Telekom Austria Said to Vie With Funds for Serbia Broadband

Telekom Austria AG is vying with private-equity firms to buy cable operator Serbia Broadband for as much as 1 billion euros ($1.3 billion), according to people with direct knowledge of the matter.

Telekom Austria, part-owned by the Austrian state and Mexican billionaire Carlos Slim’s America Movil SAB, got back in the race after dropping off a shortlist of companies looking at SBB’s books, two people familiar with its plans said.

Other bidders for Belgrade-based SBB include private equity groups Providence Equity Partners Inc and Cinven Advisers LLP, as well as Altice Finco SA, six people said. All asked to not be identified because the talks are private.

Telekom Austria, which plans to bolster its mobile-operator network in eastern Europe with fixed-line assets, signed a fiber deal this week with Dutch carrier Royal KPN NV, the other European operator America Movil (AMXL) has a stake in. Five days earlier, the Vienna-based company had its biggest single-day gain in four years after America Movil offered 7.2 billion euros for the 70 percent of KPN it doesn’t own.

Serbia Broadband, which also has a unit operating in Slovenia, is owned by London-based private-equity firm Mid Europa Partners LLP. The cable operator could be sold for as much as 10 times its estimated earnings before interest, taxes, depreciation and amortization, one of the people said.

Photographer: Dieter Nagl/Bloomberg

A cyclist speaks on a mobile phone as he passes the Telekom Austria AG headquarters in Vienna. Close

A cyclist speaks on a mobile phone as he passes the Telekom Austria AG headquarters in Vienna.

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Photographer: Dieter Nagl/Bloomberg

A cyclist speaks on a mobile phone as he passes the Telekom Austria AG headquarters in Vienna.

Capital Raising

Telekom Austria would have to sell new shares to fund the purchase, the people familiar with the former monopoly’s thinking said. The carrier may sell as much as 1 billion euros of new shares to fund growth, weekly Format reported today without saying where it got the information.

Telekom Austria dropped as much as 3.4 percent in Vienna and traded at 5.6 euros, down 2.6 percent, at 2:35 p.m.

Spokesmen for Telekom Austria, Providence, Cinven and Altice declined to comment on the deal. SBB and Mid Europa didn’t return calls and e-mails asking for a comment.

The Austrian state owns about 28 percent of Telekom Austria through Oesterreichische Industrieholding AG. America Movil holds almost 24 percent in the carrier, according to its July 25 filing. Slim has additional 3.14 percent through his Inmobiliaria Carso SA holding company.

Telekom Austria’s fiber deal with KPN was “obvious” given America Movil’s stake in both, Alexander Kleedorfer, a spokesman for the Austrian carrier, said at the time.

State Participation

Oesterreichische Industrieholding, the state-asset holding company, would have to take part in a possible share issue to keep at least a 25 percent stake, according to Austrian law. It can participate in an issue without a new government approval.

Austria will hold national elections on Sept. 29.

Telekom Austria owns mobile operators in Serbia, Bulgaria, Croatia and Slovenia. It’s looking to add fixed-line assets in the region and could “advance to become the biggest player in southeastern Europe,” Chief Executive Officer Hannes Ametsreiter said in an interview with WirtschaftsBlatt newspaper last month.

Telekom Austria’s Serbian asset competes with Norway’s Telenor ASA (TEL) and state-owned Telekom Srbija DD.

The due-diligence process, in which bidders analyze SBB’s accounts and file new bids, may take until the end of September, one of the people said.

Altice, which owns cable operators in countries including Israel, Belgium and Switzerland, plans to submit its bid in October, one person said.

To contact the reporters on this story: Alexander Weber in Vienna at aweber45@bloomberg.net; Kiel Porter in London at kporter17@bloomberg.net

To contact the editors responsible for this story: Mariajose Vera at mvera1@bloomberg.net; Edward Evans at eevans3@bloomberg.net

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