CTEL was fined CZK 80m by the Czech antitrust office, UHOS, for abusing its dominant ADSL position. The dispute has been ongoing for three years, and the amount of the fine was reduced from the original CZK 90m. Total penalty paid this year for market dominance abuse stands at CZK 285m.
In our view, whilst the increasing scrutiny of CTEL's market dominance and service roll-out is negative, it highlights the company's aggressive push into the broadband market to exploit its first-mover advantage. We continue to believe that capturing the DSL market is crucial in rolling-out CTEL's planned triple-play offerings and prevent churn in the future. We maintain our Buy recommendation and CZK 510 fair value.