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Swisscom fined SF333 mln for overcharging rivals - extended

Swisscom AG, Switzerland's largest telephone provider, was fined 333.4 mln Swiss francs (€205 mln) by the country's competition office for overcharging mobile phone rivals including France Telecom SA's Orange unit.

Swisscom had a dominant position in the market and imposed an „unfair” call termination charge of 33.5 centimes, the Swiss Competition Commission said in a statement from the capital Bern today. Swisscom, in a separate release, rejected the charges and said it will dispute the decision in court. The commission's ruling, which came more than four years after Switzerland opened investigations into fees its three mobile operators charge each other for routing calls to their networks, reduces the fine from a previously announced 489 million Swiss francs (€300.5 million) in a draft ruling in April. Swisscom Mobile competes with Orange and TDC A/S's Sunrise division. „They are playing a power game with the Competition Commission,” said Panagiotis Spiliopoulos, analyst at Bank Vontobel AG in Zurich. „If they lose this, there's a risk the commission will bring further cases.” Shares of Swisscom rose as much as 5 francs, or 1.1%, to 475.25 francs, and traded at 474.5 francs at 11:49 a.m. in Zurich, valuing the company at 26.9 billion francs. Before today, the stock had gained 19% in the past year, in line with the benchmark Swiss Market Index.

„Swisscom Mobile is not exposed to significant competitive pressure from consumer markets,” the Competition Commission said in a statement following this morning's media conference. The sanction relates to fees Swisscom charged rivals in the 14 months through May 31, 2005. In June 2005, the company reduced the fees to 20 centimes. The phone company is examining whether to put money aside for a potential fine, spokesman Carsten Roetz said in a telephone interview. „The European Commission wants substantial reductions in termination charges and roaming fees,” said Frank Rothauge, an analyst at Bank Sal Oppenheim Jr & Cie. KGaA. „These contribute 20% to 25% of revenue. Termination charges are 100% profit.” Rothauge said mobile-phone usage varies greatly between member states depending on the cost relative to fixed line calls. He said 60% of calls are via mobile networks in Austria, compared with only 16% in Germany. „Swisscom Mobile has long charged the lowest mobile termination fees of any Swiss mobile provider,” the company said in the statement.

On January 22 the Swiss Communication Commission said the three dominant mobile phone providers termination rates were „about 20% over the European average for the previous year” and should be reduced by 25% to 40% by 2009. The survey by the European Regulators Group indicated that of the 31 countries surveyed, only Slovenia, Estonia and Bulgaria had higher charges. National and European Union regulators are trying to curb the dominance of former phone monopolies by imposing price restrictions and rules allowing access to networks for rivals. In November the European Commission asked Germany to stop sheltering Deutsche Telekom AG, Europe's largest telephone company, from entrants to the high-speed Internet market. The Wanadoo SA Internet unit of France Telecom, the EU's second-largest phone company, was fined by regulators for impeding competition for broadband Internet access. In December, a Paris appeals court upheld a €534 million fine ($701 million) imposed on French mobile-phone operators Orange, SFR and Bouygues Telecom in 2005 for price fixing. Next month, EU telecom ministers will discuss proposals drawn up by EU Telecommunications Commissioner Viviane Reding to cap the „roaming” charges for international calls made from mobile-phone users whilst abroad. The UK and France have criticized the price caps. (Bloomberg)