Vodafone share price hit by EU call termination ruling

Statements from the EU aimed at driving down the cost of mobile calls drove down the share price of Vodafone by nearly 5 per cent. The EU Telecoms Commissioner, Viviane Reding, is looking for national telecoms regulators to cut mobile termination fees by up to 70 per cent in a move that would reduce European mobile revenues by €2 billion.

However, while the top-line statement of a 70 per cent cut might look savage, operators seemingly have room to manoeuvre given that this EU ruling is nothing more than guidance for regulators in each EU country. In EU language, the guidance is a recommendation that national regulators are obliged to take "the utmost account" of--essentially meaning that these rules are unbinding. In an attempt to clarify its thinking, the EU said termination rates at a national level should be based only on the real costs an efficient operator incurs to establish the connection. The EU has told national regulators to apply these new rates by the end of 2012, but those regulators with limited resources can adopt a different approach for a limited time.

Neelie Kroes, EU Commissioner for Competition, has also become involved with pushing forward these new rules by congratulating those countries that already have moved closer to the commission's recommendation--including Sweden, Finland, France, Italy and Romania. But she slammed Bulgaria, Spain and Germany for being far from compliance.

For more on this story:
The Times and Total Telecom

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