PPF linked with Slovak Telekom stake bid following O2 takeover agreement

19 Nov 2013

Czech investment group PPF, headed by Petr Kellner, is mulling a bid for a minority stake in Slovak Telekom being put up for sale by the Slovakian government, according to an unconfirmed report by the Czech News Agency (CTK) citing Slovak daily Hospodarske Noviny. Earlier this month PPF agreed a deal with Spanish group Telefonica to buy 65.9% of Telefonica Czech Republic, a transaction which, subject to regulatory approval, will also see PPF gain control of Telefonica’s O2-branded Slovakian mobile division (which is currently held as a subsidiary of Telefonica Czech Republic).

Slovak Telekom’s majority owner, Germany’s Deutsche Telekom, holds pre-emptive rights to the government-held 49% stake up for grabs. According to the Slovak Economy Ministry, no official talks about the sale of the stake have been held with any potential buyers yet, while the government is waiting for Deutsche Telekom to say whether it will exercise its right of first refusal.

Telefonica on 5 November reached an agreement with PPF to sell 65.9% (of its total 70.8% stake) in Telefonica Czech Republic, which includes its subsidiary operations in Slovakia, for a total cash consideration of EUR2.467 billion (USD3.404 billion). Although it is expected that PPF will launch a mandatory tender offer for the remaining capital, Telefonica will maintain a stake of 4.9% in the Czech and Slovakian operators, and will remain as an ‘industrial and commercial partner’ for a period of four years. Telefonica Czech Republic and Telefonica Slovakia will change their company names but will continue to trade under the O2 brand for a maximum of four years. The twin operators will also join Telefonica’s Partners Programme, an initiative offering other operators the opportunity to benefit from the Spanish giant’s scale and cooperate on key business areas. The sale is subject to regulatory approval by the European Commission (EC).

Regarding the Czech investment group’s further expansion plans, in August CommsUpdate reported that PPF confirmed its interest in bidding in Slovakia’s upcoming 4G mobile licence auction, which is set to take place by the end of this year. The group’s subsidiary PPF Mobile Services (PPFMS) stated that it ’considers the upcoming auction of frequencies and the associated onset of 4G LTE technology as very attractive in the medium to long term, probably the only real opportunity to enter the market.’ PPF is also aiming to achieve economies of scale by gaining a 4G licence in the neighbouring Czech Republic, in an auction which kicked off on 11 November.

Slovakia, O2 Slovakia, Slovak Telekom (ST, incl. T-Mobile, DIGI)