Serbia launches Telekom Srbija sale

By bne IntelliNews July 5, 2015

bne IntelliNews -

 
Serbia has invited interested companies to file non-binding bids for the state’s entire stake in Telekom Srbija, the privatization agency said on July 3. This followed months of speculation on the nature and size of the sale.
 
Serbia last tried to sell its most profitable company in 2011, estimating the company's value at the time at €2.2bn. Back then it offered 51% to investors, seeking €1.4bn in return. Telekom Austria was the sole bidder, offering €900mn for the stake and a further €500mn for investments, which the government said at the time was not enough.
 
Earlier this year Serbian Prime Minister Aleksandar Vucic said that the sale could bring in around €3bn, according to local media reports, of which around 78% would be the state's share.
 
Representatives of Telekom Srbija’s unions have previously been against the sale, pointing out that the company accounts for 12% of Serbia’s budget revenues. They are also worried about possible redundancies following the privatisation. 
 
However, the government is moving ahead with the sale, and hopes to have it completed by October. 
 
Eligible suitors should be providers of mobile telecommunications services with annual revenues from telecommunications services exceeding €500mn over the past three years, the privatization agency said. Alternatively they can be investors who have raised total funds of at least €500mn over the past 10 years, investors with assets under management of above €2bn by the end of 2014, or investors that have held a stake of no less 10% in at least one telecom firm that has posted a minimum annual revenue of €500mn for at least one year over the 10-year investment period.
 
Telekom Austria and Deutsche Telekom have officially declared their interest, and local media claim several unnamed investment funds have also indicated their willingness to participate in the sale.
 
In addition, the head of the EBRD's office in Belgrade, Matteo Patrone, said in January that the bank is not interested in being an advisor on the sale of Telekom Srbija but is instead willing to co-invest together with a strategic partner, or to finance the company that wins the privatisation tender.
 
The deadline for submitting the non-binding bids is August 2, after which the privatisation agency will shortlist candidates that will be allowed to participate in the second round of the process.
 
Earlier this year, Serbia hired French consultancy firm Lazard Freres to advise it on the pending sale, as well as to determine Telekom Srbija’s value and draft an economic, legal and market analysis of the company. Lazard reportedly submitted to the government at the beginning of June its proposals, which contained several possible options for the telecom company’s privatisation, ranging from selling a minority stake to offering the full 100% ownership. As expected, there was no official statement on the telecom’s estimated value in the lead up to the July 3 announcement of the opening of bidding.
 
The Serbian government owns a 58.11% stake in the company. Smaller shareholders control a combined 14.95%, while company employees own 6.94%. The remaining equity is held by the company itself.
 
Telekom Srbija owns Montenegrin mobile operator m:tel and is the majority owner of Telekom Srpske, Bosnia’s second-largest telecommunications company. Earlier this week Serbian telecommunications minister Rasim Ljajic said that the company will be getting an operating licence in Kosovo as part of an agreement between the governments in Belgrade and Pristina.
 
The sale of Telekom Srbija is part of a wider push by the Serbian government to sell viable state enterprises, while seeking to wind down lossmaking and unsustainable businesses as it aims to trim the public sector under a €1.2bn three-year precautionary loan-deal with the International Monetary Fund (IMF).
 
The privatisation agency launched on June the sale 38 state-owned media outlets, including the 72 year-old Belgrade-based Tanjug news agency. The estimated starting prices for all 38 media on sale amounts to some €10mn.
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