Frequency auction could bring state revenue of HUF 30bn-33bn

Telco

An ongoing frequency auction for frequency blocks in the 900 MHz band could bring the central budget HUF 30bn-33bn in revenue, and it will result in a state company becoming the fourth mobile service provider on the market, the national daily Nepszabadsag reported on Monday, citing market information.

With the bidding process completed, the auction process entered the second phase, when blocks will be assigned, on Monday. Final results are expected to announced within a few days.

The above revenue will come from the three existing mobile companies. The announced result will be about HUF 10bn higher, but the HUF 10bn price paid by the 100% state contender will not be net revenue to the state, the daily wrote, noting that setting up and operating the new mobile company would cost tens of billion forints to the central budget.

Revenue from the frequency auction would be HUF 10bn more if a private company entered as a fourth service provider, and the highest revenues would have resulted from the competition of the existing three mobile companies, the daily noted.

The national media authority NMHH announced on January 5, at the start of the bidding process, that it had accepted the registrations of Hungary’s three already established mobile service providers - Magyar Telekom, Telenor Magyarorszag and Vodafone Magyarorszag - as well as that of a newcomer, a consortium of the state-owned Magyar Posta, the Hungarian Electricity Works (MVM) and a unit of the Hungarian Hungarian Development Bank (MFB). NMHH excluded the other two bidders - Romania’s RCS and RDS and Vietnam’s Viettel Group-because of deficiencies in their registrations to participate.

In a change from previous information, MVM will have only a 10% share in the state bidder, while Magyar Posta and MFB unit MFB Invest will both have 45%, Nepszabadsag reported.

The NMHH announced the tender for the frequencies on August 4, 2011. A 5MHz "A" frequency block is being offered at a starting price of net HUF 4bn, while 1MHz "B" frequency blocks are being offered at a starting price of HUF 700m apiece, and 0.8MHz "C" frequency blocks are being offered at a starting price of HUF 560m.

The winner of the "A" block will also get an option for three 1,800MHz blocks and three 2,100MHz blocks.

If the first round of the tender is closed without result, bids may again be submitted for the "A", "B" and "C" blocks in the second round.

Participants may win no more than a combined 7.8MHz in the band.

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