Deputy Minister of the ministry of Internal Affairs stated in a PAP (Polish Press Agency) interview that launching of works on the TETRA system could start as early as in 2007 and decisions on the project could be taken even in 2006. The deputy Minister stated that it would be favourable for the project realization if the decision was taken till June 2006 so that the TETRA project could be voted on and potentially included in the state budget for 2007. At the same time, the deputy Minister confirmed that so far the Ministry of Internal Affairs had not decided whether TETRA is to be conducted within the offset frames (as originally planned in cooperation with Lockheed Martin) or in the for of a tender. The final shape of this communication system has also not been specified which implies that the value of the potential contract could range between a couple hundred million zlotys up to billions of zlotys, according to the deputy Minister. Furthermore, depending on the scope of the system – whole country at once or in parts – the realization could take place up to four years.
Regardless of the way TETRA project is to be conducted – via offset or public tender – we believe that Prokom and ComputerLand are the favorites in obtaining sizeable portions in the project as they had already invested in joint ventures several years ago. Therefore, we reiterate our Buy rating for Prokom with a fair value estimate of PLN 162.9 per share and our Hold rating for ComputerLand with a fair value estimate at PLN 102.7 per share. At the same time we would like to stress that no potential proceeds from the TETRA project are included in our forecasts for these companies, providing a potential valuation upside.