Czech regulator revamps spectrum auction, reserves 800 MHz block for newcomer

The Czech telecommunications regulator, or CTO, announced new conditions for a spectrum auction following the regulator's unusual move last month to cancel the auction over concerns that bids were too high.

A key part of the new rules is that a 2x10 MHz block in the 800 MHz band and a 2x15.8 MHz block in the 1800 MHz block will be reserved exclusively for new players, creating the conditions for a fourth operator to enter the market.

"By proposing these tender conditions, the Czech Telecommunication Office supports the motivation for a new operator to come to the market: while maintaining the limit on the amount of spectrum that can be obtained by a new operator, the CTO also reserved for the new operator part of the spectrum in the 800 MHz band," Pavel Dvořák, chairman of the CTO Council, said in a statement.

Dvořák added that the new conditions also include obligations that would ensure a rapid deployment of new networks and services. "The amended and refined conditions of the auction procedure will ensure that this phase of the tender is fast, efficient and fair," he said,

The public consultation will run until May 8, and the invitation to submit tenders is expected to be announced in June, subject to the selection of the entity to carry out the electronic auction phase.

The regulator originally cancelled the auction in March because it became concerned that bids were escalating too far beyond the reserve price. According to Dow Jones Newswires, the regulator now expects bids to be below €386 million ($505.5 million) after they reached almost double that in the previous auction--or nearly three times the minimum bid.

A new entrant would compete with existing operators Telefónica Czech Republic, T-Mobile Czech Republic and Vodafone Czech Republic.

Telefónica Czech Republic said its share price was adversely affected by the cancellation of the first auction, along with rumours that parent company Telefónica is eyeing the Czech unit as a potential business to sell in order to reduce its debt.

According to a Bloomberg report, Telefónica Czech Republic CFO David Melcon nevertheless said the decision to cancel the auction "was good" since the process was taking too long. Melcon also noted that smartphone penetration among Czech Telefónica customers was 27 per cent at the end of December, and 71 per cent of handsets sold in the stores were smartphones. The Czech operator has already begun the deployment of LTE using its existing 1800 MHz spectrum.

For more:
- see this CTO release
- see this Bloomberg article
- see this Dow Jones Newswires article (sub. req.)

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