The state's 36% stake in Globtel is almost in the hands of AIG
photo: Ján Svrček
"The negotiations have been extended until the end of February. We remain hopeful [that a deal can be reached with AIG] and there is certainly interest from their side," Peter Benčúrik, spokesman for the Economy Ministry, told The Slovak Spectator February 19.
Valued at $700 million for a planned IPO last year, Globtel has outstripped its sole rival in the Slovak mobile market, Deutsche Telekom-controlled EuroTel, recording profits of 1.07 billion crowns last year ($22.6 million) on revenues of 7.49 billion crowns, and taking a 56% share of the market with 650,000 active clients. EuroTel had 493,032 active clients in 2000.
Telecoms experts and sector players believe that despite the relatively small size of the Slovak telecoms market in the central European region - Hungary and the Czech Republic are twice the size and Poland almost seven times as big - AIG, if it secures the stake, will be in a position to benefit from what is likely to be a continuation of Globtel's, and the mobile market's, growth.
"Globtel is a good company which turned in figures in the black last year, and is fast becoming a very profitable firm," said Tibor Tarábek, general manager of telecoms firm eTel Slovensko.
"AIG will have to pay a lot for the stake, but this is definitely the right time for AIG to enter. They will also be coming into a mobile company that already has its network set up and running, and won't be faced with any costs for developing a network," he added.
Analysts have agreed that the eventual price for the stake will be less than it could have commanded in an initial public offering (IPO). A planned Globtel IPO, which would have been the first of a mobile operator in central Europe, was cancelled late last year on the advice of the sale's advisors, Credit Suisse First Boston (CSFB).
CSFB said at the time that there had been a global downturn of interest in telecoms stocks towards the end of 2000, and proposed a private placement.
"In theory, an IPO generally generates more money than a private placement, but in this case, looking at other telecoms IPOs last year, I cannot see how this one would have been successful," said Ivan Chodák, equity analyst at CAIB Securities.
But Globtel chief executive Pavol Lančarič has said that the state could have moved much earlier in readying the company for the sale of the stake, and had it done so could have sold the 36% share for a much higher price. The Economy Ministry's Benčúrik was reluctant to comment on suggestions that the government could have got more money had it run an IPO.
"We originally had two options for the sale of the stake. After consultations with our advisors, they told us that the development of interest [worldwide] in stocks of telecoms firms was not as good as the previous year, and we decided to go for a private placement of the stock, the second option," he said.
Globtel chiefs have stated that by the end of the year they hope to raise client numbers to 900,000, and that they believe more than 30% of Slovaks will own a mobile phone. The current figure is 20%.
Sector experts have agreed that there is a growing demand for mobile services but are split on the chances the market will expand sufficiently to accommodate a third mobile operator.
A tender for a third GSM licence in 1999 was cancelled by the Transport Minister at the time, Gabriel Palacka, with the licence subsequently being split between Globtel and Eurotel. The minister's decision was criticised for hurting competition on the market, and he later resigned amid accusations of corruption.
Peter Štubňa, IT manager at telecoms firm GiTy, said that with Globtel and Eurotel the mobile market had "more than enough operators", and that it had a definite ceiling. "It's just too small to have any more operators," he said.
However, CAIB's Chodák and eTel's Tabárek believed that there was room for expansion. "I wouldn't like to say how much chance there is that Slovakia will see a third GSM operator, but I think there is room for one," said Chodák.
26. Feb 2001 at 0:00 | Ed Holt