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Regulator Cuts Telekom's Fees

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News Analysis
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11/28/2003
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The German regulator Regulierungsbehörde für Telekommunikation und Post (RegTP) has cut interconnection fees by 9.5 percent with effect from Monday (December 1) (see German Regulator Cuts Fees).

Interconnection fees are paid to national operator Deutsche Telekom AG (NYSE: DT) by rival operators that connect to the incumbent's network.

The reductions are set to leave DT about €200 million ($240 million) out of pocket each year, according to financial analysts. Although this figure should be seen in context of the company's overall income -- Telekom recently announced revenues of €41.3 billion for the first nine months of 2003 (see DT Posts Q3, Cuts Debt) -– a €200 million loss is still significant, especially given the increasing pressure on fixed revenues that traditional operators are now facing.

DT did not respond to requests for comment.

The German regulator believes the reduction reflects efficiencies the national carrier is realizing in the cost of running its national network, and that it will also help to foster greater competition. The new interconnection rates, that apply to call origination and termination, will be valid until the end of May 2006.

— Ray Le Maistre, International Editor, Boardwatch

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