CTU calls for public discussion on auction terms to May 8. New auction terms mainly include the following:
- The focus is on six 10MHz blocks in 800MHz necessary for 4G. Auction should leave 2 blocks of 10 Mhz in the 800 MHz band to new operator, and to increase the size of the new operator’s block in the 1800 MHz band to 2 blocks of 15.8 MHz from 2 blocks of 15.6 MHz. /Negative. The incumbents, (281,6 CZK, -2,73%), T-Mobile CZ and (2,18 EUR, 1,82%) CZ, need two blocks each. Under proposed rules a new entrant bidder (s) for LTE spectrum (potentially PPF) would have allocation in 800 MHz guaranteed. This could allow a potential new entrant to push one or two of the incumbents out of 800MHz which could give a new entrant the opportunity to strike deals with the incumbents in the future./
- Auction rules allow participants to withdraw their highest bids only 2 times (it was 5 times in the previous auction) and impose a penalty for a misuse /This could speed up the whole process of the LTE auction. The public discussion is scheduled to last until May 8 and the CTU telecom regulator plans to launch a new auction already in June. The auction itself could last for several weeks then/
As the new auction aims to help (earlier) entry of new operator we see the new auction terms as negative for stock. A new entrant may further dent already deteriorating earnings of that could make the firm to cut dividends in the future.