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Viewing report
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Europe Market Perspective, v5 i5
Pyramid Research, Inc, May 2005, Pages: 6
Czech Republic: Telefónica Continues its Quest for New Market Entry Opportunities
In early April, the Czech government sold its 51% stake in Ceský Telecom to Telefónica of Spain for US$3.5bn (CZK 82.6bn), marking the Spanish giant’s first foray into Central Europe. In order to comply with Czech legislation and the terms of its contract, Telefónica is forced to make a public offering for the remaining 49% of Ceský, which currently trades in the stock market. We anticipate that this will be the first of several transactions in the region for Telefónica. Given slowing growth in its home market and in Latin America, we expect Telefónica to become increasingly active in Central and Eastern Europe as well as Northern Africa. Upcoming privatizations that might interest the Spanish giant include that of Slovenia’s incumbent operator Telekom Slovenije and of Latvia’s fixed telco Lattelekom.
Telefónica: Not such a risky bid
-Telefónica purchased Ceský Telecom for US$3.5bn (CZK 82.6bn), a sum significantly higher than the US$2.9bn (CZK 70.0bn) the Czech government was expecting to raise. As a matter of fact, the price paid by the Spanish Group for Ceský Telecom is actually quite high in comparison to that paid for other recently privatized telcos in the region (see Exhibit 1). With its offer, Telefónica outbid Swisscom, Belgacom, and a group of venture capitalists - Blackstone, CVC Capital and Providence - that were bidding together with France Telecom. Vodafone and Danish telco TDC had initially demonstrated interest in the property, but decided not to participate in the tender, discouraged by its economic conditions.
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