Vodafone 2011 Annual Report Download - page 143

Vodafone Group Plc Annual Report 2011 141
Additional information
The national regulator has determined the net cost and industry
contributions corresponding to universal service contributions for 2007.
Vodafone is required to contribute €14.9 million. We are currently appealing
this decision.
In June 2010 the Spanish Ministry of Industry, Tourism and Commerce
issued a wideranging consultation on spectrum. In February 2011 the
Government confirmed its plans under which operators (including
Vodafone) will return small amounts of their existing 900 MHz and 1800
MHz spectrum, the remaining licences would be extended until 2030 and
refarming would be allowed in these bands. A tender process for the 2.6 GHz
and 800 MHz bands will also be undertaken in the 2011 calendar year, with
the 800 MHz spectrum available for use from around 2015.
The national competition authority has commenced an investigation into
the wholesale origination and termination charges levied by all Spanish
mobile operators for SMS services.
United Kingdom
Our regulated average termination rate is currently 2.98 pence per minute.
The national regulator has finalised the process to decide the rates that will
apply from 1 April 2011 to 31 March 2015. It has imposed a glidepath with
annual adjustments that would see a reduction to 0.69 pence per minute
(plus inflation adjustment) in 2014 and 2015. The mobile network operators
have until 16 May 2011 to appeal this decision.
All 2G licences have been modified to allow refarming to 3G. All 3G licences
will also be made indefinite rather than expiring in 2021.
The national regulator will carry out a competition assessment and
consultation process to what restrictions, if any, might be applied to
participation in the auction of 800 MHz and 2.6 GHz spectrum, which is
expected to be conducted in early 2012.
As part of the conditions for clearance of the merger between Orange UK
and T-Mobile UK, the Commission has required them to dispose of 2x15 MHz
of spectrum in the 1800 MHz band. If they fail to do so, this spectrum will be
included in the auction.
Other Europe
Albania
Vodafone Albania acquired the single 3G licence (2x15 MHz) for €31.4m
in November 2010. Commercial services were launched in January 2011.
Greece
The national regulator is currently consulting on the renewal/re-auction of
existing 900 MHz licences expiring in 2012.
Hungary
In October 2010 the Hungarian Parliament adopted a law which imposes a
significant additional tax burden on the telecommunications, retail and
energy sectors. The law came into force in December 2010 and will apply
until at least January 2013, although the Hungarian government has
indicated that it may be further extended. Vodafone prepaid 7,343,503,000
HUF (£24 million) in December 2010. A large number of firms have asked the
Commission to review the legality of the tax, which they are currently doing.
Ireland
The national regulator has proposed auctioning all spectrum in the 900 MHz
and 1800 MHz spectrum bands at the same time as an auction of 800 MHz
spectrum in 2011, with spectrum available in 2013. In the meantime,
Vodafone’s and O2’s 900 MHz licences will be renewed until the
commencement of the new licences in 2013.
Malta
The national regulator has concluded a process for the renewal/issue of all
900 MHz and 1800 MHz spectrum which allows Vodafone to retain all but
five MHz of its 900 and 1800 MHz spectrum for 15 years. Vodafone has also
secured an additional 20 MHz of 1800 MHz spectrum.
Netherlands
Our termination rate reduced to 4.20 eurocents per minute in January 2011
following a cost model analysis by the NRA which proposes reducing to
1.2 eurocents per minute by September 2012. This decision is currently
under appeal.
Auctions of 2.6 GHz spectrum concluded in April 2010. Vodafone acquired
2x10 MHz of 2.6 GHz of spectrum for the reserve price of €200,000.
In February 2011 the Government announced plans to auction 800 MHz,
900 MHz, 1800 MHz, 2.1 GHz and 2.6 GHz spectrum in early 2012. It proposes
to reserve two 800 MHz licences for new entrants.
Portugal
The national regulator has adopted a glide path of termination rate
reductions from May 2010 to take the rate from 6.50 eurocents per minute
to 3.50 eurocents per minute by August 2011. The national regulator is
currently consulting on a cost modelling process to determine rates beyond
August 2011.
The spectrum auction in Portugal was delayed and is now expected in 2011
and will include a number of spectrum bands including 800 MHz and
2.6 GHz.
The competition authority has started an investigation into certain retail
pricing initiatives undertaken by Vodafone in early 2011.
Romania
Proposals for the renewal of Vodafone’s 900/1800 MHz licences, which
expire in December 2011, are expected shortly.
In February 2011 Vodafone was fined €28 million by the competition
authority in relation to an alleged refusal to interconnect with another party
in 2006. We appealed this decision in April 2011. Other enquiries remain
ongoing. In April 2011 we were advised that new proceedings in relation to
termination rates and subsidies for handsets will be initiated.
Turkey
Our termination rates are currently set at 0.032 Lira per minute.
Africa, Middle East and Asia Pacic region
India
The national regulator’s decision to reduce interconnection charges to
Rs 0.20 per minute effective 1 April 2010 was successfully appealed to the
appellate body. The national regulator launched a new interconnect
charges consultation process in April 2011 and has been directed by the
appellate body to implement new rates by June 2011.
In May 2010 we secured 20 year licences for 2x5 MHz of 3G spectrum in nine
circles in the Indian auction for a total price of INR 116.2 billion (£1.7 billion).
These circles include Delhi, Mumbai, Kolkata and a further three ‘A’ circles
and three ‘B’ circles providing a footprint covering 66% of VEL’s current
revenue base. In May 2010 the national regulator made recommendations
on the spectrum management and licensing framework which includes far-
reaching proposals for spectrum allocation and pricing. In February 2011 the
national regulator recommended a new spectrum valuation approach for
1800 MHz spectrum. These recommendations will be reviewed by the
Union Minister of Communications and IT.
In September 2010 VEL’s appeal against the increase in 2G spectrum fees of
1% to 2% of adjusted gross revenue (effective from 1 April 2010) was
unsuccessful. VEL then appealed to the Supreme Court in October 2010 and
was granted a stay against the order increasing spectrum charges.