Hungarian government re-enters the telecoms market

01 February 2012 |


In a controversial move, a consortium of state-owned players succeeded in the auction of mobile frequencies in the 900MHz band to offer mobile services in Hungary.

The consortium of state-owned companies was led by Magyar Posta, and included the Hungarian Electricity Works and the Hungarian Development Bank.

It successfully bid HUF 10 billion for a 5MHz block, which was the largest block of frequencies (referred to as the “A-block”) available in the auction. The consortium, which was the only qualified bidder for this spectrum block, secured the right to use these frequencies for 15 years.

Two other bids for this block were both rejected by the Hungarian telecoms regulator National Infocommunications Authority (NMHH). Romania-based RCS&RDS and Vietnam’s Viettel Group submitted tenders which NMHH declared invalid due to technical problems with their applications.

Peter Kollar, the deputy director of NMHH, said that the consortium’s bid was evaluated on different terms from those of the established operators in Hungary’s telecoms market. He said, “It would have been unfair to demand similar terms from a new market entrant than from incumbent participants.”

Kollar said that NMHH had not demanded a higher price for the A-block frequencies with the aim of bringing a fourth mobile player into the market in order to boost competition.

Three other mobile players already operating in Hungary also won smaller blocks of spectrum in the less valuable “B-block”, which is better suited to provide mobile internet access in rural areas.

Vodafone Hungary bid HUF 15.7 billion and secured 2MHz; Magyar Telekom bid HUF 10.2 billion and secured 2MHz; and Telenor Hungary bid HUF 7.29 billion and secured 1.8MHz.

The auction raised at total of HUF 43.9 billion (nearly $200 million).

The success of the government consortium has proved controversial. Neelie Kroes, the European Commissioner responsible for telecommunications, said, “The commission has been following closely the ongoing auction of 900MHz frequencies in Hungary." She has declared her intention to find out whether NMHH acted independently in the auction.

This is not the first controversial move by NMHH. In December 2011, it removed the expired license from a radio station which was considered to be the main voice of opposition to the Hungarian government, awarding the license to a new broadcaster, raising condemnation from international media watchdog Reporters Without Borders.