New Italian Carrier To Pay for Customers' PCs

ROME (06/12/2000) - Tu Tlc Utilities SpA, a new Italian telecom carrier focused on small businesses and people who live outside Italy's major cities, will cover all or part of the cost of a new PC for customers who sign up for a three-year contract, the company announced today.

Customers must commit to making at least 4 million lire's (US$1,980) worth of phone calls with Tu over the three-year period to qualify for the promotional offer, Chairman Emanuele Castrignano told a press conference in Rome. Clients will be able to choose whichever brand of PC they prefer and Tu will cover the first 2 million lire of the purchase cost, he said.

"We believe there are around 1 million Italian families who are interested in this type of investment," Castrignano told reporters. "We are also making a similar offer to small and medium-sized businesses which want to update their information technology equipment."

The company expects up to 100,000 families and 100,000 small business to take advantage of the offer by the end of this year, Castrignano said. "The offer could attract very significant numbers, making us one of the major IT distributors in Italy," Tu's chairman said. "We want to ensure we have significant revenues. There are plenty of new telecom companies that generate only minor revenues."

The offer has been launched to coincide with the end of the school year in order to give parents a chance to reward their children for their performance in class, Castrignano said.

Tu, which is controlled by the telecommunications consultancy Atitalia SpA and private investors, is currently engaged on the creation of a 2,900 kilometer (1,800 mile) fiber optic network, initially concentrated in north and central Italy, the company said. It has reached partnership agreements with 41 municipal utility companies and is planning to lay fiber optic cables in 183 small and medium sized towns, it said.

"We are offering cities the chance to equip themselves with the most modern technological infrastructures without additional costs for the creation of the network," Castrignano said in a prepared statement. "Ownership of the network will remain in the hands of the local authorities and there will be a joint management of the services offered over it," he said in the statement.

"We want to give a voice to the small businesses," Castrignano told reporters.

"The real Italy is not the Italy of the 10 great industrial families but of the 1 million small artisans." Tu sees its market as being that of small businesses, municipal utilities and professional associations, with which it already has a close collaborative relationship, Castrignano said.

The Milan-based company has announced its intention to bid for a UMTS (Universal Mobile Telecommunications System) license in the forthcoming competition, and it is currently engaged in talks with major foreign investors and telecom carriers, Castrignano said. So far, eight consortia have announced an intention to bid for the five available licenses, and Communications Minister Salvatore Cardinale is encouraging them to integrate with their competitors, he said.

Among the major international carriers interested in joining the competition are AT&T Corp., Germany's Deutsche Telekom AG, Telefónica SA of Spain, TIW of Canada, Koninklijke KPN NV of the Netherlands and carriers from South Korea and China, Castrignano said. KPN, which is already allied with NTT DoCoMo Ltd. of Japan, would make a particularly valuable partner, he said. "The only people with experience of UMTS are the Japanese. Their UMTS service has been operational for about a year," he said.

Tu has earmarked 20 trillion lire for its UMTS venture, 7 trillion to acquire the license and the rest to cover infrastructure and service costs, the company chairman said.

The social advantages of Tu's approach -- spreading the benefits of technology to companies and geographic areas that risk being left behind -- could prove a winning card when the government's advisors come to evaluate the rival bids, the company said. Castrignano emphasized his company's intention to exploit the highly qualified but underemployed human resources available in southern Italy.

"Tu confirms a new approach to communication," company CEO Fiorenzo Quarzago said in a prepared statement. "Communication is no longer a mere opportunity to do business, it also extends the benefits of new technology -- in terms of market development and prospects for young people -- to the residents of smaller towns."

The company expects revenue of 60 billion lire from a customer base of 120,000 telephone consumers in the year 2000, Tu said in a prepared statement. It plans a listing on the Milan stock exchange by the end of the year.

Tu can be contacted in Milan on tel. +3902 382 231.

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