The Czech telecoms regulator, the CTU, is preparing a new proposal for operators’ payments for fixed-price UMTS licenses, again based on the original fixed price of CZK 6.7 bil. per license. The CTU is proposing two payment options for cellular operators: (a) CZK 3.35 bil. in 2001 and then CZK 3.35 bil. spread over five years, or (b) CZK 5.025 bil. in 2001 and CZK 1.675 bil. spread over 10 years. Given that the original offer was a payment of CZK 3.7 bil. in 2001 and CZK 3.0 bil. in 2002, this new proposal does not represent a significant improvement from the point of view of the cellular operators, who have spoken of CZK 3 bil. as an appropriate license price. Cesky Telecom’s Eurotel and Ceske radiokomunikace’s RadioMobil applied for CZK 6.7 bil. fixed-price licenses in August, but conditional on a better payment schedule (among other things), and are unlikely to find the new proposal acceptable. Perhaps in an effort to push the operators into accepting these conditions, the CTU said yesterday that there are other potential bidders for the licenses, including Vodafone and Orange. These foreign companies would be allowed to bid if Eurotel and RadioMobil reject the fixed-price licenses in the first round, in which case the licenses would fall through into an auction in a second round (the starting auction price would be CZK 6.7 bil.). The news above may be seen as somewhat negative for domestic telecom stocks as the chance of a favorable first-round deal for Eurotel and RadioMobil seems worse. We nonetheless expect negotiations toward a payment schedule to continue.
(Ondrej Datka)