The NHH (Hungarian telco regulator) is cutting the one-off and monthly access fees charged by incumbent operators (MTEL, Emitel, Invitel and Monortel) to ISPs for broadband internet service provision. The move is intended to stimulate competition and eventually enable customers to use broadband Internet services without having to subscribe to fixed-line telephone services provided by the incumbent provider. Based on new "reference unbundling offers" submitted by SMPs and approved individually by the NHH, the authority has eliminated or significantly reduced a number of one-off fees related to ADSL Internet provision.
Our view: Although the news may have a marginal negative trading impact on MTEL, we do not expect material impact on its financials as this is already widely expected by the market, and we have already incorporated between 30-35% reduction in DSL rates (retail and wholesale) into our 2006 numbers. Importantly, the NHH considered the operators' cost models in determining the reduction rates.