Anna Strezynska, UKE head, said in an interview with the Polish press that the fine, if ultimately imposed, on TPSA for failure to implement WLR within the UKE's prescribed timeframe would be much higher than PLN 100mn (levies earlier for internet-phone services binding) and could reach 3% of the telecom’s annual revenues. The UKE's fine will depend on the recently relaunched talks on the matter between TPSA and Tele2.
Our view: we expect marginal negative trading impact from the news. However, note the UKE has already held a meeting with TPSA last week to obtain an explanation over the delay, and given that Strezynska said prior to the meeting that she will demand payment of the PLN 100m fine immediately should she find TPSA's reasons unsatisfactory. Therefore, it would appear that the UKE has had to accept the audited unbundling schedule submitted by TPSA. We believe that if the regulator has accepted TPSA's explanation, Tele2 would have lesser grounds for their demands. Additionally, recall that TPSA had earlier warned Tele2 not to advertise unbundling-related services prior to having the technical infrastructure in place, and hence Tele2 may not use such reason for compensation for lost revenues. Finally, with the State having indicated its intention to sell its remaining 3.8% stake to France Telecom at a premium, we believe that the UKE would do well to ease up on regulatory pressures.