Cesky Telecom sale: can the end really be in sight?

7 Apr 2005

After a week of nail biting following a close-run vote of confidence in the Czech Republic’s incumbent government, Telefónica’s USD3.57 billion acquisition of the state’s 51.1% stake in Cesky Telecom has been approved by Finance Minister Bohuslav Sobotka. The Spanish group must now pay 10% of the price within four days of signing the purchase contract, which is expected to take place before the end of the month. Cesky’s privatisation has been a long-running saga. In August 2002 it was announced that a sale was to go ahead, with the state’s holding being sold to a consortium including Deutsche Bank and Denmark’s TDC for USD1.83 billion, but three months later talks collapsed as parties disagreed over the final price. The process was restarted in late 2004, and in February 2005 the government accepted bids for the 51.1% stake in the telco from Swisscom, Belgacom and Telefónica. In addition, two financial consortia placed bids but were told they must partner a telecoms operator in order to proceed further; in March France Télécom announced that it would join the Blackstone Group, CVC Partners and Providence Equity Partners to bid, whilst another consortium led by Czech financial company PPF dropped out of the race. Later that month Telefónica’s final price of CZK502 (USD22) per share trumped the competition and was announced the winner by the auction’s steering committee. However, approval for the deal had to wait until after last week’s government vote, in which Prime Minister Stanislav Gross and his coalition government only just clung onto power in the face of stern opposition from a rightwing opposition coalition headed by the Civic Democrats and Christian Democrats.

Czech Republic, O2 Czech Republic (incl. CETIN), Telefonica