Slovakia to float Slovak Telecom in London and Bratislava

By bne IntelliNews April 2, 2015

bne IntelliNews -


Slovakia will float its 49% stake in Slovak Telekom (ST) on the Bratislava and London stock exchanges, officials announced on April 1. The plan may also be part of a government push to secure a majority in power producer Slovenske Elektrarne.

The government has been trying to offload the minority stake in the national telecom operator for some time. However, it has struggled to find a strategic investor, given that 51% is already held by Deutsche Telekom. In the meantime, it has signalled that it wants to accelerate the sale, suggesting it wants to use the funds raised to buy a majority holding in power producer Slovenske Elektrarne.

The Slovak government has already approved a plan to transfer the economy ministry’s 34% stake in the telecom operator to the country’s privatisation agency  - the National Property Fund (FNM) - which holds 15% currently. The whole 49% stake would then be sold via public offerings on the stock exchanges, TASR news agency reported.

“The sale of a certain part of the stake will also be opened up to the Slovak public. This means that people will be given preferential treatment via a 5% discount if they decide to buy a certain volume of shares," explained FNM head Branislav Bacik.

Slovakia hopes to earn around €1bn from the sale, although analysts suggest that could prove optimistic. Economy Minister Pavol Pavlis said in February that an IPO is likely the preferred route in order to secure the best pricing.

In July, FNM signed agreements with JP Morgan and Citigroup regarding the management of the divestment. Bratislava wants to complete the sale by the end of June.

"We do not know exactly when shares will get to the stock exchange, but we would like to have it concluded by the end of the first half," ministry spokeswoman Miriam Ziakova said, according to Reuters.

The country had previously said it had not ruled out a direct sale to a strategic investor, but it has had little success in whipping up interest. Deutsche Telekom has shown no enthusiasm to utilise its pre-emptive rights to buy the stake, while Bratislava has not received “any official offer for talks for the time being", despite a series of unofficial talks, Pavlis said in February. 

"We cannot prevent Deutsche Telekom from making an offer, but today the government approved a sale through the stock exchange. If Deutsche Telekom comes with an offer by the time of placement, the government would consider it," the ministry spokeswoman told Reuters.

However, despite the push from Bratislava, the German telecom sounds unlikely to get involved. "Our strategy regarding our European participations has always been to look at opportunities from a perspective of whether it makes economic sense. We will do the same with Slovak Telekom," a Deutsche Telekom spokesman said. 

"From an operational and economic perspective, the sale of the Slovak government's stake does not change much for us," he continued. "We can continue to execute our strategy."

Bratislava had earlier said it was likely to use the proceeds to cover its financing needs for 2015. However, Pavlis has also suggested Bratislava could direct the funds to acquire part of Enel’s 66% stake in Slovenske Elektrarne. That idea gained traction in March when Prime Minister Robert Fico performed an about-face to support it for the first time.

In September, the economy minister said he would like the Slovak government, which owns a 34% stake in SE, to raise its holding to 51%. Bratislava has been piling the pressure on the Italian utility since it put SE up for grabs in the summer. That has led suitors such as Czech utility CEZ to downplay their interest in the power producer.  

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