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FIXED-LINE OPERATOR TO BUY REMAINING SHARES FROM US CONSORTIUM

Slovak Telecom online for mobile deal

SLOVAKIA's only fixed-line phone operator, Slovak Telecom, wants to buy mobile phone operator EuroTel. Slovak Telecom already owns 51 percent of EuroTel's shares and is targeting the remaining 49 percent of the company, which is currently controlled by an American telecommunications consortium, Atlantic West. EuroTel is one of two mobile phone companies in Slovakia.
Although negotiations are in the final phase, neither Slovak Telecom nor EuroTel want to comment on the plan.

SLOVAKIA's only fixed-line phone operator, Slovak Telecom, wants to buy mobile phone operator EuroTel. Slovak Telecom already owns 51 percent of EuroTel's shares and is targeting the remaining 49 percent of the company, which is currently controlled by an American telecommunications consortium, Atlantic West. EuroTel is one of two mobile phone companies in Slovakia.

Although negotiations are in the final phase, neither Slovak Telecom nor EuroTel want to comment on the plan.

"We have no comment on the situation so far," Alena Buchlákova told The Slovak Spectator this week from her offices at Slovak Telecom's communications department.

"Nothing has been signed or approved yet," Slovak Telecom's vice-president Jan Kondráš told SITA news wire.

Negotiations between Deutsche Telecom, which owns 51 percent of Slovak Telecom, and Atlantic West, were suspended earlier this year, after the sale of AT&T Wireless to Cingular, another US wireless company. (The consortium owns Verizon and AT&T Wireless.)

Industry analysts estimate the value of the deal between fixed-line monopoly Slovak Telecom and EuroTel will surpass Sk10 billion (€250 million), according to daily SME.

In mid-December last year, Slovak Transport, Post Office and Telecommunications Minister, Pavol Prokopovič, confirmed that the Slovak state (which holds 49 percent of Slovak Telecom) wanted to buy the remaining stake of EuroTel from its US holder.

The likely purchase will increase the value of Slovak Telecom's share prices, which the state eventually wants to sell.

The Slovak economic daily Hospodárske noviny reports that according to Prokopovič, Slovak Telecom will purchase the 49-percent EuroTel stake for Sk13 billion (€316.37 million).

David Brezina from the consulting company Accenture says it is possible that the takeover could benefit customers of both Slovak Telecom and EuroTel.

For example, Slovak Telecom and EuroTel could consolidate their billing processes, allowing existing customers to pay just one monthly bill for both their fixed-line and mobile phone services.

"It all depends on how the firms cooperate," Brezina said, according to the SME daily.

While this kind of cooperation could strengthen the market position of both operators, he warned that it could also spark regulatory actions by the Slovak Transport, Post Office and Telecommunications office.

Even if the deal stipulates that Slovak Telecom and EuroTel remain competitors, Slovak Telecom stands to gain. Brezina pointed out that, historically, the purchase of a mobile phone operator by a fixed-line company improves the profitability of the latter.

At the end of June EuroTel reported a total of 1.7 million clients.

EuroTel is the second largest mobile operator on the Slovak market. It competes with Orange which is controlled by the French telecommunications company France Telecom. Total mobile phone market penetration is at 73 percent, a figure reported in June, with Orange handling 2.2 million customers.

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