Czech Mobile Tender Lures Incumbents and Two Newcomers

Three existing Czech mobile phone providers and two prospective newcomers filed applications in a 8.72 billion-koruna ($457 million) mobile-frequency auction aimed at boosting services and competition.

Czech Telecommunication Office, or CTU, said Telefonica Czech AS, T-Mobile Czech AS and Vodafone Czech Republic AS filed applications by today’s deadline. Revolution Mobile AS, a former unit of Czech financial group PPF, and Tasciane AS also registered for the sale, CTU said in a an e-mailed statement.

“The auction has a potential to significantly change the mobile service telecommunication market,” CTU head Jaromir Novak said in the statement.

The auction was called to boost 4G high-speed data for mobile users and increase speeds through LTE, or Long Term Evolution networks, which allow customers to shop online and stream videos faster. The tender conditions also set aside a spectrum block for a new entrant to help boost competitiveness.

An earlier auction failed in March when CTU judged that bids exceeding 20 billion koruna may trigger an unwanted jump in prices. Weeks after the failure, the existing operators cut tariffs that, according to Finnish consultancy Rewheel, had been the second highest in the European Union.

PPF Switch

PPF Group NV, the Czech financial company controlled by billionaire Petr Kellner, said it wouldn’t take part because the tender banned any new entrant 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.

Instead, the company sold its unit PPF Mobile Services AS to its chief executive officer, Tomas Budnik. The subsidiary then changed its name to Revolution Mobile and applied, Revolution Mobile said in a statement.

The Czech units of Telefonica SA (TEF) and Vodafone Plc said they took legal action against certain conditions. Telefonica alleged that guaranteeing a new entrant a spectrum amounts to “unauthorized state aid.”

Shares in Telefonica jumped 8 koruna, or 2.7 percent, to 300 koruna as of 11:11 a.m. in Prague trading.

Faster Data

CTU will open the applications tomorrow. 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.

Telefonica is considering selling its Czech subsidiary, among other 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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