Telekom Austria (Telekom) has won the right to purchase Bulgaria’s largest cellco MobilTel (MTel) for EUR1.6 billion (USD2.1 billion) at the end of 2005. According to a Telekom press release the company has “agreed a Memorandum of Understanding and exclusivity with the shareholders of MobilTel … to acquire a call right with respect to the purchase of MobilTel”. The agreement would essentially give Telekom Austria the unilateral right to acquire 100% of MobilTel late next year.
The announcement follows on/off talks between the two companies lasting over a year. Telekom pulled out of acquisition talks in October 2003; at the time the company was put off by MobilTel’s owners’ – a consortium comprising Germany’s Bayerische Landesbank, Austrian bank BAWAG/PSK and the financial group Management Trust Holding – insistence that it only wanted to sell a minority 40% stake in the operator. Telekom officially reaffirmed its interest in buying MTel in March 2004.
In recent years Telekom Austria has adopted an expansion strategy across several Eastern European countries. In addition to the scheduled acquisition of MTel, the company is also planning to buy Mobtel in Serbia (1.4 million mobile subscribers in June 2004) and Bosnian cellco Eronet, which reported 155,000 subscribers in June 2004.
MTel’s Bulgarian customer base of around three million places it substantially ahead of nearest domestic rival Cosmo Bulgaria with 1.4 million. The country’s third placed cellco, Mobikom had an estimated 70,000 subscribers at the end of September 2004. With a population of around eight million, Bulgaria has a relatively underdeveloped mobile phone market with a wireless penetration rate of just 55%.