Slovenia launches multi-band spectrum auction

The Slovenian telecoms regulator APEK published a tender for the award of radio frequencies for providing public communications services (OJ RS, No. 114/2013, p 3515, 31 December 2013). Spectrum in the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2600 MHz bands is included in the award process as set out in the following table.

Clouds over Telekom Slovenije privatisation plan

The Slovenian Compensation Company (SOD) appointed Citigroup Global Markets Limited as a financial advisor for the privatisation of Telekom Slovenije. The agreement was signed on 30 October 2013. The Slovenian government is determined to sell Telekom Slovenije (LJSE:TLSG) by the end of 2014. This is the third time the Government has considered selling the state’s stake in the incumbent telecommunications operator. In May, it prepared a privatisation plan with a set of 15 companies, including Telekom Slovenije, to be sold off. The National Assembly approved the privatisation plan on 21 June 2013.

State ownership in European telecommunications incumbents

The European Union (EU) is traditionally neutral on the ownership of enterprises and Member States are free to choose the forms of ownership of their enterprises (European Economy). Privatisation is not part of any legal obligations related to the electronic communications regulation. However, most of the European telecommunications operators have been privatised during the privatisation wave of 1980-90s, spurred by liberalisation.

Slovenia is in a group of five EU Member States that have retained majority state ownership of their incumbent telecommunications operators: Luxemburg (100%), Cyprus (100%), Slovenia (72% plus an additional approx. 3% indirect stake), Belgium (53,51%) and Latvia (51%).

A timeline of Slovenian 4G spectrum assignment process

Slovenian lawmakers adopted a decision to assign frequencies in the 800 MHz band, a so called digital dividend, for mobile broadband in 2007. They were ambitious and wanted to launch mobile broadband services in the 800 MHz band already in 2011. Six years later and more than seven years after the adoption of the underlying strategy, we are still far from assigning frequencies. We have not got even a complete mobile auction information memorandum. The Slovenian National Regulatory Authority (NRA) requires changes in auctioning provisions of the recently adopted Electronic Communications Act, which may lead to further delays.

Reasons for the low take-up of mobile broadband in Slovenia

The latest global broadband report, released on Saturday by the United Nations Broadband Commission, reveals an astonishingly high global growth rate in mobile broadband subscriptions of some 30%. This is the highest growth rate of any ICT. In 2012, it exceeded fixed broadband subscriptions by a ratio of 3:1 (up from 2:1 just two years ago).

Slovenia has dropped seven ranks in mobile broadband penetration to 43rd place in the 2013 global broadband report. The decline is in large part attributable to a slower adoption of mobile broadband technology despite the growth of subscriptions in 2012 was still remarkably high at 26,6%. Slovenia has lost two places and is 22nd amongst 28 EU member states. What is worrying is the gap between the economies with highest mobile broadband penetration that is three times higher than in Slovenia.

Telekom Slovenije – a brief history of its privatisation

Telekom Slovenije, one of Slovenia’s largest and most important business groups, has successfully resisted privatisation since its separation from PTT Slovenije in 1995. Both privatisation attempts were marked with strong opposition against privatisation. For proponents of state ownership Telekom Slovenije has been a strategic company and valuable state’s crown jewel that should remain state-owned. This is the third time the government has considered selling its stake in the incumbent telecommunications operator. The government seems to be determined to carry out the privatisation of Telekom Slovenije. However, its privatisation plan is likely to face strong opposition which is already growing.

The first privatisation attempt – a missed peak of the telecom hype

The first attempt to privatise Telekom Slovenije was made between 1999 and 2001. The government started the privatisation process in 1999 and appointed members of the privatisation commission. In 2000, it hired the consultancy firm PriceWaterhouseCoopers (PWC) that prepared three privatisation models. Each envisaged a reduction of the state’s stake in Telekom Slovenije below 50% either immediately or in a short run of two to three years. 

Minister Pikalo would sell Telekom Slovenije without infrastructure

The Slovenian minister for electronic communications Jernej Pikalo has recently announced that he is going to propose structural separation of Telekom Slovenije. The announcement has come as a surprise as there had been no prior consultation on the issue, neither within the government offices nor publicly with other stakeholders. Besides, Telekom Slovenije has been on a list of state-owned companies for sale and the Parliament has already approved the government’s privatisation plan. The next step in privatisation was made at the end of August when shareholders, the majority of them state-owned companies, signed an agreement to sell a combined stake of 72,75% in Telekom Slovenije, which is valued at EUR 710 million at current market price. The state’s stake is worth EUR 517 million.

Slovenia lacks telecoms network investment

The Slovenian electronic communications sector has lost much of its steam between 2008 and 2011. The sector's investment, driven by infrastructure competition and fibre deployment, peaked in 2008 at EUR 401 million, accounting to 32,6% of the sector's revenue (Figure 1). The investment then fell to EUR 120 million in 2011, representing only 9,8% of the sector's revenue, which placed Slovenia in the last position among the EU Member States (Figure 2). Investment in the electronic communications sector recovered to EUR 173 million in 2012, reaching a level of 14,3% of the sector's revenue.

Slovenian telecoms regulator decided to reduce market transparency

Informed consumers are essential to the fair and efficient functioning of electronic communications markets. In well-functioning markets, consumers are able to compare service plans and pricing and switch between services. For consumers to make informed decisions, they need to understand the price and quality of their options. Therefore, they need to be provided with factual information on which to base their choices.

In Slovenia, consumers do not have access to independent advice and guidance to help them make informed decisions about communications products and services and to choose between service providers. They even do not have access to accurate, comprehensive and up to date pricing and service plan information provided in one place.

Competition protection in the interest of the private sector or of the state?

Telekom – The Impregnable State Fortress

Last month, the Ljubljana District Court issued its ruling, completely dismissing T-2’s damages claims against Telekom Slovenije in the amount of 130 million euros. T-2 filed its lawsuit already six years ago against Telekom Slovenije over alleged anti-competitive actions, which, it claimed, prevented it from successfully entering the internet services market. The main hearing did not get underway until January of this year, but it finished in just an hour and a half, so the ruling was no surprise. At the hearing, the judge did not even ask the question of whether or not the claims of Telekom’s abuse of dominant market position were founded, but first verified that T-2 had submitted enough evidence to calculate the damages. Since the judge was of the opinion that a solid cubic meter of documents was insufficient, she completed the proceedings without even giving T-2 an opportunity to submit additional evidence for its claims. With such a conclusion to the case in which the parties submitted to the court a total of three thousand pages of written materials over the course of six years and over five thousand pieces of evidence, one has to ask the question, what poses the greatest obstacle to competition: Telekom, the Civil Procedures Act, or Slovenian courts themselves? Or is this a concerted action?

Is Telekom not guilty?

Telekom’s management continues to insist that it has always adhered to Slovenian legislation, and that it has not violated any competition rules. Yet the facts suggest otherwise. Telekom’s competitors have been fighting against its anti-competitive activities and abuse of dominant market position since 1996. In these fifteen years, at least a dozen proceedings have been initiated before the Slovenian Competition Protection Agency (previously the Competition Protection Office). The Agency has never been particularly keen on investigating Telekom’s alleged abuses, as the proceedings for establishing the existence of infringements have always been dragged out longer than stipulated by law, but it has nonetheless issued a few decisions.