Czech regulator may not auction off 800 MHz frequency

The 800 MHz frequency is the key one for developing a high-speed broadband Internet site covering most of the Czech population

The Czech Telecommunications Office (ČTÚ) has reportedly backtracked on plans to auction off the 800 MHz frequency — the most suitable spectrum to build a nationwide fourth-generation network and easiest way to introduce a fourth mobile operator in the country.

The online Czech business daily iHNED.cz reports that the regulator instead plans to attract a newcomer by extending national roaming by offering services on the existing networks of the three established mobile operators (Telefónica 02, Vodafone, and T-Mobile).

The ČTÚ had been looking to auction of frequencies (800, 1800 and 2600 MHz) in part to pave the way for a new generation of fast Internet broadband services and a fourth mobile phone operator that could take on the incumbents, who are frequently charged with operating a cartel charging Czechs some of the highest mobile phone tariffs in Europe.

The 800 MHz frequency is the key one for developing a high-speed broadband Internet site covering most of the Czech population. The starting price for one of the six blocks on offer is Kč 1.1 billion. A total of 29 comments were submitted to the ČTÚ by the May 11 deadline, included those from the existing big three operators and the PPF Group controlled by billionaire Petr Kellner, considered to be the only other interested party that could realistically build up a fourth operator to rival them.

According to iHNED.cz, the regulator believes that by extending national roaming a newcomer could start its business without incurring intensive capital expenditures in building its own network. The ČTÚ also wants to attract a newcomer by lowering the prices for new frequencies (in the 1800 MHz spectrum) by some 20%. ‘Why is this positive? We believe that in not offering the 800 MHz, the likelihood that a new competitor will emerge ... has been greatly reduced.’

An analyst for Prague-based brokerage and investment bank Wood & Company said the change in plans would be good news for Telefónica 02, which is listed on the Prague Stock Exchange (BCPP).

“Why is this positive? We believe that in not offering the 800 MHz, the likelihood that a new competitor will emerge for Telefónica 02 Czech Republic (along with the local branch of T-Mobile and Vodafone) has been greatly reduced,” Igor Muller said Wednesday in a note to clients.

“The Ministry of Industry had been pushing the regulator (unsuccessfully, in our opinion) to make the tender attractive to a new player in the local mobile telephony sector. So far, the regulator’s actions appear to be consistent with its previous view that there is not enough room for four mobile companies in the country.”

See related article: Czech billionaire’s PPF seen paving way for Chinese fourth mobile operator bid