Cesky Telecom: Today is the deadline for new bids in the Cesky Telecom privatization tender. The government asked the privatization consortia (Deutsche Bank/Blackstone Group/TDC and Swisscom/CVC Capital Partners/Spectrum Equity Partners) to raise their last tender bids (reportedly CZK 335 per share) by at east 10%.
Should the bids not be raised, as is widely expected, the new Czech Cabinet could decide to continue negotiations with the consortia, since it is pressed upon by a tightening fiscal budget. Nevertheless, should CTel not be privatized, company management would likely continue in its restructuring plan (i.e., capital structure optimization, 49% EuroTel stake acquisition), which would yield positive results for the stock, we believe. On the other hand, privatization to a financial investor-led consortium could result in CTel selling it 51% EuroTel stake, which would not be positive for the stock.
Jiri Soustruznik