Cesky Telecom announced yesterday morning that it had terminated talks on the purchase of a 49% stake in Eurotel, because it was not able to reach an agreement with the minority shareholder, Atlantic West (a consortium of AT&T Wireless and Verizon Communications). As a result, it will be up to the Cesky Telecom privatization tender winner to decide whether to continue negotiations with Atlantic West in the future. We were slightly disappointed with this outcome (and the immediate market response was negative), but it was still better than if Cesky Telecom had been perceived by the market as overpaying for the stake. The Prague-based MFDnes newspaper reports today that while Atlantic West insisted on USD 1.475 bil. for the stake, Cesky Telecom was not willing to pay more than USD 1.2 bil.
MFDnes also writes that the new Cesky Telecom owner will have to offer Cesky Telecom’s 51% stake to Atlantic West. A Financial Times report on Monday was first to mention a call option on the 51% stake in Eurotel that Atlantic West reportedly has if Cesky Telecom’s shareholder structure changes. While we believe that AT&T Wireless and Verizon Communications are interested in exiting Eurotel rather than acquiring total control over it, such an option could represent a slight complication in the Cesky Telecom privatization (some potential bidders might be attracted to the privatization mainly because of Cesky Telecom’s stake in Eurotel).
(Ondrej Datka)