New Entrant Needs Regulatory Guardian
The Czech Republic's three existing mobile operators - Telefónica , T-Mobile and Vodafone - are submitting applications to participate in the LTE auction, along with private equity firm PPF . While PPF has applied for the auction , it has stated it will only decided on whether to construct a network or not on the basis of the results of the tender and regulatory measures around service rollout. BMI believes the newcomer would face significant challenges and the regulator may need to incentivise network construction.
In January 2012 the Czech Telecommunications Office (CTU) stated it was preparing for frequency auctions and that promoting high-speed 4G LTE rollout was a key priority. It planned to reserve spectrum for a new entrant , as well as introducing coverage requirements in order to reach 90% population coverage of LTE services over three years. BMI expected operator interest in the auction as additional spectrum will help them meet rising data demand . H owever , we have argued that the incentives are limited for a new entrant in the absence of regulatory measures to encourage investment (see our online service, January 19 2012, ' Spectrum Allocation A Priority For CTU , But New Entrant May Need Sweetener Says BMI') .
The three existing operators and PPF submitted applications for the auction before the September 10 deadline, with the auction planned for November 2012 and spectrum should be allocated by YE12 or January 2013. While existing operators were expected to take part in the auction , we maintain our view that PPF faces significant challenges making ground in the Czech market where mobile and broadband penetration is already high - limiting the potential for an aggressive subscription acquisition growth strategy. The limited growth prospects are underlined by the decision by UPC , Dial Telecom , J&T and Penta to decline to enter the auction.
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