10-09-2010

In this week’s Business News: Czech economic growth on steady course; ministries scramble against solar power impact; telecoms giant under shadow of competition office suspicion; landlords look to double rents; and beer “museum” seeks to showcase small brewers.

Czech posts steady second quarter growth, under target inflation

The Czech economy is still growing steadily with inflation bubbling just below the national bank’s target level of 2.0 percent. Figures out this week showed that the economy grew by 2.4 percent in the second quarter compared with the same period a year earlier. That is higher than earlier estimates. Year on year inflation figures for August came in at 1.9 percent, just below the central bank’s expectation of 2.0. Even so, the Ministry of Trade and Industry has voiced worries that ongoing growth, largely pulled by the Czech Republic’s biggest export market, Germany, could be undermined by budget cuts across Europe, a higher euro and a slackening off in overseas demand.

Tax measures sought to blunt solar power price increases

Photo: European CommissionPhoto: European Commission Czech ministries are scrambling to find further ways to brake the country’s solar power production boom. The moves have been sparked by fears of up to a 30 percent hike in electricity prices for companies next year to subsidise the renewable power. Tax measures ranging from a blanket tax on power companies to environmental taxes on natural gas and coal are being considered. Income from these taxes could be used to curb the impact of electricity rises. Pressure could also be exerted on state-controlled power giant ČEZ to pull out of solar power projects. The government wants measures passed in October so that they could be ready by the start of 2011.

Telefónica O2 under suspicion of pricing out Internet competitors

The country’s biggest telecommunications company Telefónica O2 is facing a probe by the local competition watchdog. The Office for the Protection of Competition says it suspects that Telefónica tried to price competitors out of the market for providing high speed Internet connection by charging excessive charges to use its parts of the network. The practice is suspected to have taken place between 2006 and 2008. Telefónica could face a fine of up to 10 percent of its annual turnover if it is found guilty of abusing its dominant position. On the basis of last year’s results, that could total around 6.0 billion crowns.

Major landlord signals doubling of rents following deregulation

One of the biggest landlords in the Czech Republic has said it wants to double rents for flats when price deregulation takes effect at the start of next year. CPI Byty manages around 8,000 flats across the country and says current charges of between 25 and 46 crowns per square metre should climb to between 40 and 80 crowns from the start of 2011. In January, regulated rents end for around 450,000 households as part of the country’s staged phase out of controls. The change affects most small towns but excludes regional centres with the exceptions of Ostrava and Ústí nad Labem. There are fears there that rents could double or triple to reach market levels. Deregulation in Prague and Brno will not take effect until 2013.

Small brewers on show at beer “museum”

Small and medium sized breweries have been making a comeback against the big multinationals in recent years. And a pub boasting 30 taps dedicated just to those small producers is opening in the centre of Prague this weekend. Called the Prague Beer Museum, it is partly owned by a Californian with a decade of living in the Czech capital. But if this venture harks back to traditional as regards the end product, the marketing has been mostly through social network sites such as facebook and twitter.

10-09-2010