Vodafone 2010 Annual Report Download - page 136

134 Vodafone Group Plc Annual Report 2010
Regulation continued
Italy
In July 2008 the NRA reduced our termination rate to 8.85 eurocents per minute and
in July 2009 to 7.70 eurocents. The NR A foresees fur ther reductions to 6.60 eurocents
in July 2010, 5.30 eurocents in July 2011 and 4.50 eurocents in July 2012 subject to
the findings of its cost model analysis.
Following the auction of 2.1 GHz spectrum in June 2009 we and two of the other
existing network operators (Telecom Italia and Wind) each acquired an additional
2x5MHz of spectrum at 2.1GHz. We paid €90 million for this additional spectrum. The
NRA also reorganised the 900 MHz spectrum during the 2009 calendar year and as
a result we increased our 900 MHz spectrum assignment to 12 MHz.
Spain
The NRA reduced our termination rate to 7.87 eurocents per minute in October 2008
and to 7.00 eurocents in April 2009. The NRA has adopted a glide path of termination
rate reductions from 6.13 eurocents in October 2009 to 4.00 eurocents by October
2011 (on a per second charging basis).
The National Competition Authority (‘NCA’) issued a statement of objections in the
procedure opened for an alleged anti-competitive practice in January 2007,
concerning alleged concerted practice by Vodafone and others to establish the same
call set-up charges. The NCA has decided to close the file.
After an initial decision determining the net cost and industry contributions
corresponding to universal service provision in the years 2003 to 2005, the NRA has
adopted new decisions with the same principles for years 2006 and 2007. In its
decision for 2006 it declared an amount of €75.3 million payable by the industry. We
have been held liable for between approximately 15% and 20% of the industry total
for the years 2003 to 2006 with a decision for 2007 pending.
The Spanish Government removed advertising from state television and radio
services in September 2009 but sought to replace advertising revenue through
imposition of a new tax on revenue earned by Spanish telecommunication operators.
In January 2010 the European Commission announced that it had initiated an enquiry
as to whether these provisions breach European laws on State Aid.
United Kingdom
Our regulated average termination rate from April 2008 to March 2009 was 5.75
pence per minute. From 1 April 2009 the rate declined to 4.72 pence following
appeals by BT and H3G to the competition appeals tribunal. On 1 April 2010 the rate
declined to 4.43 pence. The NRA is currently consulting upon the rates to apply
from 1 April 2011 to 31 March 2015. It currently proposes a reduction to 0.50 pence
during 2014/15.
An auction of the digital dividend spectrum in the 790-862 MHz range and 2.6 GHz
spectrum is expected during 2011.
The UK Government’s proposals to permit refarming, restructure 2G spectrum and
determine the basis upon which existing operators could participate in the 2.6 GHz
and digital dividend spectrum auctions failed to pass through Parliament before its
dissolution. As part of the conditions for clearance of the merger between Orange
UK and T-Mobile UK, the European Commission has required them to dispose of 15
MHz of spectrum in the 1800 MHz band.
Other Europe
Greece
In January 2009 the termination rate reduced from 9.91 eurocents to 7.86 eurocents
per minute. In January 2010 the rate fell to 6.24 eurocents and a further reduction to
4.95 eurocents will take place in January 2011.
Vodafone Greece and other mobile operators have encountered difficulties in
obtaining authorisations to install and maintain base stations and antennae.
Operators have proposed amendments to the relevant law and have requested that
the Government extend the deadline for obtaining such approvals. In May 2009 the
Government set a new deadline of March 2010 which has been extended further until
March 2011. Vodafone Greece is negotiating a co-location agreement to site base
stations on the premises of OTE, following a regulatory decision in February 2009
mandating co-location.
Vodafone Greece continues to appeal findings and sanctions arising from the 2007
interception incident. A number of civil lawsuits are also pending in the Greek courts.
A new tax law passed by the Parliament in July 2009 has introduced a 12% levy on
prepaid subscriptions and changed the method of assessment thereby increasing
the levy on contract subscriptions, both of which are paid by the customer.
Mobile subscriber registration was implemented in Greece on 7 November 2009 and
all prepaid subscribers should be registered by the end of July 2010. Any remaining
anonymous prepaid accounts are to be disconnected by 31 July 2010.
Ireland
The NRA has proposed re-auctioning all licences in the 900MHz spectrum band on
expiry of their existing term in (in our case) 2011.
Netherlands
Following an appeal by one stakeholder against the NRA’s decision setting of call
termination rates, Vodafone’s termination rate reduced to 7.00 eurocents per minute
in July 2009. This is likely to be reduced in July 2010 following a cost model analysis by
the NRA which proposes reducing to 1.2 eurocents per minute by September 2012.
Auctions of 2.6 GHz spectrum concluded in April 2010. We acquired 2x10MHz of
2.6 GHz of spectrum for the reserve price of €200,000.
Portugal
The NRA has adopted a glide path of termination rate reductions from May 2010 to
take the rate from 6.50 eurocents to 3.50 eurocents per minute by April 2011.
The NRA is expected to auction 2.6 GHz spectrum in 2010.
Africa and Central Europe region
South Africa
The NRA has released draft regulations proposing adoption of a uniform mobile
termination rate and further reductions to ZAR 0.65 per minute in July 2010, ZAR
0.50 in July 2011 and ZAR 0.40 in July 2012.
In January 2009 the NRA published a notice that it was issuing converted licences to
close the licence conversion process which commenced in 2006. Vodacom’s mobile
cellular telecommunications licence was transformed into two distinct licences: an
individual electronic communications network service (‘I ECNS’) licence and an
individual electronic communications services (‘I ECS’) licence. The NRA gazetted
a further document setting out a process through which it will determine
standard terms and conditions regulations, licence fees, spectrum fees and universal
service obligations.
In July 2009 the NRA published proposals for the future allocation of spectrum
licences including the 2.6 GHz band.
Other Africa and Central Europe
Romania
The NRA awarded us an additional 2x2.8 MHz of 1800 MHz spectrum in August 2009.
Czech Republic
The NRA awarded us an additional 2x3.8 MHz of 900 MHz spectrum in June 2009.
Hungary
Proposals to award additional 900 MHz spectrum have been delayed and are
expected in 2010.
Turkey
The Government undertook an auction of four 2.1 GHz licences in November 2008.
Each of the three existing operators obtained licences. Concession agreements
were awarded to the successful bidders in April 2009. The fourth licence was
not awarded.
The NRA adopted rules in April 2009 which require Turkcell to ensure that on-net
tariffs do not fall below a level determined by reference to the prevailing mobile
termination rate. In May 2009 the termination rate was reduced from Kr 9.5 per
minute to Kr 6.8. A further reduction to Kr 3.2 took place in April 2010.