The Slovak Telecommunications Office has confirmed that Telefonica has bid for the country's third license, which covers both GSM and UMTS standards. Telekom Austria and a financial consortium including Ceske Radiokomunikace have also bid for the license.
The minimum bid for the 20-year license was set at SKK 100m (US$3.42m), and the criteria includes ability to strengthen competition, timetable for network build-out and operations, and price offered. Current players in the 84.5% penetrated market are Orange, the market leader, and T-Mobile.
Our view:
We do not expect any trading impact on TEF O2 CR in the near-term. However, we believe TEF has a very good chance of winning as it could provide significant competition to the two other existing global brands in the Slovak market. A potential network build-out will require significant capital, and hence we could expect more cash repatriation from TEF O2 CR to TEF de Espana via inter-company loans. We maintain our Hold recommendation and CZK 503 fair value for TEF O2 CR.