France Telecom has acceded to the state's plans to float its 36% stake.photo: Ján Svrček
More than a year after the current Slovak government declared its intention to sell its 36% stake in the largest mobile network operator in Slovakia, Globtel GSM, shareholders decided June 6 that the stake would be issued on capital markets - the first ever government-owned share to have been sold in this way.
After the decision, the Economy Ministry said that the placing of an as yet undetermined portion of the stake on the Bratislava Stock Exchange was also under consideration to complement the issue of shares on foreign bourses. The ministry added that it wanted the sale of the stake to be completed in September or at latest October this year.
The government has been contemplating the sale of parts of its stakes in other firms on the Bratislava bourse for the last several months. Government officials and analysts stressed the importance of the Globtel decision for reviving the moribund Slovak capital market.
There was some surprise that France Telecom had supported the government's decision to sell the stake on the stock markets. The French telecoms giant currently holds a 64% stake in Globtel, and long ago declared its intention to buy the government's stake in a direct purchase. But analysts explained that the company's muted reaction to the sale was quite logical.
"All that France Telecom wants is to maximise the value of its stake in Globtel GSM. The best way to do this is to put some Globtel shares on the stock exchange," said Michal Kustra, an analyst with Tatra Banka.
He was supported by Dušan Meszáros, an analyst at Commerzbank Capital Markets in Prague, who said that France Telecom didn't need a bigger stake in Globtel GSM. "A 64% stake is enough for France Telecom to manage the company, no matter which other investors buy into the government stake," Meszáros said.
According to Márius Hričovský, an advisor to Economy Minister Ľubom'r Harach, his ministry had come to the conclusion that the sale of the stake through the stock exchange was the most transparent, most profitable and least problematic sale option for all parties. "Even if France Telecom had bought the stake it would have started to trade it on the stock exchange sooner or later," Hričovský said.
Hričovský admitted nevertheless that there had been discussions about the sale of the stake to France Telecom, but that all of them had ended unsuccessfully.
France Telecom increased its stake in Globtel GSM to 64% after buying an additional 29% from Slovak shareholder Slovtel in January this year. At that time, France Telecom representatives said that the purchase of the stake had not been something that they had been desperately waiting for, but that the company was keen on acquiring the government's remaining share. "We view Globtel as a tool for our further expansion," Bruno Duthoit, France Telecom's representative on the Globtel Board of Directors, told The Slovak Spectator at the end of February.
However, Duthoit refused to comment on the June 6 shareholder vote. Globtel General Manager Pavol Lančarič said Globtel was not ready to enter the stock exchange and that work would begin to prepare the company in the near future.
The trading of the 36% stake on exchanges is expected to be both a boost for the transparency of Globtel and a mark of the government's approach to corporate transparency in general.
"When a company has a 36% stake traded on the stock exchange, it is generally viewed better than a company with a closed shareholder structure," Kustra said.
Both Harach and analysts have agreed that the government will probably make higher revenues from the sale of a 36% stake in Globtel through the capital markets than if it was sold to a single investor in a direct sale.
Revenues from the sale will be, according to Harach, divided among individual state companies proportional to their share of Globtel's registered capital. Part of the revenues from the sale will be used for settlement of claims with the energy utility Slovenské elektrárne (SE), which holds an 18.91% share in Globtel.
Other shareholders in Globtel include electricity distributors Západoslovenské, Stredoslovenské and Východoslovenské energetické závody which account for 10.26%, and the gas utility Slovenský plynárenský priemysel (SPP), which holds a 6.83% stake.
Despite the fact that the nominal value of the 36% stake is only 1.2 billion crowns ($27.3 million), its market value is expected to be much higher. In April 1999, when the government originally calculated how much it could get for the stake, then-Economy Minister Ľudovít Černák said that the ministry was expected to get at least 3.6 billion crowns ($81.8 million) for the stake in Slovakia's largest mobile network operator.
Analysts said at the time that the government's valuation had been too modest and estimated Globtel's total value at $1.3 billion, also the estimate for the present sale.
