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Vodafone challenges changes in interconnection prices proposed by Anacom

Lisbon, 21 January 2010 – Vodafone Portugal regards as unreasonable and excessive the proposed changes in wholesale prices that Anacom intends to impose on call termination on mobile networks between operators, according to the draft decision issued yesterday by the regulator. The proposed decision will inexplicably harm consumers and the national economy.

The aggressive nature of Anacom’s draft decision, which calls for a very significant reduction in mobile termination charges (over 46%) over just 14 months, poses serious and harmful effects on the management of Vodafone by damaging the Company’s competitiveness in the market and its future investment plan.

Portuguese consumers of mobile services will be those most affected by this measure which removes operators’ margin for manoeuvre to continue to promote initiatives leading to a reduction in the average price per minute to the consumer and to maintain the high level of investment in networks and in innovation in products and services.

Anacom’s proposal for the sharp reduction in interconnection charges between operators is also prejudicial to the Portuguese economy, implying a loss of revenue to the country from international call termination charges of over 10 million euros in the first year of implementation of the announced measures alone. Moreover, the timing of this measure is inappropriate, given the economic recession in Portugal and the need to create an environment conducive to investment.

Vodafone agrees that termination charges in Portugal should match the downward trends that are taking place at European level, but believes that this should not necessarily correspond to the targets set by Anacom, which ignore the specific situation in Portugal. In particular, they ignore the high levels of investment in networks, the low tariffs charged and the significant levels of penetration and development of 3G services, especially mobile broadband.

Vodafone cannot but express its surprise at the proposal for the retrospective application of the new termination charges because of the negative effects that this decision will have on the market in terms of transparency and predictability. It is unacceptable for Anacom to propose to impose a price which will enter into force on a date prior to the completion of the market consultation and public discussion of it.

Expressing its profound disagreement with the elements outlined in Anacom’s Draft Decision and highlighting the serious damage that it will do to the Company and the public interest, Vodafone intends to use the time allowed for responses to prepare and submit additional information to the regulator that will contribute to the publication of a decision which supports the proper operation of the market.