Lawsuits and political disputes mar Slovenia's Telekom privatisation
Privatisation of publicly owned utilities such as power, post and telecommunications rarely seem to run smoothly in Central Europe. Apart from a reluctance by many political players to see national icons fall into foreign hands, corruption allegations are all too common. And Slovenia, which holds the EU presidency is no exception. Plans to sell a large part of Telekom Slovenia are threatening to split the coalition government.
Telekom Slovenia is the country’s biggest telecommunication company and for years enjoyed a virtual monopoly in the nation. In the last few years, no other telecommunication company was as widely available in the country and competition grew slowly, if at all. For example, a customer could not switch to another provider if the cables that enabled internet, television and telephone service were the property of Telekom Slovenia.
Telekom Slovenia did not want to sell or provide the use of these cables to other companies, so they started to build their own networks in order to remain on the market.
The current political situation, especially with Slovenia presiding over the EU, is also an important factor. The coalition government is in danger of splitting up if the government tries to sell a large part of Telekom Slovenia to companies abroad. Two coalition parties don’t want to see one of the country’s most prominent assets pass into foreign hands.
Although Telekom Slovenia got a warning form the office for the protection of competition, interest in buying the state’s 49 percent share is high. To date, a private equity group and two telecom incumbents have submitted binding bids.
Recently one of the smaller telecommunications companies filed a lawsuit against Telekom Slovenia -- one of many. Amis, a small Slovenian telecommunications company, slapped a 2.3 million euro damages suit against Telekom. It insists the company violated competition rules. Telekom believes that the demands of the suit and the proposal for a temporary injunction are completely unfounded, because the company "completely respects the legislation and operates in accordance with good business practices."
The lawsuits haven’t stopped there. Some weeks ago a small IT services and communication provider, Sinfonika, filed a 36 million euro damages suit against Telekom for supposedly stifling competition. The biggest lawsuit against Telekom, however, was filed by the Maribor-based T-2, a provider of voice, internet and television services, which wants 130 million euros. They have refused to settle and are pushing ahead with the case in court. As officials at T2 explained, Telekom hindered their work form the beginning in October 2005. They insist that they warned Telekom every time, but all in vain. The director of T2, Matevž Turk:
“T2 is suing Telekom Slovenia for the damages done to it. And these damages are twofold: Telekom Slovenia restricted our entry into the market and caused delays for well over a year. And secondly it restricted and disabled access to subscribers after we entered the market. We estimate that these damages are around 130 million euros.”
Telekom will lose up to nine percent of its market value if they were to lose all the lawsuits currently filed against them.
The smaller telecom companies have one thing in common: They insist that the country’s biggest provider has abused its position and monopoly over the market, and they want these days to end.