Evolving Over Moving Ground : Absorbing Introduced Regulatory Risk - Case Study

In this paper we examine the unique in Europe case of WIND Hellas (at that time known as TIM Hellas) & Q-Telecom, 3rd and 4th - in market share - mobile telecom operators in Greece and the impact that had on them a specific regulatory intervention by NTPC (Greek NRA for the telecom sector). Both, WIND Hellas, parent company and sole shareholder of Q-Telecom and the latter, were regulated on 2006 according to the procedure provided under article 7 of the EC Framework Directive for voice call termination into their respective networks. The base for the aforementioned regulatory intervention and remedies imposed was the NTPC's finding - during a market analysis/public consultation - that WIND Hellas & Q-Telecom jointly held Significant Market Power (SMP) in market 16 (voice call termination in mobile networks) of the EC Recommendation on telecom markets that must be ex ante regulated. The legal base for such a finding was the European Commission's final decision that cleared the buy out of Q-Telecom by private equity funds that were controlling at that time WIND Hellas, as well. According to the decision the buy out of Q-Telecom constituted a concentration under article 3(1)(b) of the EU Merger Regulation. Following this evaluation, NTPC decided to treat both companies as a single company and awarded them joint SMP in the relevant market. This conclusion was followed by the imposition on them of the same regulatory remedies, considering them as a single network. The aforementioned regulatory intervention that followed the concentration of the two companies, in relation with the remedies imposed to the remaining other two operating mobile networks and the high level of competition in the mobile telecom sector in Greece, which was already at that time a mature one, introduced market wide a significant regulatory risk, which mostly effected the concentrated companies. Moreover the lack of an effective appeal mechanism in Greece where NTPC's decision could be confronted made it inevitable for the two companies to proceed with the implementation of the remedies imposed. This compliance exercise was evaluated as having a major impact on certain business assumptions and plans that had been laid down. As a response WIND Hellas fine-tuned its strategy. A year after, all indicators showed that the strategy was correct and ultimately the turnaround was complete