Bloomberg News

Hungarian Court Annuls Mobile Frequency Tender Results

September 17, 2012

A Hungarian court annulled the results of a tender for the country’s fourth mobile frequency, which was awarded to a consortium of state-owned companies.

Under the ruling of the Budapest Metropolitan Court, the court abolished the results, including the granting of extra frequency capacities to the three other mobile operators.

“Based on existing regulations at the time of the tender, state-owned companies couldn’t have taken part as bidders in the tender,” Gyorgy Mohay, the ruling judge in the case told reporters in Budapest today after presenting the ruling. “We have discovered serious procedural law infringements.”

The ruling was binding and couldn’t be appealed, he said. Hungary’s state media regulator, known as NMHH, in January awarded 5 megahertz of the 900 MHz frequency to a group including postal service Magyar Posta Zrt., power company Magyar Villamos Muvek Zrt., and development bank Magyar Fejlesztesi Bank Zrt. The three service providers, Magyar Telekom Nyrt., and the local units of Vodafone Plc and Telenor ASA (TEL) appealed the result of the tender.

Under the tender, the state-owned group offered 10 billion forint ($46.5 million) for the frequency. Vodafone offered 15.7 billion forint, Magyar Telekom Nyrt. offered 10.9 billion forint and Telenor offered 7.3 billion forint for the extra capacity they were awarded.

Magyar Telekom shares rose as much as 3.8 percent today and traded 2.4 percent higher at 429 forint at 3:12 p.m. in Budapest.

The court’s ruling raises the risk that Hungary’s mobile market will “remain in a state of immobility” due to lack of price competition and “customers will be the biggest losers,” MPVI Zrt., the new mobile company set up by the tender-winning consortium, said in an e-mailed statement today.

NMHH didn’t respond to questions e-mailed by Bloomberg today.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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