According to the MFDnes newspaper, the Cabinet should today discuss a Ministry of Finance proposal that envisages selling the government’s 51% stake in Cesky Telecom by the end of March 2002. However, a Ministry of Finance spokesperson told us this morning that the Cabinet will not discuss its proposal today.
According to the newspaper, the tender should be launched in November 2001, regardless of the outcome of current negotiations on the purchase of the remaining 49% stake in Eurotel by Cesky Telecom. According to the paper, the government expects to receive CZK 50 bil. for its 51% stake (CZK 305 per share), vs. previous expectations of CZK 80 bil. (CZK 487 per share). The new figure looks suspiciously low—we will try to verify this as there is often confusion in case of Cesky Telecom as to whether a given expected sum relates to a 34% or a 51% stake (both scenarios are possible, given that the government is selling its stake jointly with that of TelSource, a 27% strategic shareholder in Cesky Telecom). If confirmed, however, the lowered price expectations would be negative news for the stock.
As to the planned Eurotel acquisition, MFDnes reports that the acquisition price should be reduced by “at least USD 200 mil.” (from the preliminary, non-binding price of USD 1.475 mil., agreed in July). It is not clear whether this is Cesky Telecom’s or the government’s objective; in any case, USD 200 mil. implies a saving of CZK 23 per share (though we believe that expectations of a lower acquisition price are to some extent reflected in Cesky Telecom’s current stock price).
The prospect of the tender as well the possibility of an improved Eurotel deal for CT are positive for the stock, but the report of an expected lower selling price on the part of the government is negative news.
(Ondrej Datka)