Cesky Telecom CEO P. Klima suggested in a Hospodarske noviny newspaper interview published today that Cesky Telecom is worth less than CZK 80 bil. (this is reportedly the minimum price the government seeks for its 51% stake, and corresponds to CZK 485 per share). The CEO himself did not mention any specific valuation, but vaguely agreed to the CZK 50 bil.–70 bil. range suggested by the interviewing journalist (corresponds toCZK 305-425 per share). Although we advise against paying much attention to the range cited, the fact that the CEO suggests Telecom is worth less than what the government seeks could have a negative impact on the stock. The government has said several times that it would not sell the company if it were not satisfied with the bids. (Our fair value estimate is CZK 370–380 per share, but this without any control premium).
The government’s privatization committee for the sale of Cesky Telecom is to meet today to set a deadline for investors’ binding bids. According to the official tender schedule, the Cabinet should receive a recommendation of the best bid by the end of March, hence we expect binding bids to be submitted in the next two weeks (though a small delay of the whole tender process into April would not be seen as undue).
(Ondrej Datka)