Telecoms watchdog to propose TeliaSonera’s network separation

Fitch Ratings said it expects Swedish telecoms regulator, PTS, to propose a functional separation of TeliaSonera's fixed-line network, adding such measures will promote open access and fair competition within the European telecoms market.

“Although we expect this development to increase competition and drag down TeliaSonera’s marketshare and revenues, the extent of the impact will be largely determined by the cost of capital set for its products by the regulator,” a statement from the ratings firm said.

The Swedish telecoms watchdog is expected to propose a functional separation of TeliaSonera’s wholesale activities from its retail operations later this week, so that access to TeliaSonera’s network will be provided on a non-discriminatory basis to all service providers, including the company’s own retail arm.

The proposal comes in response to the government’s request that PTS look at ways to improve broadband penetration in the country, which currently stands at 51 percent of homes, to match that of its neighbours Denmark at 60 percent

and Finland at 56 percent.

Fitch noted that considering Sweden’s infrastructure, the introduction of the regulated bit-stream access product combined with DSL, has significant potential to impact TeliaSonera’s operating performance.