The Cabinet yesterday approved the Finance Ministry’s proposal to postpone a firm decision on the method and timetable of Cesky Telecom privatization until the end of September. Originally, the Cabinet should have discussed these issues by the end of June, but the creation and work of a co-ordination committee consisting of various ministries’ representatives took longer than originally envisaged, as did the choice of a privatization adviser. The new deadline is September 30, 2000. As we reported yesterday, the delay is of a technical nature and does not indicate any weakening in the government’s resolve to privatize CT. The proposal had a small negative impact when it was announced two days ago, but its actual approval yesterday did not prevent the stock from posting a gain.
Separately, the Czech Constitutional Court yesterday issued a ruling that gives new hope to a minority Cesky Telecom shareholder who has claimed that the CT shareholder meeting of February 13, 1995, was invalid. The ruling requires that the lower-level courts that had previously rejected the minority shareholder’s claim hear his complaint again. The 1995 shareholders meeting in question approved the intention to pursue a strategic partner for Cesky Telecom (then SPT). The key issue is whether Karel Dyba, then the economy minister who represented the state at the meeting, had proper power of attorney. In a press release issued after the Constitutional Court’s ruling, Cesky Telecom said that “the act of strategic partner joining Cesky Telecom cannot be put in doubts, regardless of the mentioned proceedings result.” CT said that the entry of TelSource was approved at another shareholder meeting (August 11, 1995), and that the validity of this later meeting is not debatable.
It is difficult to predict how long it will take to settle this issue. We believe that TelSource’s ownership of CT will eventually not be questioned, especially in light of the argument provided by Cesky Telecom. However, we cannot rule out that the stock may be vulnerable in the short-term as a result of the uncertainty associated with an outcome.
(Ondřej Daťka)