Wednesday, October 24, 2007

Local company makes gigantic bid for Telekom Slovenije

Local company makes gigantic bid for Telekom Slovenije
Wednesday, October 24, 2007 10:50:00 AM
According to press reports, citing leaked information from the Slovenian privatisation agency, the only local bidder, Engrotus, submitted the highest offer in the privatisation tender for a 49% package in Telekom Slovenije. The bid implies EUR 460 per share, which appears to be a staggeringly high price at first glimpse. Hungary's largest telecom group, Magyar Telekom, is also among the bidders.

2007.10.16 14:58
Hungary Magyar Telekom submits non-binding bid for Telekom Slovenije

The deadline for the final decision in the tender has not been set, but eexperts believe it could be end-December. Non-binding bids were welcome by 15 October.

According to the latest press reports, citing sources close to the privatisation agency, Engrotus, owned by the richest Slovenian businessman Mirko Tus, offered EUR 460 per share for the 49% stake in Telekom Slovenije. The runner-ups are Iceland's Skipti with EUR 350 and Germany's telco giant Deutsche Telekom with EUR 317 per share offers. There were some other bids in the area of EUR 300 per share and some offered even less than that. According to Croatia's Limun, the government of Slovenia still favours Deutsche Telekom and will not necessarily take the bid of Engrotus seriously.

The commission for the privatisation of Telekom Slovenije explained that Mirko Tus was the only bidder that failed to submit a financial plan for the purchase of the Slovenian national telecom company, Limun also reported. The Ministry of Economy has not say just yet what is the deadline for Tus to amend his bid.

Hungary's Magyar Telekom and Croatia's Telekom Hrvatski, both subsidiaries of Deutsche Telekom, reportedly offered EUR 317 per share for the 49% package, which surprised the privatisation agency, as well.

The Slovenian bidder's EUR 460 bid seems overly high at first signt, since it implies an 2008 EV/EBITDA ratio of over 9.5x for Telekom Slovenije. The EUR 317 per share offer made by Deutsche Telekom translates into a 7.5x 2008 EV/EBITDA ratio, which appears to be much more realistic, compared to the regional and global average of the telecom sector. We must keep in mind that the 49% package will most likely sell at a premium over the average stock exchange valuation.

Calculating at EUR/HUF of 251, the EUR 317 per share bid for the 49.13% stake we arrive at HUF 254 bn necessary resources, while Magyar Telekom's cash pool was not larger than HUF 95 bn at the end of the second quarter and it also had elbowroom in respect of indebtedness. Consequently, its dividend payment would probably not be jeopardised even if its were successful in its acquisition drive. At the same time we must highlight that the EUR 317 per share bid remains unconfirmed information and even it were a fact, it would still be no more than an indicative bid.

No comments: