The privatization committee selected Telefonica as the winner of the tender for the state’s 51% stake in CT with a bid of CZK 502 / share leading to an expected 2005 EV/EBITDA of 6.8. Telefonica was followed by Swisscom (CZK 482 / share) and Belgacom (CZK 410 / share). The consortium France Telecom/CVC/Blackstone/Providence was excluded as its bid was conditional.
The final decision is to be made by the Cabinet. We believe that Telefonica’s price is attractive enough for the government to approve the sale. Nevertheless, Friday’s vote of non-confidence may delay the process should the Cabinet fail. Given the Communist Party’s changed position to support the Cabinet, we believe that the Cabinet will survive and CT will be sold at the Cabinet’s regular meeting on Wednesday, April 6.
Rating agency S&P said it has placed its A- long-term rating of Cesky Telecom on watch pending the privatization developments. Acquisition by a strategic investor could have a positive or negative implication on the rating depending on who is the winner.