The sale of a majority stake in Slovenské Telekomunikácie (ST) is not the only telecom project mired in delay; the passage of a new Telecom Law is also being blocked by government ministers anxious to have their say in the new legislation.
According to the Telecom Ministry's Telecom Division Director Milan Luknár, Slovakia's current telecom law was drafted in 1964, slightly amended in 1993 after the break-up of the former Czechoslovak Republic, and is today in dire need of an overhaul.
The law, Luknár said, must be revised before the ST sale because it will create an independent telecom regulatory body in Slovakia. The telecom industry is currently regulated directly by the government; the presence of an independent regulator will be key to attracting an investor for the state telecom monopoly.
"Any investor will expect that an independent regulatory body will dictate the laws the investor will act under," agreed J. Russell McGranahan of the legal firm White & Case. "It offers protection from political whims which could fluctuate."
McGranahan's firm is a member of the Deutsche Bank-led consortium selected to advise on the ST privatisation.
The passage of the law has been delayed, however, as the cabinet ministries which will be affected by the law lobby for changes and alterations to the draft proposal. "The Telecom Law is currently being discussed in government between ministries," McGranahan said. "High level policy views are being vented."
While the debates and delays continue, McGranahan warned that the value of ST would plummet without the law's passage. "The regulatory body tells you how much you can make in a given market," he said. "Without it, potential investors will not be seriously interested in investing into ST."
