Fourth mobile carrier picked in Hungary

Three Hungarian companies and a consortium comprising three local enterprises have won frequency blocks in the 900 MHz frequency band in a tender invited by the National Media and Infocommunications Authority (NMHH) for the country’s fourth mobile service provider. The winners made bids totaling HUF 43.9 billion (EUR 147 mn) + VAT.

In the auctioning off of a total of 10.8 MHz of frequency by the National Media and Infocommunications Authority (NMHH), Block "A" (5MHz) was won by a consortium comprising the Hungarian Electricity Works (MVM), a unit of the Hungarian Investment Bank (MFB Invest) and the Hungarian Postal Services (Magyar Posta). As a new service provider it also had to buy from the 1,800 and 2,100 MHz frequency blocks.

Blocks "B" and "C" (5.8 MHz each) were awarded to Vodafone, Magyar Telekom and Telenor that already provide mobile services in Hungary. Hungary’s fourth mobile service provider has thus become the consortium, which - under the national roaming contract, may use the network of the existing service providers (Magyar Telekom, Telenor, Vodafone) until it has its own network. The consortium has a year to launch its services and it is obliged to reach penetration in every city with a population of at least 30,000 by 31 December 2014.

According to previous media reports quoted by the financial web site portfolio.hu, the consortium, which is to provide primarily data transmission services, expects to have an 11% market share in terms of subscribers by 2017. However, its revenues could be much bigger than what its market weight would justify. The appearance of the fourth mobile carrier could adversely affect the business of those already on this market, since it disrupts the status quo, carves out a slice of the mobile market "cake" and it could lead to a further decrease in prices by intensifying the competition.