TDC and Deutsche Bank began second due diligence in Cesky Telecom after the TDC/Deutsche Bank consortium won the Cesky Telecom privatization tender. The due diligence will take several weeks, and a privatization contract should be signed at the end of October.
When asked about the possible divestiture of the 51% stake in Eurotel, Cesky Telecom CEO P. Klima said that the convergence of mobile and fixed-line businesess results in positive synergetic effects; nevertheless, the decision on Eurotel will be based on the priorities of Cesky Telecom’s new majority owners.
This is in line with our view that out of the possible strategic scenarios--acquisition of the remaining 49% stake in Eurotel; increased leverage and a large dividend; divestiture of 51% stake in Eurotel and a large dividend--the first one is superior. Nevertheless, the other scenarios are not significantly worse under certain assumptions; the market will wait for the new owners to indicate their strategy and to demonstrate transparency during its implementation.
Jiri Soustruznik