Slovenia picks Deutsche Telekom, 4 funds to bid for telecoms firm-sources

Telekom Slovenije, D.d

31/10/2014 17:55

By Pamela Barbaglia and Arno Schuetze 
    LONDON/FRANKFURT, Oct 31 (Reuters) - Slovenia has narrowed 
the field of bidders for its largest telecoms provider to 
Deutsche Telekom and four buyout firms, several sources said, as 
the government presses ahead with a privatisation plan. 
    The buyout firms are U.S.-based Providence and Bain Capital 
and European peers Apax and Cinven vying for Telekom Slovenije 
 TLSG.LJ , the sources familiar with the matter said.  
    About four other private equity funds and industry peers  
walked away after delays to the process, mainly due to 
parliamentary elections in July, the sources said.  
    Representatives at Deutsche Telekom, Providence, Cinven, 
Apax and Bain Capital declined to comment. A spokeswoman for 
Telekom Slovenije was not immediately available for comment. 
    On Oct. 1 newly elected Prime Minister Miro Cerar confirmed 
the government's intention to sell a 72 percent stake in Telekom 
Slovenije  TLSG.LJ . 
    The company is the largest of 15 firms that the previous 
centre-left government slated for privatization last year. The 
sale is aimed at consolidating public finances after the country 
narrowly avoided an international bailout of its banks in 
December.  
    It comes at a critical time for Slovenia as two state-owned 
banks, NLB and NKBM, failed ECB health checks to determine their 
resilience to a financial crisis, increasing pressure on the 
government to shore up its capital buffers.  ID:nL5N0SL0K8  
    The government, which is advised by Citigroup, wants a 
premium over the company's market value of 955 million euros. It 
hopes to raise as much as seven times Telekom Slovenije's core 
earnings of 237 million euros, giving it a valuation of 1.6 
billion euros, two sources said. Its net debt stood at 341 
million euros in 2013. 
    Deutsche Telekom is seen as a preferred bidder due to its 
existing operations in central and eastern Europe and long-term 
investment strategy, one of the source said.  
    Deutsche Telekom has a presence in Croatia and Hungary where 
its subsidiaries T-Hrvatski Telekom and Magyar Telekom could be 
used as vehicles to buy Telekom Slovenije, the source said. 
    "A solution with Deutsche Telekom will be more welcome than 
any type of private equity-led deal," the source said. 
    The bidders will submit their offers before the end of the 
year, with an outcome likely in early 2015, three of the sources 
said.  
    Telekom Austria, which controls Slovenia's second-largest 
mobile operator Si.mobil, is not in a position to bid due to 
antitrust issues, one of the sources said.  
     
 
 (Additional reporting by Freya Berry in London and Harro Ten 
Wolde in Frankfurt; editing by Susan Thomas) 
 ((pamela.barbaglia@thomsonreuters.com)(+44)(0)(2075427723)(Reut 
ers Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net)) 
 
Keywords: TELEKOM SLOVENIA M&A/BIDDERS