The Slovak government has published its memorandum of understanding with Deutsche Telekom (DT) on the planned sale of its 49% stake in Slovak Telekom, revealing details of the process.
The government, which owns its shares in the incumbent via the…
The Slovak government has published its memorandum of understanding with Deutsche Telekom (DT) on the planned sale of its 49% stake in Slovak Telekom, revealing details of the process.
The government, which owns its shares in the incumbent via the ministry of economics, states in the MoU that it informed majority shareholder DT of its wish to sell the shares through a “dual track process”. This process offers two exit options: an IPO or direct sale.
The government intends to initiate IPO and direct sale processes in tandem. At present, it would prefer an IPO but the final decision will be influenced by market conditions.
The government would expect a listing to complete within nine months of signing the MoU, which took place this month. DT, on the other hand, expects an IPO to be completed within 18 months of signing an agreement with the advising bank or banks. DT is not required to continue to support an IPO process after this period.
The government said it believes the flotation process would have four phases: an eight to 10 week preparatory phase, an eight to 12 week execution phase, a nine to 10 week marketing phase and, finally, pricing and allocation.
As for a direct sale, the government expects this would take seven to eight months to complete.
The parties to the MoU, which also include Slovak Telekom, have agreed to provide each other with “reasonable cooperation” to ensure the terms of the document are satisfied in a “timely” manner. These include selecting advisers, securing necessary corporate approvals and undertaking due diligence of the telco.
Regarding advisers, the parties plan to hire a team consisting of an investment banking syndicate, an independent auditor and accounting adviser, a legal adviser and a PR adviser. Shareholders intend to select an investment bank from a list of 10 global players, namely Goldman Sachs, Morgan Stanley, JP Morgan, Citi, Credit Suisse, UBS, Deutsche Bank, Bank of America Merrill Lynch, Barclays and Macquarie. Others may be considered too.
The parties also acknowledge that ongoing legal disputes with regard to alleged anti-competitive behaviour could “severely influence” the pricing of the shares and overall success of the transaction.
DT has a right of first refusal with respect to the sale. Commenting on the signing of the MoU earlier this month, a company spokesperson said it “preserves all of its rights as per the current shareholder agreement”.
The state attempted to sell its shares in Slovakia’s largest telco in 2011, but halted plans in October that year after the centre-right coalition government collapsed.
