Serbian Government to Call for Telekom Tender by Next Month, Djokovic Says

The Serbian government will announce its tender to sell a controlling stake in phone company Telekom Srbija a.d. by early September, Deputy Finance Minister Vuk Djokovic said.

Details for the transaction are still being worked out between the government and its London-based adviser, Citigroup Global Markets Inc., Djokovic said yesterday in a telephone interview in Belgrade. He said, though, that the government will seek a buyer with interests in the telecommunications industry to help modernize the state-controlled enterprise.

“We have hired the privatization adviser to prepare the sale, taking into consideration that we will not sell to an investment fund but to a strategic partner who will expand capacity and bring know-how,” Djokovic said.

The government wants to sell 50 percent plus one share of the phone company that is 20 percent held by Greece’s Hellenic Telecommunications Organization SA. It is one of four state- owned companies that the government wants to sell to raise revenue for covering the budget deficit.

The exact size of the stake to be sold will be determined later, while the government also wants to give free of charge up to 20 percent to 5 million adult Serbian citizens. Naftna Industrija Srbije, the Serbian oil company 51 percent owned by Russia’s Gazprom Neft, has a 20 percent stake owned by citizens in a similar transaction.

Size of Stake

“We are still waiting to hear from our privatization adviser whether to sell a 40 percent stake or 50 percent plus one share,” Djokovic said. “We expect the tender to be called either during the last days of August or early days in September.”

Djokovic wouldn’t say if Greece’s largest phone company would sell its holding.

Telecommunications Minister Jasna Matic told Novosti newspaper over the weekend that Egypt’s Orascom, Turkish Telekom and Deutsche Telekom were interested in Telekom Srbija.

Djokovic said the government hoped to agree and sign the transaction this year, though the money will likely be deposited with the state at a later date because the sale will need regulatory approval in neighboring Bosnia and Montenegro, where it also does business.

Asset Sale Revenue

Serbia’s SIEPA Investment and Export Promotion Agency said last month it expects revenue from state-asset sales at around $2 billion in 2010. Foreign investment in Serbia barely exceeded 400 million euros ($514 million) in the first six months of the year, according to the central bank, less than half the investment inflow in the same period last year.

The sale of Telekom Srbija, which is no longer the sole fixed-line operator in the Balkan country, will improve the finances of the government, which has struggled to borrow in the local market after Treasury bills auctions have suffered from falling demand since May and the cost of borrowing rises.

Djokovic said a $200 million loan from Russia, negotiated earlier this year, is “about to arrive.”

Further financial assistance from the European Commission and the World Bank is linked to Serbia’s ongoing compliance with performance criteria under its 3 billion-euro loan program and the adoption of a fiscal responsibility law that will tighten control over spending.

For Related News and Information:

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

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