Minister confirms six binding bids for Telekom Srbija

Minister confirms six binding bids for Telekom Srbija
By Ivana Jovanovic in Belgrade November 17, 2015

Serbia's Minister of Trade, Tourism and Telecommunications Rasim Ljajic announced on November 16, on a talkshow on RTV Vojvodina, that there were six bidders still in the running for the purchase of the government's 58.11% stake in Telekom Srbija. Seven buyers had submitted non-binding bids, but one had since given up, he said.

Ljajic explained that the purpose of the privatisation of the telco is to help the company to be competitive in the fast-growing telecommunication market, for which it needs huge investments.

He stressed that he cannot say who the interested companies are because of regulations and also that it is the position of the privatisation advisor, the international financial advisory and asset management company Lazard Freres, that the names and prices should remain secret in order to boost the quality of offers as well as the competition.

Ljajic added that Lazard Freres will analyse the bids within the next 14 days to check whether they have accomplished tender conditions, and then create a ranking list of bids, based on offered prices, firstly, but also on proposed social and economic programs.

“One option is that there will not be adequate bids and in that case we will not sell Telekom and eventually request revised bids to be submitted. Another option is to choose the best bidder and continue talks with him in the next 30 or 40 day,” Ljajic explained.

According to earlier media reports, there is speculation that among the interested parties are US investment fund Apollo, Telekom Slovenije and Russia’s MTS.

Ljajic denied media speculation that the Russian company will win the tender because of political reasons, saying that “if Eskimos come and offer good price, they will get the telco”.

Mobile TeleSystems (MTS), a Russian telecommunication company, is potentially interested in buying the government’s stake in Telekom Srbija, Serbian media reported in August, quoting Russian news agency Tass.

Telekom Slovenije is believed to be planning a joint bid with US investment fund Apollo for the acquisition of the Serbian government’s stake, Slovenian Press Agency (STA) reported on November 12, citing an unofficial but well-placed source.

According to the minister, Telekom Srbija's privatisation will mean layoffs since the telco has some 9,000 workers in Serbia, and some 13,000 employees if you include its subsidiaries in Bosnia and Herzegovina and Montenegro. Ljajic believes that no one will stand that number of workers, but that the telco’s employees will get the highest severances offered so far.

Ljajic warned that even though Telekom Srbija’s mobile telecommunication service provider has 44% of the market, its income is significantly lower than the income of Telenor, the local arm of the Norwegian state-owned telco, which is due to the number of people working there. The third player on the market in Serbia is Vip Mobile, a member of Telekom Austria Group.

On July 3, the Serbian government announced plans to sell its 58.11% share in Telekom Srbija, and the Agency for Privatisation invited companies with at least €2bn worth of assets or with revenues of over €500mn to make non-binding offers by August 2.