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Hungary awards 3G licences to Pannon and T-Mobile

9 Dec 2004

Hungarian national telecom authority the NHH confirmed yesterday that 15-year UMTS licences have been awarded to Pannon GSM and T-Mobile Hungary. Pannon, the Hungarian mobile subsidiary of Norway’s Telenor, will pay a total of HUF19 billion (EUR77.5 million) for its 3G concession, while T-Mobile’s permit will cost HUF17 billion. Both cellcos are required to pay HUF5.5 billion before the end of 2004, with the remainder to be paid in three annual instalments.

Meanwhile, the other local wireless operator, Vodafone Hungary, is still in talks with the Hungarian government and the NHH about securing the third 3G licence. The government is expecting Vodafone to pay a price ‘in proportion’ to the other two licences. The technology minister Kalman Kovacs said that the government expects negotiations with Vodafone to conclude within a week.

Prior to yesterday’s awards, Hungary was one of only three EU members, along with Lithuania and Malta, still to select 3G providers. The relatively high price that the Hungarian operators paid for their licences has raised eyebrows amongst analysts, some of whom point to the fact that Romania recently sold UMTS licences for just USD35 million each. On the other hand, some observers have argued that the prices the bidders were willing to pay reflect the higher value of the Hungarian wireless market.

A fourth 3G licence had been set aside for a new market entrant, but bids by Denmark’s TDC and Tele2 of Sweden were unsuccessful, apparently due to both failing to provide bank guarantees for the minimum bid amount of HUF5.5 billion. According to Kovacs, Hungary will not re-offer the fourth concession again until after the first 3G mobile services have been commercially launched. Pannon GSM and T-Mobile Hungary both plan to launch UMTS services in January 2006. Last month, Pannon’s parent company Telenor became the first operator to launch 3G services in Norway.

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