Telenor Hungary

Last updated June 2012

Telenor Hungary was established in 1993 under the name Pannon and is wholly owned by Telenor. Pannon was rebranded as Telenor Hungary in May 2010. Telenor Hungary offers voice and non-voice services to subscribers on both prepaid and contract basis. Voice services include closed user group offers for both residential and business customers. Non-voice services include Short Messaging Services (SMS), Multimedia Messaging Services (MMS), mobile content services and Internet service provider services via Internet Protocol (IP) and Wireless Application Protocol (WAP). Enhanced Data GSM Environment (EDGE) based broadband services were launched in February 2005, reaching full coverage by the end of 2006. UMTS-based broadband services were launched in October 2005, reaching 92% population coverage as at 31 March 2011. As a next evolutional step, Pannon launched High-speed Downlink Packet Access (HSDPA) in April 2007 and High Speed Uplink Packet Access (HSUPA) during 2008. As at 31 March 2012, Telenor Hungary had 3.5 million mobile subscriptions. As at 31 March 2012, the mobile penetration and number of inhabitants in Hungary were 116,8% and 10 million, respectively.

Network and licences

Telenor Hungary holds a licence for 900 MHz band, part of which was renewed in 2007, valid until May 2016, and part of which was awarded in an auction in March 2012, valid for 15 years. Telenor Hungary’s 1800 MHz licence is valid until October 2014. The UMTS licence was awarded in December 2004, and is valid until December 2019. For licences in both the 1800 MHz band and the UMTS band, Telenor Hungary has an extension option for an additional 7.5 years. Although the 900 MHz licence has already been extended, the Minister of National Development is entitled to harmonise the expiry date of this licence with the expiry date of the 1800 MHz band licence. The same will also apply if the 1800 MHz band licence is extended by a further 7.5 years in 2014.

Competition

In addition to Telenor, there are three other mobile operators in Hungary Both T-Mobile and Vodafone hold GSM and UMTS licences. Via an auction, a new consortium of Magyar Posta, Hungarian Electricity Works and Hungarian Investment Bank, all being state owned companies, was awarded licenses in the 900 MHz, 1800 MHz and 2100 MHz spectrum in 2012. The new operator is expected to commence operations towards the end of 2012, covering Budapest with its own network and the rest of the country through national roaming agreements.

According to the National Communications Authority of Hungary (NMHH) data, as at 31 March 2012 Telenor had a market share of 31.9%, the market leader, T-Mobile, had a market share of 45.6% and Vodafone had a market share of 22.6%. At the beginning of 2012, Tesco mobile launched services as the first virtual network service provider in the Hungarian market for mobile telecommunication services.

All three mobile operators offer broadband Internet services, and the popularity of mobile Internet is growing rapidly. In January 2009, the total number of subscriptions was 508,000, while at 31 March 2012 this number had increased to 2,342,000. As at 31 March 2012, Telenor Hungary had a 28.75% market share in mobile Internet.

Regulatory matters

In November 2003, the NMHH identified Telenor Hungary as an operator having SMP in the wholesale market for call termination on mobile networks. In January 2005, the NMHH determined that all operators (Telenor Hungary, T-Mobile and Vodafone) were required to reduce their interconnection charges (mobile termination rate). New resolutions have been made in December 2008 and August.2011 requiring further reductions in the interconnection charges. The latest decision is for a further 20% reduction in MTRs from January 2012 (to HUF 9.46 per minute) and another 25% reduction from January 2013 (to HUF 7.06 per minute). The mobile termination rates (MTRs) in Hungary are symmetrical for all three operators.

In October 2010 a “crisis tax” was introduced on Hungarian telecommunication, energy and retail companies, following an expedited legislative procedure, with no prior consultation with the affected sectors. The purpose of the new tax is to bring the national budget deficit within EU targets, and the tax is expected to raise HUF 61 billion from the telecom sector for the national budget each year from 2010 to 2012 (inclusive). Telenor Hungary was required to pay HUF 9.5 billion in crisis tax liability for the 2011 financial year. On 14 March 2011, the European Commission launched an infringement procedure against Hungary due to non-compliance of the “crisis tax” with the EU’s regulatory framework on telecoms. The Commission sent a letter of formal notice to the Hungarian government – followed by a reasoned opinion on 29 Sept, 2011. On 22 March, 2012 the Commission referred the case to the European Court of Justice (ECJ).

In May 2012 the Hungarian parliament approved a new telecommunications tax to be introduced in July 2012. The tax is payable by telecommunications service providers. The tax rate is HUF 2 per every minute started for phone calls and HUF 2 pr every message sent. The tax liability on calls made and messages sent by using a given phone number cannot exceed HUF 700 per month per phone number on private individual’s subscriptions, and HUF 2.500 per month per phone number on subscriptions paid by entities other than private individuals and the phone humbers of service provicers.

As a result of a change in the method of calculation of frequency fees, effective as of 1 April 2011, no further significant increase in fees is expected in respect of Telenor Hungary’s currently used frequency bands as a result of 3G roll-out.

Due to the obligation to implement EU Directive 2009/114/EC, mobile operators are able to use existing spectrum holdings in a technology neutral manner since July 2011.