nearly 1-percent decrease year-on-year.

FDI growing steadily

The amount of Foreign Direct Investment coming into the Czech Republic has been growing steadily. This year, Foreign Direct Investment is expected to reach 6 billion USD, almost triple the figure for 1998. The total amount of Foreign Direct Investment has exceeded 21 billion USD over the past ten years. So-called green-field investments are attractive for international companies because of their massive investment incentives, which can include several-year tax breaks and subsidies for job creation. Another important factor, according to the Ministry of Trade and Industry, is state support for the development of industrial zones.

Temelin to enter third heating stage

The second stage of heating up the Temelin nuclear power station has been completed. During this stage, the controversial power plant in Southern Bohemia reached 12 percent of nominal output while undergoing testing. The State Office for Nuclear Safety has received the results of these tests and, following an assessment, the office will decide whether to allow Temelin to proceed to the third stage, where output will reach up to 30 percent. During the third stage, Temelin will also supply electricity to the power grid for the first time. The test operation of Temelin continues despite the Czech Republic's commitment to produce a new, detailed environmental impact study under supervision from the European Commission and not to put Temelin into full operation unless it is proven that the power station meets European safety standards.

Tax cuts approved by parliament

The lower house of parliament has approved a new law that cuts income tax as of next year. It also allow life insurance to be deducted from pre-tax income. The daily Mlada Fronta Dnes calculates that an average family with two small kids will now pay over a thousand Czech crowns less per annum. However, the decrease in taxes will be completely offset by price deregulations next year.

Construction faces crisis in 2001

The Czech Association of Construction Companies predicts that despite promising developments in the construction sector, two thirds of Czech construction firms, mainly the smaller ones, are likely to go out of business in 2001, and make around 6 thousand people redundant in the process. However, these people are likely to find jobs in the larger companies which will survive. The association claims that the process is inevitable as the Czech market reaches a level comparable to the EU.

Do mobile operators cheat in counting users?

Mobile telephones seem to be the most popular Christmas present this year and one of the best selling articles in December. Some ten thousand mobile phones reportedly sell every day and the three Czech mobile operators expect that after New Year, four million out of the 10.3 million Czechs will have a mobile. At the end of the third quarter, the figure was 3.2 million.

The oldest Czech mobile phone operator, Eurotel, has reported this week that the number of its customers exceeded two million, half of which have joined in the past year.

Eurotel is the market leader with an estimated 50-percent market share while RadioMobil holds a 44-percent market share. The youngest operator, Cesky Mobil, which launched services in March this year, has the remaining six percent.

However, experts warn that it is difficult to count the actual number of activated SIM cards. In a recent survey among the readers of the Mobil Server, which focuses on cellular phone technology, 59 percent of nearly a thousand respondents said they used more than one SIM card to benefit from the different rates charged by different operators. It would then be more precise to count the number of mobile phones used, since not many users have more than one phone. But as Mobil Server points out, such a comparison could reveal that there are not almost four million mobile phones in the country, as the operators claim, but maybe three or even less.

Eastern Europe's leading Web portals seek alliance

Some of Eastern Europe's leading Internet portals plan to form an alliance to ward off growing competition in a move that could spark consolidation in the sector.

The three Web gateways--Poland's Wirtualna Polska, the Czech Republic's Centrum.cz and Hungary's Index.hu--said cooperation would involve exchanging technology and combining their marketing and advertising potential. Cross-shareholdings are likely to be key to the alliance, whose basic goal is to cut development costs and connect all the portals into a large Central European network, giving them a greater chance for long-term survival.

The alliance partners, which want to announce details of their cooperation in the coming weeks, are in the top three of their respective markets, with Wirtualna attracting about three million hits a day, Centrum 1.73 million and Index 500,000.

Analysts say that while this combination may be unusual because it involves portals from different countries, it may be the first step in a sector shakedown that would include some mergers and changes of focus.

In recent months Centrum, Wirtualna and Index have faced a growing onslaught from Web portals eager to take away the relatively small, but growing number of Internet users in the Czech Republic, Slovakia, Poland and Hungary, which have a combined population of 60 million.

All of the Central European countries have comparably smaller GDP per capita, small internet penetration, and much fewer people who have credit cards than in Western Europe.

Because of the limited money-making potential on the Web, most analysts expect two, possibly three multi-subject portals to survive in each of the region's markets, a similar figure to the portal survival rate in more developed Western countries.

Other portals are likely to shut down after their cash runs out or significantly narrow their focus.

14-12-2000