Czech telecoms vie for frequencies as regulator opens bidding today

November 10
11:41 PM 2013

The Czech Telecommunications Office planned to conduct the bidding of a mobile spectrum tender today. Telefonica Czech Republic, T-Mobile Czech Republic, Vodafone Czech Republic and two newcomers in the country's telecommunications industry would be vying for the frequencies offered by the regulator. The tender came less than a week after Telefonica agreed to the biggest phone company in the Czech Republic to Petr Kellner's PPF Group in a USD 3.4 billion deal.

Erste Group Analyst Vera Sutedja told Bloomberg in a phone interview that the frequency distribution after the tender as well the price that Telefonica would pay would be viewed by minority shareholders as important developments. Sutedja said these could affect the buyout offer.

The regulator said the aim of the mobile spectrum tender would be increase the competition in the local market. A new frequency band would be allocated by the office for a new telecommunications provider. Under the terms of the auction, winners would not be able to sell the frequencies for a minimum of seven years. The auction would also include frequencies that would allow providers to give 4G mobile services to their subscribers. The regulator expected the tender to raise at least CZK 8.72 billion.

According to a Bloomberg report, Kellner's company withdrew from taking part in the auction in September. The regulator held a tender in March. However, that failed when it ruled that offers which went over the CZK 20 billion would risk an unwelcome price increase for subscribers.  Sutedja told Bloomberg that there would be no risk of a price increase in the current tender since Kellner's PPF would be joining the market as a newcomer. He added that a fourth player in the Czech telecommunications industry would not have an easy time. This is because the penetration rate in the market is already over 130%, he said.

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