Vodafone 2012 Annual Report Download - page 161

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159
Vodafone Group Plc
Annual Report 2012
The licences will expire in 2030. Our 900 MHz licence has been modied
to allow refarming and we have the option to extend it until 2030. The
licence currently expires in2020. In November 2011 we acquired 2x10
MHz of 2.6 GHz TDD spectrum at a cost of €10.4 million (£8.7 million).
In December 2011 the National Competition Authority issued a draft
decision which proposes that Vodafone, Telefonica and Orange have
abused a collective dominant position in the provision of wholesale
origination of SMS and MMS and abused an individual dominant
positionin the provision of SMS and MMS termination services in setting
excessive prices. The Council of the National Competition Authority
must now take the nal decision and consider the imposition of nes.
In January 2012 the National Competition Authority informed Vodafone,
Orange and Telefonica that they were investigating claims from BT Spain
that the operators had engaged in an unlawful price squeeze in the
market for xed and mobile services for business users. We have since
received a questionnaire, to which we have responded.
In February 2012 the government announced its intention to merge
thenational telecommunications regulator into a new regulatory body
called the National Markets and Competition Commission.
United Kingdom
Our regulated average MTR at 31 March 2012 was 3.02 pence per
minute. The national regulator proposed a glidepath with annual
adjustments that would see a reduction to 0.69 pence per minute
(plusination adjustment) by 1 April 2014. Following appeals of this
decision, the rate of 0.69 pence per minute (plus ination adjustment)
will have to be reached one year earlier (by 1 April 2013). All 2G licences
have beenmodied to allow refarming to 3G. All 3G licences will also be
made indenite rather than expiring in 2021.
The national regulator has consulted on the release of 800 MHz
and2.6GHz spectrum, including proposals for the auction design.
Theauction is expected to take place in the rst quarter of 2013.
Other Europe
Albania
AMC (Deutsche Telekom) launched its 3G services in the market in
January 2012. The national regulator launched a public tender in
February 2012 to award the third 3G licence in the market but the
minimum bid price set by the Telecoms Minister was not met and the
tender failed.
Czech Republic
In March 2012 the government released a consultation on the auction
of 800 MHz, 1800 MHz, and 2.6 GHz spectrum, which is expected to
take place in November 2012. The government proposes to reserve
aportion of 1800 MHz spectrum for a new entrant and to require
licensees to provide access for MVNOs.
The national regulator is currently reviewing the market for mobile
origination and access to determine whether mobile operators should
be obliged to provide regulated access to MVNOs.
Greece
In November 2011 we acquired 2x15 MHz of 900 MHz spectrum
and2x10 MHz of 1800 MHz spectrum for a cost of €169 million
(£142million). The licences are valid until 2026.
Hungary
In October 2010 the Hungarian Parliament adopted a law which
imposes a signicant 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. We paid HUF 7,119,714,000
(£23 million) in relation to the 2011 nancial year. InMarch 2012
theCommission announced that it would commence infringement
proceedings in the European Court of Justice on the basis that the tax
isunlawful.
We acquired an additional 2x2 MHz of 900 MHz for HUF 15.7 billion
(£44million) spectrum through anauction in January 2012. We and
other operators are, however, challenging the award of certain spectrum
to a new entrant during thatprocedure.
At the end of April 2012 the government proposed the introduction of a
new end-user tax on both mobile and xed phone trafc of HUF 2.0 per
minute and per SMS/MMS. The new tax would generate tax revenue
ofHUF 52 billion (£147.3 million) a year, which is close to 10% of the
relevant service revenue of the whole market, and would be in force
from 1 July 2012.
Ireland
The national regulator is planning to auction all spectrum in the
900/1800 MHz spectrum bands at the same time as the 800 MHz band
in mid 2012, with the 800 MHz spectrum awarded under the auction
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.
Netherlands
Our MTR reduced to 4.20 eurocents per minute in January 2011
following a proposal by the national regulator to reduce it to 1.2
eurocents per minute by September 2012. Following an appeal, the
court directed that the MTR should instead reduce to 2.4 eurocents by
September 2012. The Commission has suggested that it may challenge
this decision, but we do not believe it has the legal grounds to do so.
The government has announced plans to auction 800 MHz, 900 MHz,
1800 MHz, 2.1 GHz and 2.6 GHz spectrum in October 2012. The
government will reserve 2x5 MHz in the 900 MHz band for new
entrants, in addition to 2x10 MHz in the 800 MHz band.
In May 2012 the Dutch Parliament adopted amendments to the
Telecommunications Act which are intended to limit the circumstances
in which operators are able to engage in network management and to
prevent operators from varying the charges to end users by reference
tothe type of internet service or application they wish to use. The
cumulative effect of these measures is to prevent operators from
blocking or otherwise charging specically for voice over internet
protocol (‘VOIP’) and other internet services. These measures are
expected to apply from January 2013.
Portugal
The national regulator will reduce MTRs to 1.27 eurocents per minute as
from 31 December 2012.
In November 2011 we acquired 2x10 MHz of 800 MHz spectrum,
2x5MHz of 900 MHz spectrum, 2x14 MHz of 1800 MHz spectrum and
2x20 MHz of 2.6 GHz spectrum for a cost of €146 million (£123 million).
The licences are valid until 2026.
Romania
The government agreed to renew our 900/1800 MHz licences for a
further period of one year (until December 2012) for a fee of €6.4million
(£5.4 million). In the meantime, the government plans tooffer the
licences for a further 15 year term during an auction in mid-2012 which
will also include the 800 MHz and 2.6 GHz bands.
In February 2011 Vodafone was ned €28 million (£23.3 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 a
new proceeding inrelation to MTRs and on-net pricing has commenced
and have sincereceived a questionnaire, to which we intend to respond.
A competition investigation regarding prepaid distribution is in the nal
stage of being closed without any ne.