The widely expected draft of an EU proposal to overhaul the sector was submitted by the the Communications Commission today. The proposal will have to be agreed by the 27 EU states, and can come into effect immediately. The main points of the draft are as follows:
-Provide regulators authority to force separation of network and service businesses of an operator without divestiture of assets
-Allow EU Commission to override national regulators
- Create European Electronic Communications Market Authority to advise the European Commission on competition issues
- Cut markets under scrutiny from 18 to 7 segments
- ensure MNP execution within 1 day
- Open up spectrum access and allow rights trading
Our view: the individual member states are likely to put the proposal itself under scrutiny and given that it requires national regulators to effectively give up some powers to the new agency, we expect a protracted approval process. We expect the market to regard this level of sector scrutiny negatively. For (23 PLN, 1,33%), we expect the UKE to seize this development to justify recent statements regarding her plan to break-up , hence we expect negative trading impact. For MTEL and TEF O2, we expect neutral reaction given less aggressive national regulators.