Hungary Telecom Office Cuts Mobile Termination Fees 10%

BUDAPEST -(Dow Jones)- Hungary's telecommunications authority, NHH, said Tuesday that it has decided to cut the termination fees of mobile telecom service providers by 10% from June.

The step is aimed at bringing termination fees in the mobile sector closer to the termination fees in the fixed-line sector to boost competition as well as lowering prices for mobile services.

The ruling also applies - the first time for such NHH decisions - to the local unit of Vodafone PLC (VOD).

Termination fees are what telecom companies pay to one another for terminating a call from another provider in their telecom network.

At the moment, market-leader T-Mobile Hungary's termination fee is 37 forints ($1=HUF188.15) per minute in peak periods and HUF20.5 per minute in off-peak periods. Pannon GSM's termination fee is HUF41 per minute in peak periods and HUF21 in off-peak periods. Vodafone's termination fees are HUF46.15 and HUF30.15 per minute.

The NHH also ordered that the difference between the highest and the lowest termination fees the companies charge one another cannot be more than 20%. At the moment the difference is between 30-40%.

The NHH also ordered that the mobile companies are to establish termination fees that are based on their costs.

Cost-based termination fees are already in place for fixed-line telecom providers but not for mobile providers, NHH President Daniel Pataki said.

The companies have 60 days to establish cost-based termination tariffs.

If the cost-based pricing leads to a bigger cut in the termination fees than 10%, compared to Dec. 31 average prices, the cost-based fees will take effect over a longer period.

"The NHH doesn't think that an intervention bigger than that is needed from one half-year or year to the other," Pataki said.

Hungary already cut mobile termination fees by 10% in 2004 but "several more steps of 10% reductions are necessary to reach cost-based termination tariffs," Pataki added.

T-Mobile Rt. is fully owned by Hungary's largest telecom company, Magyar Tavkozlesi Rt. (MTA), or Matav. Matav is majority owned by Deutsche Telekom AG (DT). Pannon GSM Rt. is 100% owned by Norway's Telenor ASA (TELN). Vodafone is majority-owned by U.K. mobile operator Vodafone Group PLC.

Telecom authority Web site: http://www.nhh.hu
-By Margit Feher, Dow Jones Newswires; +361-267-0622; margit.feher@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 25th January 2005