Polish Operators Oppose LTE Auction Changes as Bids Surge

  • P4 says planned LTE auction changes ‘unjustified’ interference
  • Regulator says bidders `not serious' about buying frequencies

Operators of Polish mobile networks Plus and Play urged the government to scrap a plan to change auction rules for high-speed mobile Internet frequencies, saying the proposed amendments would penalize some bidders.

The Administration Ministry submitted a motion that would allow it to stop the bidding for the so-called Long Term Evolution frequencies after 115 auction days. The measure would reduce further delays and secure budget revenue, according to a draft published on the government website last week. If approved, the auction that started Feb. 10 may be concluded as soon as in October. Offers reached 6.8 billion zloty ($1.8 billion) on Sept. 4, compared with 1.6 billion zloty at the start.

The proposed modifications are an “unprecedented interference” by the telecommunication authorities with a procedure that’s already under way, P4 Sp. z o.o., the operator of the country’s fourth-largest mobile network Play, said in a statement on Wednesday.

The auction, which has no defined end date, has dragged on as bidders repeatedly raised their offers, inflating the investment costs to per-user levels seen in France and Germany. Magdalena Gaj, the head of the telecommunication market watchdog, said Wednesday that the 400 rounds in the auction without a buyer make her “think the market isn’t serious about buying these frequencies.” It’s “up to the government” to decide whether to take into account negative opinions of the bidders, Gaj said.

New rules are against regulations determining auction terms as well as other laws, Polkomtel Sp, which runs Plus, said by e-mail. Deutsche Telekom AG’s unit T-Mobile Polska SA called for a “thorough” review of the telecommunication law. The proposed changes don’t “remove all flaws” of the auction process, it said in an e-mail.

The Administration Ministry will address the operators’ comments next week,
Minister Andrzej Halicki said on Wednesday.

While this change “is a good idea from the point of view of the ministry, it increases the risk of further protests and litigations,” Jakub Krawczyk, an analyst at Raiffeisen Centrobank AG in Vienna, said by phone. “Every participant in this auction has its strategy and a sudden change in the rules in an ongoing auction is hard to agree with. It’s opening a Pandora’s box.”

Instead of the proposed changes, P4 wants the ministry to introduce rules allowing the market regulator to stop or cancel the auction after some determined period of time. Gaj dismissed the option to cancel the current auction as there are “no legal grounds for the regulator to do so.”

Orange Polska SA also sent its opinion on the proposed changes to the ministry, its spokesman Wojciech Jabczynski said by phone. He declined to elaborate. Orange Polska shares rose 1.3 percent to 7.31 zloty at 3:40 p.m. in Warsaw.

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