Market intervention through regulatory measures

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The Telekom Austria Group’s markets are subject to various regulatory systems in the mobile and fixed-line segments. The provisions of the EU apply to Austria, Bulgaria, Croatia and Slovenia. In the Republic of Serbia and the Republic of Macedonia, regulatory conditions are gradually aligned to EU standards against the backdrop of association negotiations.

Generally speaking, the EU — and hence its member states — pursues an interventionist, consumeroriented approach. The resulting reduction in termination rates, i. e. the fees that one network operator is required to pay another network operator for placing a call domestically or abroad, has led to a substantial decline in the interconnection revenues generated by telecommunications companies.

Another objective of the EU is to eliminate roaming fees for customers within the European Union — a plan that is currently under discussion. The ‘Digital Single Market Proposal’ that was presented by the European Commission in 2013 would require a reduction in roaming fees for calls, text messages and data to the level of the respective national termination rates (‘roam like at home’). Above and beyond this, there are calls for the imposition of net neutrality, i. e. the equal treatment of all transmitted data. Regardless of the outcome of this specific proposal, this kind of harmonisation can be expected to occur in the medium term, with the result that revenues will decline further.

Irrespective of this, telecommunications companies and, in particular, former monopolists are subject to price controls in certain areas. In addition, market leaders are subject to particularly stringent control by the competition authorities in order to ensure that they comply with the relevant regulations on competition.

In summary, it is essential that European telecommunications providers cushion the impact of revenue losses due to regulation, the economic environment and price-oriented competition by focusing on high-yield market segments and trends and pioneering innovations. The balancing act between cost efficiency and further infrastructure investments represents a key factor when it comes to successfully protecting profitability and leveraging future potential, not least in the interest of customers.

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