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T-Mobile contracts Ericsson for 3G network

26 Jan 2005

T-Mobile, one of the three operators to be awarded a Hungarian 3G licence in November 2004, has signed a contract with Swedish equipment manufacturer Ericsson making it the sole supplier for the rollout of its 3G network. Under the terms of the deal, the value of which has not been disclosed, Ericsson will provide the cellco with radio access network and core network systems, including related network rollout services. As part of the build up to 3G, T-Mobile has been offering EDGE services to its customers in the capital Budapest since last December. It hopes that this will enable them to experience the benefits of next-generation services and encourage the take up of 3G when it is launched. Fellow 3G licensee Pannon GSM struck a similar agreement with Ericsson earlier this month, and both T-Mobile and Pannon have said they hope to have commercial services up and running by the end of 2005. Vodafone Hungary has also received a 3G licence, although it has not revealed any plans for network rollout.

The 3G licence auction has been long-awaited in Hungary. The government first announced plans to hold the tender in December 2001, but postponed the process indefinitely after concluding that neither operators nor consumers were prepared for next-generation services, and that the frail telecoms industry could not afford to invest in a market which had no guarantee of success. In November 2003, however, the regulator NHH changed its mind, saying it was keen to launch a tender as early as the start of 2004, and hoped to award licences by the mid-year to dovetail with the country’s accession to the European Union. This announcement was met coolly by the incumbent cellcos, however, and in December 2003 the government revised its plans once more, stating that it would not begin the process until the end of 2004.

The tender was finally launched in September, when the NHH put five 15-year licences up for sale. Pannon GSM, T-Mobile and Vodafone all entered bids, as well as fixed line operator HTCC and foreign player Tele2. In November 2004 spectrum block A was awarded to T-Mobile, which will pay HUF17 billion, block B to Vodafone for HUF16.5 billion and block C to Pannon for HUF19 billion, although Vodafone was not officially awarded its concession until December following negotiations with the government about the price. HTCC and Tele2 both entered bids for spectrum block D, but it has yet to be awarded to either with the regulator claiming in December that neither bid was in line with regulatory requirements.

The regulator is keen to get 3G services up and running, not least because the country’s 2G services market is quickly approaching saturation. Prospects for a smooth transition to 2.5G and 3G networks are somewhat dubious, however, given Hungary’s comparatively weak GDP and generally poor wages, which mean that data-based mobile internet services are beyond the reach of the average man in the street; the market has so far been built on the strength of inexpensive voice services rather than data.

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