The auction of frequencies has not brought a 4th operator onto the market

The auction of frequencies for fast mobile networks LTE that ended yesterday has not brought a 4th operator onto the market, the frequencies were gained by Telefonica CR, T-Mobile and Vodafone (2,75 EUR, -0,04%) for CZK 8.53 bln in total, the CTU regulator announced. They will distribute among themselves also the frequencies in the most lucrative band of 800 MHz. Telefonica CR will pay CZK 2.8 bln for frequencies. Companies Revolution Mobile and Sazka Communications in the end did not gain the frequencies reserved for new players in the 1,800 MHz and 800 MHz bands or any other frequencies. /The news itself would be positive as there is no 4th player in the market and incumbents did not pay any premium for LTE license. We originally expected TEFO2 (299,2 CZK, 0,40%) to pay CZK 3.5 bln for the LTE license. However, after PPF bought 65.9% stake in TEFO2 the probability of the 4th entrant significantly decreased so the outcome is not surprising. The key for TEFO2 share is the price PPF will offer for minority stake in TEFO2 which could be around CZK 296 in our view.