T-Mobile Sole Bidder at FYR Macedonia's 3G Tender

Macedonian Information Agency (MIA), a news service, reports that only T-Mobile Macedonia decided to participate at a 3G tender held by the telecoms regulator of FYR Macedonia, AEC, by submitting a bid by the deadline of 13 November. The licence is valid for 10 years and has a minimum one-off fee worth 10 million euro (US$14.2).

The head of the tender commission, Mile Veljanov, was quoted by the MIA as saying that the tender is "a step towards further liberalisation and promotion of telecommunications competitiveness" in the country. He also said that the regulator and the government hence "observe EU's action plan and make space for wider application of the broadband access all over Macedonia, which opens opportunities for new investments in the field of electronic communications". Such comments reflect the role of the European Union (EU)—which granted FYR Macedonia an official candidate status already in 2005—as a driver for injecting more competition into the country's telecoms sector.

Outlook and Implications

• Not More Than One: The AEC had put a total of three UMTS licences on sale, and it comes as something of a disappointment to the regulator that T-Mobile was the only company to show interest. The local Deutsche Telekom subsidiary is the market leader, holding a share of close to 60% of the country's subscription base, followed by OTE's Cosmofon (with an approximate 30% of the market) and Telekom Austria's VIP (with the remaining 10%). Currently, Cosmofon is the holder of the market's only 3G licence, having launched its services in the third quarter of this year, and it is somewhat surprising that VIP was not keen on acquiring one of its own. Of the South-East Europe (SEE) region's strategic investors, FYR Macedonia also accommodates Telekom Slovenije—the owner of On.Net, the market's second largest ISP after T-Home Macedonia, T-Mobile's fixed-line counterpart—which was also considered as being among the potential bidders. As T-Mobile has enough clout to meet the tender requirements, we expect the rest of the process to be mostly a formality and the sole bidder to receive its frequency band.
• Cosmofon Sell Still Up In The Air: IHS Global Insight believes that the tender has been to some extent affected by the unfinished talks over the fate of Cosmofon, which is being sold by OTE—something which became a regulatory necessity after Deutsche Telekom took over 25% and the management in the Greek telco and subsequently decided that it would continue in FYR Macedonia under the T-Mobile brand. Both of the Slovenian and Austrian incumbents have been reported to be after the assets, which also include Cosmofon's UMTS licence and operations, yet to date there has been no signs of a deal. With the financial risk looming and playing its own part, the parties are likely to have difficulties with agreeing on the appropriate value of the operator. What also matters for Telekom Austria, is the regulator's stance on the issue, as VIP grabbing Cosmofon's customer base would mean the market turning back into a mobile duopoly (see FYR Macedonia: 18 September 2008: Regulator Invites Bids for Three New 3G Licences in FYR Macedonia).