Final decision on Cesky Telecom privatization expected within days


As we await Friday's vote of no-confidence in the government, Prime Minister Stanislav Gross has said the government is ready to privatise the state owned Czech fixed-line operator Cesky Telecom. The government has been trying for some five years to carry out this last major privatisation, but have up to now rejected bids they considered too low.

Prime Minister Stanislav Gross,  photo: CTK
Prime Minister Stanislav Gross said at the weekend that there was now no reason to postpone the privatisation any longer, since Telecom's current valuation is higher than at any time in the past. Meanwhile, the opposition Civic Democrats have been highly critical - they say the government is rushing a very important privatisation project. Patria Finance telecoms analyst Tomas Gatek, however, agrees with the government that there is no reason to delay the privatisation.

"I think the time is for the Czech Republic better now than it was during the previous privatization attempt in 2003. That is due to the rebound in the markets on the whole and due to improved situation in the telecom sector. So from that point of view it is convenient."

The government's privatisation commission is meeting on Wednesday to discuss the bids for Cesky Telecom. The bidders include telecommunication companies: Swisscom, Belgacom, Spain's Telefonica and a grouping of Blackstone, CVC, Provident and France Telecom. Press reports suggest binding bids went as high as 73 billion Czech Crowns or over 3 billion US dollars. Tomas Gatek says that not only in view of the price but also due to the political situation it is better to sell Cesky Telecom right now.

"I think the price wouldn't change but the problem is whether the current political situation would allow the cabinet to make a decision on the sale, and how the sale would be structured."

Many critics also point out that the atmosphere of the current political crisis could have a negative affect on the price of Cesky Telecom, but Tomas Gatek rejects these misgivings.

"I don't think the price itself is influenced. The bidders had some time to decide and to evaluate the company before the actual crises started. It has been known for some time that the Telecom is on sale. Of course, the political crises increase the risk but it should not have any impact on the privatisation as it has been in progress for some time, and it's gone quite far."

Analysts say it is likely that a final decision on the privatisation of Telecom will be made next week.