At a press conference held yesterday evening, the telecommunication expert Professor Kruse from the Helmut Schmidt University of Hamburg, Telekom Austria Group's mobile subsidiary, mobilkom austria, T-Mobile Austria and Orange (Austria) warned about the EU roaming regulation's negative effects on Austria's mobile industry. Kruse, who knows the Austrian market very well, presented independent research on the effects of the regulation on the Austrian telecommunications industry.
The outcome of the analysis is said to show a dramatic scenario: the decrease in EBITDA due to roaming regulation amounts to a total of EUR 81.5 million for the three Austrian mobile providers: mobilkom austria, T-Mobile Austria and Orange (Austria). This decline has a direct impact on investment volumes of the three providers, which decreased by 41.2% in the first half of 2008 compared to the same period of the previous year. In absolute terms, this means EUR 128.3 million in the first half-year 2008 versus EUR 218.2 million in the first half-year 2007, prior to the introduction of the EU roaming voice price caps.
The call volume effects forecasted by the EU did not take place: the average price per roaming minute (for both active and passive calls) decreased by 43%, however, the three mobile operators reported increases of only 3.7% for active roaming minutes and of 10.3% for passive roaming minutes. As a result, price cuts could not be compensated with rising call volumes. Since the introduction of the price caps, voice roaming revenues from active roaming minutes have decreased by 41.4% for all three mobile providers compared to the previous year. For passive roaming minutes the drop in revenues amounted to 37.4% on a half-year on half-year basis.
Professor Kruse drew the following conclusion: "Since its deregulation, the Austrian telecommunications market has been marked by intensive competition, which has led to considerable price reductions for the benefit of the Austrian customers. However, the central intervention measures of the European Commission in some areas of the price shaping process have resulted in negative effects on national price structures."
"The Austrian mobile telecommunications sector is marked by three key attributes: an extremely high penetration rate of 122.5% (as of end of September 2008), the lowest prices when compared against international benchmarks and an internationally recognised strong commitment to innovation," said Hannes Ametsreiter, CMO mobilkom austria and Telekom Austria. "The planned intervention measures of the EU Commission with regard to roaming price caps for both SMS and data as well as the plans for pulsing, represent a massive threat to the Austrian mobile telecommunications industry. If we are obliged to reduce investments due to the aforementioned regulations, this will have repercussions on Austria as a business location as well as on customers," added Ametsreiter, warning that further financial losses of the same magnitude are expected due to planned increases in roaming regulation.
Wolfgang Kniese, CFO T-Mobile Austria, pointed out: "This research study confirms our point of view: the assumptions of the European Commission, according to which the negative effects from price cuts were to be counteracted with an increase in call volumes, proved wrong. On the long-term this results in negative effects for the entire industry. In the current context of the global economy this approach is in contrast with the EU political intentions of promoting growth via investments."
"As a traditional tourism country Austria is particularly exposed to roaming regulation compared to other EU member states," said Michael Krammer Orange CEO in Austria.
The number of foreign visitors' call minutes within Austrian networks increased by 24% due to two effects: a good winter season and the 2008 European Football Championship. However, revenues per minute decreased by 44.8%.
Mr Krammer further pointed out: "In particular, the reduction of roaming prices at the wholesale level does not bring about any benefits for Austrian consumers. Quite the reverse, it leads to a capital outflow of millions of EUR to foreign countries as Austria is a popular tourist destination, which results in more customers of foreign networks roaming in Austria than the other way around. The EU regulation is weakening the entire European industry, while hitting Austria particularly hard."