LJUBLJANA (Slovenia), September 1 (SeeNews) – The ongoing consolidation of the telecoms sector in Europe coupled with the industry-wide drive towards convergent services have boosted the privatisation appeal of Telekom Slovenije [LJE:TLSG], an official from the law firm advising the state in the sell-off process for the incumbent telco said.
In June 2013, the Slovenian parliament endorsed government plans to sell state-owned stakes in 15 companies, including Telekom Slovenije, lender NKBM, flag carrier Adria Airways and the operator of the Ljubljana airport.
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The pre-selection phase for the sale of a 72.75% stake in Telekom Slovenije that served to confirm technical eligibility was followed this summer by the launch of a second phase, involving a narrower group of candidates that had submitted non-binding bids.
The sell-off process was then placed on hold immediately prior to the snap vote that Slovenia held on July 13.
Both strategic and financial investors have reached the second phase of the process, Rob Irving, a partner at international law firm White&Case, which is also acting as advisor on the sale of NKBM, told SeeNews over the phone.
“The process could move ahead over the next few weeks. Typically, the second phase takes anywhere from six to eight weeks before a final bidder is selected and an agreement signed. Then it takes 1-2 months to complete the transaction once the anti-trust approval is granted,” Irving said, cautioning that particular variables should never be ruled out.
Telecoms have come into vogue again after some time when merger and acquisition activity in the sector had slowed down, Irving said, pointing to the ongoing consolidation on a pan-European basis with the big players trying to add more markets and strengthened their footprint.
Away from its home market, Telekom Slovenije provides fixed-line and mobile services in Kosovo, Bosnia and Macedonia.
In Irving’s view, the Telekom Slovenije sell-off story also fits well within the context of another key industry trend which is seeing a heightened drive towards the convergence of mobile and fixed broadband operations.
“Telekom Slovenije has in different countries all of these operations, it has fixed-line, mobile, broadband and is a good platform for continued expansion across these different technologies.”
For some bidders, the telco’s regional footprint could be the main focus while for others, its significant market position in Slovenia could be the top draw, the expert said.
According to official data, Telekom Slovenije had a 49.1% share on the mobile voice segment of its home market at the end of March and a 35.9% share on the fixed-broadband segment.
SLOVENIA NEEDS AN NKBM WITH CLEAR LENDING MANDATE
In August, state holding firm SDH invited binding offers for 100% of lender NKBM - bailed out and nationalised by the government in late 2013, and said bids are expected to be submitted in October.
“The bidders are in the process of doing due diligence but a timeline for this transaction is difficult to predict,” Irving said.
In his view, there is a certain degree of urgency to the deal stemming from the commitment on the part of the SDH to see it through and to do so relatively quickly. “On the other hand, the most important thing is to get the highest price and to have a long-term investor for the bank.”
“If you look at Spain, there have been several acquisitions in the past few months of several bailed-out banks. I think there is quite a bit of interest out there among banks and financial investors to buy at the low-end and bet on a recovery of the market,” Irving said.
It is in the interest of Slovenia, he further noted, to have a clear capital structure at NKBM and a clear mandate from the bank’s shareholders to conduct lending operations. “NKBM has traditionally been focused on SMEs and on consumer finance and this is an area that is underserved in Slovenia right now. If you want to stimulate the economy, then you need somebody lending.”
AERODROM LJUBLJANA OFFERS DIVERSE APPEAL
Last month, SDH said it had started exclusive talks for the privatisation of the operator of the Ljubljana airport with Fraport AG Frankfurt Airport Services Worldwide.
Fraport was the highest bidder in a tender to sell a 75.5% stake in the airport operator launched in March.
“Aerodrom Ljubljana [LJE:AELG] has a wide regional catchment area and if you look within a three-hour drive you can reach into well-populated regions in Italy, Croatia and Austria. If you get the right airline and destination mix at the airport, it is an attractive proposition,” Irving said.
Different bidders are believed to be interested in the Ljubljana airport for different reasons. An Asian bidder was rumored to be in the mix and they would be interested in Ljubljana as a hub for Asia-to-Europe flights, the official said.
“Fraport, I believe, is probably interested in the Ljubljana airport’s potential to help divert some of its air freight business away from Frankfurt where it may face constraints,” Irving said. “I represented one of the bidders and he was interested primarily in developing the airport’s passenger terminal.”
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