UPDATE 2-Czech regulator suspends mobile frequencies auction

Fri Mar 8, 2013 1:45pm EST

* Bids exceeded aggregate 20 billion crowns

* High bids could mean high prices, slow start -regulator (Adds Telefonica statement)

PRAGUE, March 8 (Reuters) - The Czech Telecommunications Office (CTU) has suspended an auction of mobile frequencies after rising bids threatened competitive pricing and the speed at which the service could start operating, the regulator said.

Bids in the auction, aimed at building fourth-generation (4G) mobile data networks and possibly bringing a fourth operator to the market, exceeded an aggregate 20 billion crowns ($1.03 billion) for the three frequencies on offer.

The regulator said the rise in bids would lead to unrealistically high prices of future 4G mobile services and could slow efforts to get the networks into operation.

CTU said it was revising tender conditions and would report on future steps in due course. News agency CTK quoted CTU chief Pavel Dvorak as saying the regulator still aimed to sell the frequencies this year.

"When announcing the conditions in the first half of last year, we stressed that the main motivation of the auction was the quick availability of a 4G network for Czech citizens and the possible entry of a fourth operator - never about profits for the state," Dvorak said in a statement.

European countries are rushing to roll out superfast mobile networks based on LTE or fourth generation technology that will enable millions of people to shop online, communicate and become more productive.

But South Korean operators warned European colleagues at last month's World Mobile Congress that they were still struggling to make money from 4G 18 months after launching.

Four groups bid for 800 megahertz (MHz), 1800 MHz and 2600 MHz frequencies offered by CTU, including German group T-Mobile , Spanish company Telefonica's Czech unit Telefonica CR and British operator Vodafone.

There was also a bid from newcomer PPF Mobile Services, a unit of the PPF investment group owned by Petr Kellner, the richest man in the Czech Republic.

CTU said last year the government could raise a sum "in the order of billions of crowns" through the auction and more from annual fees for using the frequencies.

Telefonica said it would develop its 4G network in the Czech Republic via frequencies it uses already following the suspension.

"Telefonica Czech Republic respects the CTU's decision and, given the circumstances, considers it a reasonable solution," the company said in a statement. ($1 = 19.4676 Czech crowns) (Reporting by Jan Lopatka and Jason Hovet in Prague, Additional reporting by Clare Kane in Madrid; Editing by Paul Casciato and Helen Massy-Beresford)

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