Handelsblatt Exclusive

Telekom in Bid for Serb Carrier

telekom srbija
Serbia is trying to shed its stake in Telekom Srbija - and Deutsche Telekom is interested.
  • Why it matters

    Why it matters

    The acquisition of Serbia’s Telekom Srbija could help Deutsche Telekom expand its operations in the Balkans.

  • Facts

    Facts

    • Serbia has put its 58-percent stake in Telekom Srbija up for sale and wants at least €1.1 billion, or €1.3 billion.
    • The Serbian operator could fill a gap in Deutsche Telekom’s Balkan operations.
    • Deutsche Telekom, which took control of Slovakia’s Slovak Telekom in May, declined to comment.
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    Audio

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Deutsche Telekom, Europe’s largest telecoms operator, is among a group of companies bidding for Telekom Srbija, Serbia’s government-controlled landline carrier, Handelsblatt has learned.

Serbia, which owns 58 percent of Telekom Srbija, opened the bidding process last month to sell its stake and wants to raise at least €1.1 billion, or $1.3 billion.

“It is an open and transparent process. Deutsche Telekom, as well as other interested parties, are very welcome in Serbia,” the Serbian prime minister, Aleksandar Vucic, told Handelsblatt in an interview.

“We hope we can conclude the sale process in five months,” Mr. Vucic said. His country’s economy is suffering from weak growth and could use the cash to bolster state finances.

Serbia, which has 8 million citizens, rejected a €1.1-billion offer for a 51-percent stake in Srbija Telekom in 2011 from Telekom Austria as too low.

Deutsche Telekom, a rival to British-based Vodafone and Telefonica of Spain, declined to comment.

Since the chief executive, Timotheus Höttges, took over in 2014, Deutsche Telekom has streamlined to focus on telecommunications services in Europe.

The Serbian telecoms operator is known as inefficient with too much staff and too little innovation.

In May, the former German monopolist took full control of Slovak Telekom, paying €900 million for a 49 percent stake in the operator.

Two weeks ago it sold one of Germany’s most-visited websites, T-Online.de, and an online marketing service provider for €300 million. It has tried three times to sell its U.S. mobile unit T-Mobile US but has failed to close a deal.

Analysts were skeptical about the bid by Deutsche Telekom and viewed the €1.1-billion price tag for a 58-percent stake in Telekom Srbija as too high.

The German firm, however, could achieve savings by buying Telekom Srbija, integrating it into its international network and switching operations to Internet-communications technology known as IP, or Internet Protocol.

This technology makes it easier to offer additional services at little cost.

The Bonn-based German operator has carriers across Europe, including in Romania, Hungary, Croatia and Bulgaria on the Balkan peninsula. Mr. Höttges, the Deutsche Bank chief executive, has repeatedly said he is open to acquisitions, but only if they fit the operator’s core businesses.

Nine bidders were interested in Telekom Srbija, including Deutsche Telekom and Telekom Slovenije as well as private equity firms Apollo Global Management, Mid Europa Partners, CVC Capital Partners, Bloomberg reported two weeks ago, citing Serbia’s government privatization agency.

009 Deutsche Telekom - WTB resume 2014 Neu 2015-08-06-01

Ironically, Deutsche Telekom’s Greek subsidiary OTE held a 20 percent stake in the Serbian firm until it sold it back to Telekom Srbija for €400 million four year ago to reduce debt. Small shareholders and employees own the remainder of Telekom Srbija, according to Reuters.

The Serbian telecom operator, which also owns stakes in operators in neighboring countries Bosnia and Montenegro, is known as inefficient with too much staff and too little innovation.

Telekom Austria, which is partly owned by Mexican billionaire Carlos Slim, is no longer among the bidders for Telekom Srbija, people familiar with the Austrian firm told Handelsblatt. Telekom Austria declined to comment.

 

 

Ina Karabasz is an editor with Handelsblatt Live. Hans-Peter Siebenhaar is Handelsblatt’s correspondent in Vienna. Gilbert Kreijger, an editor with Handelsblatt Global Edition, contributed to this article. To contact the authors: karabasz@handelsblatt.com; siebenhaar@handelsblatt.com

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