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Only two suitors remain in ST race

Telecoms colossus Deutsche Telekom (DT) emerged as the most likely winner of the tender for state-controlled Slovenské telekommunikácie (ST) after Telekom Austria pulled out of the running on May 29.
Telekom Austria representatives said that the decision came after a review of the firm's capabilities, with an impending float on the Austrian stock-market approaching and internal restructuring underway. The firm said that it would be overstretched if it entered a new market - a claim that fuelled speculation that KPN, the third bidder in the tender, was also about to rethink its involvement in the ST tender given its interest in boosting its stake in Czech telecoms firm Český Telekom.
"The only reason we pulled out was because of the restructuring in our company and our up-coming stock exchange entry," said Martin Predl, spokesman for the Austrian telecoms firm. He rejected initial speculation that the firm had backed out of the race because of recent concerns with ST's involvement in a capital hike at the state-owned Poštová banka.


The withdrawal of Telekom Austra from the bidding for telecom monopoly ST (above) has narrowed the field.
photo: TASR

Telecoms colossus Deutsche Telekom (DT) emerged as the most likely winner of the tender for state-controlled Slovenské telekommunikácie (ST) after Telekom Austria pulled out of the running on May 29.

Telekom Austria representatives said that the decision came after a review of the firm's capabilities, with an impending float on the Austrian stock-market approaching and internal restructuring underway. The firm said that it would be overstretched if it entered a new market - a claim that fuelled speculation that KPN, the third bidder in the tender, was also about to rethink its involvement in the ST tender given its interest in boosting its stake in Czech telecoms firm Český Telekom.

"The only reason we pulled out was because of the restructuring in our company and our up-coming stock exchange entry," said Martin Predl, spokesman for the Austrian telecoms firm. He rejected initial speculation that the firm had backed out of the race because of recent concerns with ST's involvement in a capital hike at the state-owned Poštová banka.

"This has nothing to do with Poštová banka," said Predl.

The state forced ST to participate in the capital hike at the bank May 23 using ST's 25% stake in Poštová. However, the move led to the resignation of ST General Director Emil Hubinák on May 22 in protest at what he said was a waste of ST's hard-earned cash.

Predl also put a damper on rumours that Telekom Austria may look to form an alliance with another foreign firm, Telecom Italia, and re-enter the tender at a later stage.

"Even if we were to team up with someone else it would leave us in exactly the same position vis-a-vis our own company's situation," Predl said.

Deputy Telecom Minister Dušan Faktor said that the latest move by TA would inevitably lessen competition within the tender, now in its second round, but would leave the two remaining bidders more active in their pursuit of the 51% stake.

Deputy Premier for the Economy Ivan Mikloš agreed, saying that there was no reason for the ST sale to come off track, and that having only two interested firms was no obstacle to the successful conclusion of the sale.

However, KPN's heavy involvement in Český Telekom has raised questions over its commitment to its pursuit of the ST stake. KPN holds a 51% stake in the TelSource consortium that currently controls just under 34% of Český Telekom. KPN recently announced that it would be interested in upping its stake to a majority in a future sale of the Czech government's 51% stake in the company.

The much larger Czech market makes Český Telekom a more attractive draw for the firm, and, if a choice between the two were to be forced, analysts believe that this would sway the firm towards the Czech company rather than ST.

Combined with Telekom Austria's decision this has left Deutsche Telekom in front in the race for the state's stake.

"I think that Deutsche Telekom is capable of putting in a better bid [than KPN]," said Miloš Božek, an analyst at J & T Securities in Bratislava. He added that while the outcome of the tender would be merely a question of price, a poor performance from Deutsche so far in central European telecoms tenders may bolster their bid in Slovakia.

"DT missed out on some opportunities in the region and with the exception of Croatia [where Deutsche Telekom beat off a joint Swedish and Norwegian bid for Croat Telecoms firm HT] they haven't been involved in a successful tender of this type out here, and they may be looking hard at this one," Božek added.

A decsision on the sale is expected to be made on June 30, rounding off a tender process that has been constantly snagged on late legislation and held up by what many complained was ministerial foot-dragging on pushing the deal through.

The long-awaited telecoms law was passed by parliament only on May 19. The sale of ST could not go ahead until the legislation was approved, leading to a hold up that will see a final selection of a strategic investor, if the June date is held to, some seven months later than had first been planned by the current Mikuláš Dzurinda-led coalition government.

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