Shortly after the end of trading yesterday, a National Property Fund spokeswoman announced that Ceske radiokomunikace’s privatization will be delayed due to ongoing negotiations between the government and Deutsche Telekom regarding the compensation to Ceske radiokomunikace for its dilution in RadioMobil, the cellular operator. Specifically, that Finance Minister Pavel Mertlik will not submit the CR tender result to the Cabinet by end of September, which has been the official deadline. The NPF declined to say how long the delay might be. Although a delay in privatization is never good news, in this case it is of a technical nature and we do not consider it necessarily damaging, particularly if the delay leads to an agreement on the issue of early compensation.
Deutsche Telecom-controlled CMobil, Ceske Radiokomunikace’s partner in RadioMobil, earlier this year rejected Ceske Radiokomunikace’s offer to buy CMobil’s option to subscribe new shares in RadioMobil. By subscribing the new shares, CMobil will increase its stake in RadioMobil from 49% to 61%, and dilute Ceske radiokomunikace’s stake from 51% to 39%. Ceske radiokomunikace will be compensated some USD 565 mil. for the dilution. According to the original joint-venture agreement, the compensation was scheduled to be made in 2001, but the privatization of the company led the government into negotiations with Deutsche Telecom about accelerating the compensation. Another issue to be decided is whether the compensation proceeds will be retained by the company or will be distributed to shareholders.