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%).

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.

New Electronic Communications Act comes into force today

LJUBLJANA – A new Electronic Communications Act comes into force today. The act was adopted by the National Assembly on 20 December 2012 and published in the Official Journal on 31 December 2012. It transposes the revised European Union (EU) electronic communications framework into national legislation.