Serbia to Study Telekom Stake Offers for Next Two Weeks

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The Serb government will take the next two weeks to study offers for a majority of Telekom Srbija AD and is ready to cancel the process if it deems them unsatisfactory, a government minister said.

The deadline for accepting non-binding bids for the 58.1 percent stake in the country’s largest phone company passed on Sunday, without the government making any formal announcement of the ongoing tender. Telecommunications Minister Rasim Ljajic on Monday told Tanjug newswire that the list of qualifying buyers, made up of investment funds and telecommunications companies, will be announced on Aug. 17. Qualifying bidders would then have 60 to 180 days to submit binding offers, he told Tanjug in a video statement.

“If the offer is satisfactory, the process of acquiring Telekom Srbija will start,” Ljajic said. “If we don’t have an appropriate offer, then we expect the privatization process will be canceled.”

The Balkan nation is moving ahead to sell off the dominant player in Serbia’s 1.5 billion-euro ($1.65 billion) market for mobile, fixed lines, Internet, and media content distribution, after it rejected a 1.1 billion-euro bid by Telekom Austria AG in 2011. The government, which valued the company at 2.27 billion euros in 2012, needs to raise cash as the Greek crisis is making investors skittish in rest of the Balkan region.

Premier Aleksandar Vucic is looking for the “right buyer and the right price,” he said on July 29. Proceeds will be used to repay state debts and finance public infrastructure projects, he said. The premier’s office said several U.S. companies were interested, after Vucic met with U.S. Ambassador to Serbia Michael Kirby on Monday.

‘Challenging’ Transaction

“Considering the challenging situation in the European Union, the region and primarily in Greece, and the fact that acquisitions in the telecommunications sector are currently seen at around 5.8 to 6 times Ebitda, the transaction could prove challenging if the price is the key target,” said Mladen Dodig, an equity analyst at Erste Group Bank AG.

Telekom Austria is still interested in the Serbian company, according to Austrian newspaper Die Presse. Carlos Slim’s America Movil may bid for Telekom Srbija directly, bypassing Telekom Austria if Austria’s government vetoes a capital increase to finance the purchase, newspaper Kurier reported, citing unidentified people close to Telekom Austria shareholders.

Telekom’s net income rose 13 percent to 17.8 billion dinars ($164.4 million) in 2014. Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 5.7 percent from a year earlier to 16 billion dinars in the first half of 2015, after a full-year Ebitda of 46.5 billion dinars last year.

Vucic’s government pledged to consolidate public finances and narrow the budget deficit and public debt as part of a three-year stand-by loan accord with the IMF. It’s offering Telekom months after the inconclusive sale of Slovenia’s state-owned telecommunications company.