The Czech Parliament should vote this morning on the draft 2002 state budget proposed by the government. It seems that the minority Social Democratic government has not been able to win enough support for the budget; one of the opposition charges is that budget revenues forecasts are too optimistic. A rejection of the draft budget in the first reading today would mean, we believe, that the government may be forced to re-open the issue of UMTS license fees (the asked fixed price of CZK 6.7 bil. per license, is much higher than any of the three incumbent operators is willing to pay). A rejection of the draft budget today would make it more likely that the Czech government will climb down and reduce the fixed price of the UMTS license later this year. Moreover, a similar step by the French government yesterday (which helped French telecom stocks) will not go unnoticed by the Czech operators, opposition parties, and the sector regulator. Sooner or later, we expect this to help the two domestic telecom stocks.
(Ondrej Datka)