Fears of European intervention over mobile termination rates (MTR) have led to a drop in operator’s share prices.
Morgan Stanley said that a possible reduction in the amount operators are allowed to charge for calls made from their networks could impact operators' revenue streams.
Morgan Stanley analysts Nick Delfas and Saroop Purewal said in a note to investors: 'We believe the market underestimates the EU's muscle - as it did initially with roaming.'
The note added: ‘Regulatory drags should be seen as an incremental negative, in our view, and a real risk on earnings from 2009 onwards.’
Vodafone, Deutsche Telekom and Telefonica’s share prices all fell after Morgan Stanley changed its rating of Vodafone’s stock from ‘buy’ to ‘sell’, with Vodafone’s share price dropping to a three month low of 151.70.
European Commissioner for telecoms Viviane Reding has consistently argued for lower mobile phone charges and has already successfully campaigned for lower roamed voice charges.
At a press conference on 19 March Reding said: ‘In an industry that does not know technological borders and that more and more establishes a pan-European footprint, this means that different MTRs are a serious distortion of competition.
‘Europe’s single market is not only at risk when we talk about roaming charges. At the moment, one of the most important stumbling block for cross-border business and for investment in next generation networks are mobile termination rates that diverge so heavily as today.’
In June the European Commission will publish a report on termination rates which will give legal guidance to national telecoms regulators for the regulatory treatment for fixed and mobile termination rates.