Hungary May "Squander" $400 Million on Mobile Provider, KBC Says
December 08, 2011, 8:04 AM ESTBy Andras Gergely
Dec. 8 (Bloomberg) -- Hungary may spend as much as 100 billion forint ($446 million) on setting up a state-backed mobile network operator, an “unnecessary” expense given the pressures on the state budget, according to KBC Securities.
Hungary’s state-owned electricity wholesaler MVM Zrt. is bidding for a mobile-telephone license together with the country’s postal service and state-owned Magyar Fejlesztesi Bank Zrt., Napi Gazdasag reported yesterday. Magyar Telekom Nyrt., the country’s former phone monopoly, now competes with units of Vodafone Group Plc and Telenor ASA on the mobile market.
Hungary bought OAO Surgutneftegas’s 21.2 percent stake in refiner Mol Nyrt. in May for 1.88 billion euros ($2.5 billion), which helped push the budget deficit to 181.5 percent of the full-year target by the end of November, according to data published by the Economy Ministry yesterday. Entering the mobile market would be a similar strain on the budget as the funds ‘squandered’’ on the MOL stake this year, Gergely Palffy, a Budapest-based analyt at KBC, wrote in a research report.
“We wouldn’t be surprised to see similar unnecessary moves, even if the development costs for fourth player amounts to roughly 100 billion forints,” Palffy wrote.
Hungary, the European Union’s most indebted eastern member, last month lost its investment-grade credit-ranking at Moody’s Investors Service, which said the government may not be able to meet its fiscal consolidation and public debt reduction targets.
The entrance of a fourth mobile operator would also be “potentially destructive” for the existing three players’ operating results and may hinder their efforts to develop 4G networks, KBC’s Palffy added.
--Editors: Chris Peterson, James Kraus
To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
