According to Reuters, Cesky Telecom is holding discussions with banks toward borrowing EUR 1.5 bil. (equivalent to some CZK 51 bil.) for the purpose of acquiring the remaining 49% stake in Eurotel, the cellular operator owned by Verizon Communications and AT&T. Although one should not jump into strong conclusions about the possible price for the acquisition simply on this basis, the amount to be borrowed could point toward a purchase price at around CZK 55 bil.–60 bil., approx. USD 1.5 bil. (we assume that Cesky Telecom would first use its cash, which stood at CZK 6.7 bil. at the end of Q1/2001). Such a range corresponds to our Eurotel valuation and would be a fair deal, in our view. The stock is unlikely to respond unless there is more conclusive information on the issue; the purchase of Eurotel itself, if done at a reasonable price, would be positive for the stock.
(Ondřej Daťka)