Cesky bidder cools on price, seeks partners

The consortium, led by DB Capital, which is in exclusive negotiations to buy the Czech telecoms operator wants a price cut and to bring others into the deal.

The protracted privatisation of Czech telecoms business Cesky Telecom looks set for further delays as the consortium in exclusive talks over a E1.8bn offer for the business seeks changes to the current deal.

 

The consortium, comprising the private equity team at Deutsche Bank (DB) and Danish telecom company TDC, has asked the government to reduce the price for the incumbent operator by ten per cent. It is also looking to attract partners for what will be one of the largest private equity-backed transactions in Central and Eastern Europe (CEE).

 

The transaction, which comprises the sale of the government’s 51 per cent stake in the business and a 33 per cent stake held by KPN and Swisscom, is further complicated by the consortium’s wish to acquire Czech mobile operator Eurotel, currently owned by US companies Verizon and AT&T Wireless, which rejected a $1.1bn offer for the business last year.

 

A government document leaked to Reuters says that the DB-led consortium wants to acquire a more than 90 percent holding in Cesky Telecom to be able to merge it with its highly indebted takeover vehicle C-Tel. It added that the transaction needs to be completed by end-March when a law change is expected which would make a buyout offer mandatory, increasing the buyers' costs.

 

The Czech Minister for transport and communications, Milan Simonovsky, has expressed dissatisfaction over the proposed reduction in price, insisting the consortium should stand by its original offer and that Cesky Telecom should stay in public ownership if it fails to do so.

 

The cabinet is to vote on the sale of its 51 percent stake in Cesky Telecom, possibly next Monday.

 

Those involved in the consortium have been unavailable for comment on the reports.