To summarize the major news from a Ceske radiokomunikace (Cra) press conference yesterday:
It was confirmed that TDC could decide in two weeks whether it would buy a 50% stake in Contactel from Cra by May 2. Otherwise, Cra would either buy the 50% stake from TDC for a "symbolic" price, or both stakes would be sold to a third party (Contactel is a loss-making business, we believe the market assigns little value to it).
It was again confirmed that, based on the agreement of its shareholders,
Radiomobil (the No. 2 domestic mobile operator, 39% owned by Cra, 61% by Deutsche Telecom) will pay dividends once its financial assets exceed its liabilities. Nevertheless, this is not expected to happen sooner than in 2006 (i.e., dividends from the 2005 profit would be paid), when the dividend could reach CZK 30-50 per Cra share, we estimate.
While a stream of dividends could eliminate the low likelihood of Deutsche Telecom buying the remaining 39% of Radiomobil in the coming years, we believe the dividend prospect is at present too remote and too uncertain to increase investor interest in the stock. As for Contactel, we see the issue to be of minor importance.
Jiří Soustružník