Advent finally wins Bulgarian telco

After two years of negotiations and political wrangling, Advent International has reached agreement with the Bulgarian government over the acquisition of the state-owned Bulgarian Telecommunications Company.

The Bulgarian Telecommunications Company (BTC), the state-owned telecom operator in Bulgaria, has finally been sold to Advent International after two years of negotiations, political disagreement and court appearances.

Advent International today announced that it had reached agreement with the Bulgarian Privatisation Agency on terms for the purchase of 65 percent of BTC. Advent is purchasing its stake through Viva Ventures Holding, an Austrian vehicle.


The agreement comes after a process lasting nearly two years, which started when Advent came first in the tender process in October 2002. “Effectively we had to win the deal twice,” said Advent director Chris Mruck. “First we had to win the tender process and then we had to convince the political establishment of the merits of Advent’s involvement in the deal.”


The agreement covers the purchase price of €230 million ($309 million) plus a €50 million capital increase, a previously agreed minimum €400 million programme of investment and previously agreed redundancy figures, one of the key stumbling blocks of the deal. Advent had initially indicated that it would have to reduce the BTC workforce by as much as a third. The agreement reached in August, which has been confirmed today, will see the workforce cut from 25,000 to around 20,000.


Advent said it plans to transform BTC from a state-owned monopoly into a fully competitive organisation, building on the group’s dominance in its market. BTC operates 2.9 million telephone lines, of which 85 percent are residential. Plans include upgrading the access and completing the digitalisation programme, developing business services including data and internet, implementing modern billing systems and outsourcing non-core activities.


Additional financing for the transaction is being provided by an international group including the European Bank of Research and Development, the Dutch Development Bank (FMO), the Abu Dhabi Investment Authority, Thor Bjorgolffson, Swiss Life Private Equity Partners, Enterprise Investors and the National Bank of Greece. The government will retain a 35 percent stake.


Advent International’s advisers on the purchase were Cameron McKenna (legal and tax), Georgiev, Toderov & Co. and Lega Interconsult (legal), PA Consulting (commercial), PricewaterhouseCoopers (due diligence).


The Bulgarian Government have been advised by Deutsche Bank (financial), Denton Wilde Sapte (legal) and Djingov, Goiuginski, Kyutchukov & Velichkov (legal).