Prime Minister Milos Zeman said on Friday that the government requires a minimum of CZK 80 bil. for its 51% stake in privatizing Cesky Telecom. This statement corresponds to earlier statements by other government officials. He also criticized Telecom CEO Přemysl Klima for recently suggesting that the government’s stake is worth less than CZK 80 bil. Binding bids are due by the end of this week; the Cabinet should discuss the tender results in the first or second week of April.
Separately, the sector regulator on Friday reduced the maximum fixed-to-fixed interconnection prices, by 9–40%. Any reductions in these prices are generally negative for Cesky Telecom, the dominant owner of fixed-line access to customers. We expect another reduction to come once the regulator adopts a new price methodology (a long-run incremental cost model) in the course of the year. The long-run trend is therefore unfavorable for Cesky Telecom, but it has been expected; hence, we would not expect a major impact on the stock.
(Ondrej Datka)