Slovenian Prime Minister Miro Cerar is today expected to seek a parliamentary dismissal of the defence minister over the privatisation of Telekom Slovenije.
Following a meeting of the coalition government yesterday, Cerar said he would submit a motion…
Slovenian Prime Minister Miro Cerar is today expected to seek a parliamentary dismissal of the defence minister over the privatisation of Telekom Slovenije.
Following a meeting of the coalition government yesterday, Cerar said he would submit a motion to dismiss Janko Veber – a deputy leader of the smallest member party, the Social Democrats – if he does not resign by today, local media reported.
Controversially, Veber had directed the army’s secret service to look into potential security issues surrounding the privatisation, raising questions of whether or not it will proceed.
Cerar has remained insistent that the incumbent will be privatised as planned, but the Social Democrats are against selling off lucrative state assets such as Telekom, which is also considered one of the country’s better employers.
Saso Stanovnik, chief economist at Alta Invest in Ljubljana, said Veber’s impending departure “will rock the boat” for the coalition, adding that the Social Democrats are staunchly behind Veber and claim this breaches their coalition agreement.
“We will now see if this is a bluff or not, but it must be recognised Cerar has alternative [coalition partners], like Bratusek Alliance,” he said.
The government’s latest attempt to privatise the telco has faced delays due to the security questions as well as lawsuits directed against the company.
Stanovnik said that, six months ago, Telekom faced €600m worth of lawsuits, representing a big risk for any potential investor. While one major case has been settled recently, about €300m in claims are still outstanding, he said.
However, he noted that the telco’s management is confident it can win the cases and that, even if it doesn’t, it is likely to have to pay just “a small fraction” of the damages.
The government could agree to settle the remaining claims, resolving this issue, but, as it owns just 72.38% of shares, it would have to consult with other investors, Stanovnik said. The remaining shares are held by individual shareholders, local and foreign companies, institutional investors, brokerage houses and the company itself.
Naturally, this have had an impact on pricing, with the telco’s shares trading at between €130 and €150 each over the past three months.
Stanovnik noted that, based on similar deals in Europe and other factors, Telekom’s multiples should be quite high. His team initially estimated bidders would offer between €150 and €180 per share. At the time of writing, Telekom’s shares were trading at €133.80 each on the Ljublanja stock exchange, giving it a market capitalisation of €874.45m.
Cerar is concerned that the privatisation needs to go ahead to maintain Slovenia’s credibility internationally, Stanovnik said, adding that the finance minister is also in favour of the process continuing.
Ultimately, Stanovnik said the issue will come down to pricing. If the remaining suitors offer too low a price – less than about €140 per share –it is possible that the entire process will be called off. That said, he is optimistic that it will be sold eventually.
Deutsche Telekom, which has other assets in Central and Eastern Europe, is reportedly among the bidders while UK-based private equity firm Cinven recently confirmed its interest.
Previous suitors were said to have included private equity firms Providence, Bain Capital and Apax Partners.
Telekom is one of 15 state-controlled firms tabled for privatisation in Slovenia.
