Shares in Bouygues Telecom jumped 3.5 per cent after news broke that the French telecom regulator Arcep gave it the go-ahead to refarm existing 1800 MHz for LTE services starting this October.
This move follows heavy lobbying by rivals France Telecom Orange and SFR arguing they had bid more than a year ago in an auction for other wireless spectrum for LTE, and that allowing Bouygues Telecom to use 1800 MHz amounted to changing the rules in the middle of the game, according to Dow Jones Newswires.
A similar move happened last year in the UK, where telecoms regulator Ofcom gave EE the right to refarm its 1800 MHz spectrum for LTE, which it launched last October. In that case, however, the decision gave EE a significant market advantage over its rivals, which have still not launched LTE. In France, SFR has already been offering LTE to consumers and Frame Telecom has been offering it to enterprise customers.
The two rivals, which also have spectrum in the 1800 MHz band, claim they're unable to follow Bouygues Telecom in refarming those airwaves because they use them more heavily than Bouygues does, making it difficult for them to switch.
Arcep has placed conditions on the refarming proposal by instructing Bouygues Telecom, if the company accepts the deal, to return around 10 per cent of its frequencies in very densely populated areas. Arcep chief Jean-Ludovic Silicani said that the operator would also have to pay the government about €60 million each year to provide LTE in the 1800 MHz band, according to Bloomberg.
France Telecom spokesman Tom Wright told Bloomberg that the company regretted this decision by Arcep, which "far from calming a market that's already strongly destabilised, is creating a new shock by providing a player with an advantage that de-facto can't be repeated by its competitors."
SFR was less polite, accusing the French government and Arcep of having "violated the principle of legitimate expectations," and threatened to assert its rights.
"The regulator's decision substantially alters the competitive and economic environment in how we [SFR] formulated our financial offer for the 2.6 GHz and 800 MHz frequencies," the company told Les Echos.
Arcep has dismissed these complaints. "We weren't convinced that the impact will be negative. It will incite all operators to accelerate the roll-out of LTE services," Silicani told Dow Jones Newswires.
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