Today is the deadline set by the CTU, the sector regulator, for existing mobile operators to respond to the new conditions attached to the sale of UMTS licenses. Earlier in October, the CTU proposed a new payment schedule for fixed-price licenses but left the CZK 6.7 bil. per license fee unchanged. In light of the operators’ previous statements (their respective valuations of the licenses range from CZK 1 bil. to CZK 3 bil. per license), we expect the operators not to accept the new conditions, or to make their acceptance conditional on the further modification of the conditions. A possible outcome of the current UMTS tender, is in our view, an entirely new tender with a reduced price for the licenses. The probability of this scenario — favorable for both telecom stocks — would increase should the operators indeed explicitly or de facto reject the new conditions today. In a Lidove noviny interview today, the finance minister sounded optimistic about the government’s chances of collecting the fees it is currently asking for the licenses (CZK 10 bil. this year and a remaining CZK 10 bil. over the next several years for all three licenses).
(Ondrej Datka)