8 August 2002 -- The Czech government's Finance Minister Bohuslav Sobotka said it has agreed to sell its 51% stake in the country's leading fixed-line telecoms operator Cesky Telecom AS for EUR1.82bn (a 26% premium over the market price). The buyer is a consortium of Germany's Deutsche Bank AG and Denmark's TDC A/S (not including original consortium member US private equity group Blackstone).
Cesky Telecom is the Czech Republic's largest listed company and eastern Europe's most profitable telecoms operator, with an profit margin of 53%. It operates almost 4 million fixed lines and owns 51% of highly profitable leading local mobile phone operator Eurotel.
The agreement requires the parties to hold on to the assets and shares for three years and retain Cesky Telecom's key role in providing telecoms services in the Czech Republic.
Sobotka claims that the government decided to sell Cesky Telecom not because it needed money for the budget but because it believes the company needs new owners during the telecoms recession. Minister Without Portfolio Vladimir Mlynar adds that, with the country entering the final stages of market liberalisation, it was best if the government was not involved as a key shareholder.
The privatisation had been delayed by June's elections and the new government's failed request in July for earlier bids from both the DB/TDC consortium and the other bidder (the Telsource consortium of Royal KPN NV and Swisscom AG) to be improved by 10%. However, it now wants to complete the sale by the end of October. The government -- which has EU entry as a priority and won a vote of confidence in parliament on Wednesday -- needs the proceeds of the sale to help pay for welfare programmes and a USD1.8bn purchase of fighter jets.
* Amsterdam-based data services provider KPN doesn't expect to be able to sell its stake in the Czech Republic's Cesky Telecom AS before the end of October, but does expect to dispose of its holding before end-2002.
KPN indirectly owns a 27% stake through a joint venture with Swisscom AG and also owns a direct stake of 6.5%. The company aims to reduce its debt to below EUR14bn by end-2002 and is looking to sell its stake for about the same price per share at which the Czech government sold its stake.