Greek Telcos Fight License Auction

By John W. Miller

In a bid to raise cash to fill its empty coffers, the Greek government is re-assigning, via an auction later this year, four cell-phone frequency blocks in the 900 MHz spectrum. It hopes to raise €270 million in the fourth quarter of 2011 through the sale of these 15-year licenses.
Up for grabs are the spectrum blocks of the two private-sector players, WIND Hellas Telecommunications SA and Vodafone Greece, a unit of Vodafone PLC.
This being Greece, what might seem like a sensible market-based move is a bit more complex, prompting outrage, and the threat of a complaint to the European Commission.
Cosmote Mobile Telecommunications SA, Greece’s part-state-owned operator, is not seeing its block expire until 2016 and thus doesn’t face the risk of an immediate auction, and thus possibly losing its spectrum space. That, of course, doesn’t sit well with the private players, who complain of discrimination.
Also, the Greek government has set a starting price for the auction at €61.7 million per block, more than three times the €20 billion the phone companies say the block is worth, as determined by studying prices in other countries and adjusting them down to account for Greece’s shrinking economy.
The auction, which was announced earlier this year, “is an indirect tax, plain and simple on Greek citizens,” says Georgios Tsaprounis, a WIND Hellas official in Brussels this week to talk to EU officials. “Consumer prices could increase three-fold. The government is not looking at the future.”
Instead of an auction, the Greek government should simply renew the licenses or hold a “beauty contest,” with each operator putting forth its merits in a formal bid, he says.
The telecom firms are contemplating filing a complaint at the European Commission, adds Mr. Trasprounis. “It’s a violation of fair competition not to renew our license.”
The Greek move reflects the country’s Catch-22. It needs the economy to grow, so it can increase tax revenue, but that won’t happen unless it can ease the cost of living and doing business for its own people.
The Greek Ministry of Finance did not make available anybody able to comment.