Czech Financial Group PPF Won’t Participate in Spectrum Auction

PPF Group NV, the Czech financial group controlled by billionaire Petr Kellner, said it won’t take part in an auction aimed at opening the country’s mobile phone market as its conditions preclude it from merging rivals.

The mobile frequency auction, aimed at boosting the availability of 4G high-speed data for mobile users, is a re-run of a process that failed in March when the telecommunications regulator CTU judged that bids exceeding 20 billion koruna ($1.05 billion) may trigger an unwanted jump in prices. The new tender bans any new player from merging with another participant for 15 years, PPF spokesman Radek Stavel said in an e-mailed statement.

“Because the telecommunications market will change dramatically as a result of revolutionary shifts in technology, this type of 15-year obligation is not practically or economically sensible,” Stavel said.

The Czech Telecommunication Office has said it wants to earn at least 8.72 billion koruna from the sale. It also wants to attract a new player to improve services and boost competition in a market dominated by existing operators Telefonica Czech Republic AS, T-Mobile Czech Republic and Vodafone Czech Republic AS.

Telefonica Czech and T-Mobile Czech AS said last week they had registered for the auction. Telefonica also filed a lawsuit alleging that certain auction rules, including setting aside spectrum for a new entrant, is “unauthorized state aid.”

Shares in Telefonica jumped 8 koruna, or 2.7%, to 300 koruna as of 11:11 am in Prague trading.

Faster Data

Weeks after the sale’s failure, the country’s existing operators cut tariffs that, according to Finnish consultancy Rewheel, had been the second highest in the European Union. The new auction should increase speeds through LTE, or Long Term Evolution, networks that allow customers to shop online and stream videos faster.

PPF also said it sold its unit PPF Mobile Services AS to its chief executive officer, Tomas Budnik. It took part in the previous sale and said in April it was ready to participate again if the regulator kept in place proposed rules, including setting aside spectrum for a new entrant and obliging existing operators to provide roaming. The ban to merge with any competitors in the sale wasn’t in the draft rules made available for public discussion before the sale.

CTU will announce the number of registered companies today, after the deadline for applicants ends. CTU spokesman Martin Drtina declined to comment before the announcement. Vodafone Czech AS, wouldn’t comment on whether it applied before the deadline.

Tender Deadline

The sale comes just as the country’s existing operators are deciding about how regulatory pressures and lower customer spending will affect their future plans in the country.

Spain’s Telefonica is considering selling its Czech subsidiary, among other of its assets, Bloomberg reported on April 8. Deutsche Telekom AG (DTE) plans to review a future of the T-Mobile Czech stake in coming weeks, the Wall Street Journal reported on Aug. 29.

PPF said on April 10 that it’s not at that moment in talks about purchasing a stake in Telefonica, CTK reported.

To contact the reporter on this story: Lenka Ponikelska in Prague at lponikelska1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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