Austrian mobile tariffs leapt in Q4 -regulator

VIENNA Thu Jan 16, 2014 3:48am EST

VIENNA Jan 16 (Reuters) - Austrian mobile tariffs rose sharply in the fourth quarter, the telecoms regulator said on Thursday, following a merger between two of the country's carriers and a costly spectrum auction.

Tariffs for so-called power users rose 10.7 percent between September and December, while low users paid 9.1 percent more, according to a study carried out by the watchdog. Tariffs for medium users rose 6.6 percent and for high users 10 percent.

"There have been price increases," Georg Serentschy, head of the regulator, told a news conference. "There is an obvious time context of the merger. However, there is no logically compelling evidence that they are related to the merger."

Both investors and regulators have been closely watching price development in the market since Hutchison Whampoa bought Orange a year ago, reducing the market to three players and seen as a possible model for other countries.

The Alpine country of 8.4 million inhabitants, where Telekom Austria competes with smaller players Deutsche Telekom's T-Mobile as well as Hutchison, is one of Europe's most price-competitive.

Telekom Austria has seen its earnings and sales decline as it spends heavily to keep premium customers in Austria and it faces economic weakness in its foreign markets, and has slashed its dividends for the past two years.

It said in November it hoped to stabilise core profits in Austria this year through cost cuts and less generous handset discounts.

"Austria is still a very low-cost market in comparison with other European countries," Serentchy said. Asked whether further price increases were to be expected, he said: "I wouldn't be surprised."

Financial pressure on the carriers rose after an Austrian frequency auction in October that raised 2 billion euros ($2.7 billion) and was Europe's most expensive so far per capita for fourth-generation spectrum.

The operators now face large investments to build the fourth-generation networks enabled by the spectrum gains. ($1 = 0.7356 euros) (Reporting by Georgina Prodhan; Editing by Michael Shields)

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