UPDATE 2-Newcomers miss out in Czech 4G mobile licence auction

Tue Nov 19, 2013 12:56pm EST

* Existing operators win frequencies for 4G-LTE networks

* Two newcomers lose out despite auction conditions

* CTU regulator had wanted to boost competition in market

By Robert Muller and Jason Hovet

PRAGUE, Nov 19 (Reuters) - The three existing Czech mobile operators, Telefonica Czech Republic, T-Mobile and Vodafone, won an auction of radio spectrum for 4G high-speed mobile data networks, the telecoms regulator said on Tuesday.

The regulator, CTU, said two newcomers, Revolution Mobile and Sazka Telecommunications, did not win any frequencies - a surprise given that auction conditions included setting aside space for a fourth operator.

The sale raised 8.5 billion crowns ($420.44 million) for the Czech state budget.

"They (new entrants) followed a strategy that did not earn them any frequency," CTU spokesman Martin Drtina said.

Governments across Europe are rushing to roll out networks based on 4G's LTE (long-term evolution) technology, which enables faster mobile broadband access.

"Given the operators have been experimenting with LTE already, I gather that customers will be able to use really fast Internet on a mobile or tablet in a large part of the Czech Republic within one year," CTU Chairman Jaromir Novak said in a statement.

Telefonica Czech Republic, which already covers significant parts of the capital Prague and second city Brno with LTE networks, said it would start building a 4G network in new locations in the first half of 2014.

It paid 2.8 billion crowns for its received frequencies, including 2.4 billion for two blocks in the important 800 MHz band.

T-Mobile also won two blocks in that bandwidth, paying 2.2 billion and 2.6 billion overall. Vodafone received one block in the 800 MHz band for 2.7 billion, paying 3.1 billion overall for frequencies.

CHANGING MARKET

Earlier this month, investment group PPF, owned by the Czech Republic's richest man Petr Kellner, agreed to buy a 65.9 percent stake in Telefonica Czech Republic from Spain's Telefonica for 2.5 billion euros, or 305.60 Czech crowns per share.

"It is clearly positive news for Telefonica (Czech Republic)," Komercni Banka analyst Josef Nemy. "But I would expect the share price to stay around the PPF offer."

PPF has said it planned to launch a mandatory tender offer for the remaining Telefonica Czech Republic shares.

Customers have long criticised the Czech market for being too expensive, although operators earlier this year cut their voice and data services prices, launching a price war.

CTU had wanted this auction, which was launched just over a week ago and had been expected to last several weeks, to give a new operator a foothold in the market.

"The price for frequencies was not in accordance with the company's strategy for building a fourth mobile network," Czech investment group KKCG, which owns Sazka Telecommunications, said in a statement.

CTU had cancelled an initial auction in March after receiving bids of more than 20 billion crowns, which it said were so high that they risked inflating the price of the services and delaying the launch.

Last month, Austria raised 2.01 billion euros ($2.68 billion) - almost four times the amount targeted - in a 4G auction that was among the costliest in Europe to date.

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