Spain has a new large software company, Eritel SA – a public company resulting from the merger of Telefonica de Espana SA-owned Entel SA, which owns 39% of Eritel and the Spanish Institute of Industry’s software arm Eria that owns 51% of Eritel. The company has been designed to merge the strategies of Spanish companies operating in the same sector in preparation for the single market. In a recent interview given to Computerworld Espana, Eritel’s chairman Jaime Sodupe said that the merging process, begun on 28 September 1990 when the valuation agreements were signed, should be finally completed in July this year – when Eritel is legally registered as a limited company of consulting and information technology services – and that the new company with its 2,100 employees and expected turnover of $208m, was already operating as one unit with joint management teams, accounting and monitoring systems. He said that although it had taken a long time to get an agreement between the shareholders – which apart from Telefonica and the Spanish Institute’s software arm, also include minority partners BBV, Central Banesto and Cap Gemini between them accounting for 10% of Eritel’s equity – the actual merger had been accomplished very quickly. The fact the Spanish Ministry of Industry suggested the merger has led to accusations that Eritel is protected by the state as the sole supplier in a series of captive markets. Eritel has recently been awarded a $10.4m contract by the Spanish government to provide the software for local elections. Sodupe said that the company has three main markets: public administration, general industry – including finance, banking and insurance, and telephone communications. In the first of these Sodupe admitted that Eritel did have a competitive advantage over other possible suppliers to the Spanish government because the government needed contracts with solvent companies of a certain size that could guarantee work on a long-term and continuous basis. After all, one of the main reasons for the merger had been to create a financially secure company that could attract large customers. As for the second market, he said that this was only a relatively captive market from Eritel’s point of view as although banks represented on the company’s board of directors may give Eritel priority, it was, nevertheless, operating in an open market. Sodupe drew attention to a department in the new company whose sole mission was not to compete with but instead establish co-operation deals with the hundreds of Spanish software companies that do not have the stability or size to enter institutional markets. He said the larger software companies in Spain were mainly multinationals with whom he didn’t want to co-operate or would only do so when Spanish companies got the same opportunities abroad that foreign companies had in Spain. Sodupe intends to prove that Spain can make software too. According to him, Eritel will, in fact, be among the top 10 European companies having 10% market quota in Spain, however, he also said the company should know its limits and acknowledge its lack of experience in managing international business. The current international strategy does, however, include three markets: Europe, South America – various activities are ongoing in this region including contracts pending finalisation in Ecuador and Argentina – and the Eastern block where Eritel applications have been requested but the company needs financing to implement them. In Europe, Eritel is considering alliances with a view to exporting specialist products from Spain for certain vertical markets and to certain European countries that are less technically advanced. As for the Single Market, Sodupe thinks it already exists in that companies are already getting into the markets they want to be in on January 1, 1993. For example, all companies that would want to be in Spain by then are probably there now. He thinks that co-operation between Spanish companies will be the key to defending the domestic market from foreign rivals as well as a way of competing st
rongly in the rest of the world.
