Government relaunches quest to find strategic partner for Cesky

8 Jan 2004

The Czech cabinet yesterday announced plans to relaunch the privatisation of national fixed line service provider Cesky Telecom, saying it hoped to call a tender for a sale adviser by the end of this month with the sale method to be outlined by mid-July. At the end of last year the state said it would sell its 51% stake in the dominant telco in 2005 together with its mobile arm Eurotel Prague, following the sale of the Telsource consortium’s 27% stake in the Czech incumbent to institutional investors for USD826 million in early December. The removal of the KPN and Swisscom-led Telsource consortium from the equation effectively eliminated any problem of it being seen as an obstacle by a new investor, while Cesky Telecom’s acquisition of the 49% of Eurotel that it did not already own in November 2003 is expected to generate stronger profits and bolster the parent company’s bottom line. The government now hopes that the inclusion of profitable Eurotel, the jewel-in-the-crown which leads the domestic market with over 4.01 million subscribers, will serve as an enticement to strategic investors looking to invest in the region.

The Czech government tried and failed to sell its 51% holding to Danish PTO TDC and Deutsche Bank in August 2002 for USD1.83 billion, but three months later talks collapsed as parties disagreed over the final price to be paid for the shares owned by Telsource. This time the prospects for a successful sale look more optimistic and TDC is once again highlighted as a strong contender. Other parties lining up to bid for the stake – estimated to be worth USD1.9 billion – include another previous bidder Swisscom and new players PPF ( a large local financial group), and mobile heavyweights Orange and Vodafone, which are no doubt intrigued by the prospect of acquiring control of Eurotel. The bidding rules include the stipulation that financial investors will need a strategic investor to pre-qualify, meaning that Cesky Telecom may finally lose the tag of being the only former monopoly in central Europe without a partner.

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