Ministers fume over Telekom 'no'

‘A GOLDEN hen without any ability to lay golden eggs’ is how Slovakia’s economy minister described the country’s telecoms giant in response to a decision by its majority shareholder not to pay the €258 million in dividends demanded by its minority shareholder, the Slovak state.

‘A GOLDEN hen without any ability to lay golden eggs’ is how Slovakia’s economy minister described the country’s telecoms giant in response to a decision by its majority shareholder not to pay the €258 million in dividends demanded by its minority shareholder, the Slovak state.

Deutsche Telekom, which owns 51 percent of the shares in Slovak Telekom, said an offer it had tabled was appropriate and that the company was open to further negotiations with the minority shareholder. It outvoted Slovakia at the general meeting held on April 28 and blocked the requested dividend of €258 million which the Economy Ministry said could come from Slovak Telekom's “retained earnings and dividends”.

Ministers said there was no reason for the refusal.

Both Economy Minister Juraj Miškov and Finance Minister Ivan Mikloš said that Slovakia is entitled to the money.

The Economy Ministry owns 34 percent of the shares; the remaining 15 percent is in the hands of Slovakia’s privatisation agency, the National Property Fund (FNM).

“The representatives of the German shareholders have not explained their decision not to pay the dividends,” states a memo sent by Miškov’s spokeswoman Daniela Piršelová to The Slovak Spectator.

Miškov considers the situation that has emerged to be an abuse of the telecom operator’s dominant position, according to Piršelová.

“The attitude of the German shareholder has unpleasantly surprised us and taken us aback,” said Miškov. “Slovak Telekom today disposes of enough resources from the profits of previous years when it did not pay these [the retainedprofits as dividends] to its shareholders.”

Deutsche Telekom, the majority owner of Slovak Telekom, says it is interested in negotiating with the Slovak Ministry of Economy.

“Deutsche Telekom received, at short notice, a request from the Slovak minister of economy to enter negotiations on the dividends payout,” Sylvia Braunle of Deutsche Telekom’s press department told The Slovak Spectator. “The negotiations commenced shortly before the annual General Shareholder Meeting and Deutsche Telekom made an appropriate offer during these talks.”

This offer still stands and Deutsche Telekom is willing to continue talks with the Slovak government, Braunle said, adding that the group will not comment further on internal discussions between shareholders.

According to Miškov, Slovakia currently needs every spare euro to consolidate its public finances and clear the debts that the previous government of Robert Fico left behind.

“Today’s vote has only strengthened my conviction that Deutsche Telekom is abusing its status as the 51-percent shareholder and, at the same time, by this attitude it has only confirmed the fact that Slovak Telekom is perhaps a golden hen without any ability to lay golden eggs,” Miškov said.

The minister, who will shortly meet representatives of the telecom concern, said he will insist that Deutsche Telekom corrects its decision.

Finance Minister Mikloš has said he expects the situation to change. But he added that the company’s failure to pay dividends would not in any way threaten next year’s state budget, the SITA newswire reported. The FNM, which also objects to the decision of the majority shareholder, said that it had used all available means to pass a proposal to pay dividends at the general shareholder meeting, FNM representative Miroslav Homola told SITA.

Mikloš said he is still convinced that the remaining 49-percent stake of Slovak Telekom should be privatised.

“There are many reasons why those shares should be privatised,” Mikloš said, as quoted by the TASR newswire. “This is one, although it is not so significant. Telecommunications is no longer the natural monopoly it used to be; there is no longer a cause for the state to have any part in it.”

The proposed sale of the state’s remaining stake in Slovak Telekom is not a new issue. The Slovak cabinet on March 23 reviewed an analysis jointly prepared by the Finance Ministry and the FNM concerning the eventual sale of the holding, perhaps to Deutsche Telekom.

The FNM stated that the government would not receive more from dividends than from the actual sale of its ownership stake in Slovak Telekom and said sale of the 49-percent stake could be completed by the autumn of 2012.

The state is considering two options: the first is an international tender with all the state’s shares being sold as a block, giving Deutsche Telekom the option to take full ownership. The other option is to sell the state-owned shares in the capital market, a process which would result in many smaller shareholders.

“That could aid the development of the stock market, as we expect these stocks to be listed on the Bratislava securities exchange,” Mikloš said earlier this year, as quoted by TASR.

For fiscal year 2010, the net profit of Slovak Telekom declined by 17 percent year-on-year to €120.9 million, SITA reported.

Slovak Telekom Group achieved overall consolidated revenues totalling €934.3 million. According to a company press release, overall revenues fell by 4 percent year-on-year due to an overall decrease in selected service prices in the telecommunications market as well as the negative influence of continuing regulation. It said the group achieved €393.1 million of earnings before interest, tax, depreciation and amortisation (EBITDA), generating operating cash flow of €251.7 million.

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