Cesky Board OKs Eurotel Buy

Cesky Telecom to acquire Atlantic West's 49% stake in Eurotel Praha for $1.05B in cash, bringing its ownership interest to 100%

June 6, 2003

2 Min Read

PRAGUE -- The Board of Directors of CESKY TELECOM, a.s. today approved the terms of a preliminary agreement reached with ATLANTIC West B.V. (AWBV) regarding the acquisition of the remaining 49% stake in Eurotel Praha, spol. s r.o. (Eurotel), the Czech Republic’s leading wireless operator. The parties have agreed on the price of USD 1.05 billion for the stake to be paid in cash. Following the completion of the transaction, CESKY TELECOM will increase its ownership interest from 51.0% to 100%.

"We are pleased to have reached agreement on principal terms with AWBV to increase our interest in Eurotel to 100%. Eurotel is the market leader in wireless telephony in the Czech Republic and its acquisition has long been in line with strategic objective of CESKY TELECOM to address customer needs in both the fixed and mobile services. From a financial perspective, the acquisition is expected to be immediately enhancing to the group’s financial profile via full consolidation. We are confident that Eurotel’s performance will represent continuing enhancement of value to our shareholders,” said Mr. Ondrej Felix, Chairman of the Board of Directors and CEO of CESKY TELECOM.

Related to the transaction, Eurotel owners declared a dividend of CZK 10.98 billion (USD 407.5 mil.)* , which will be paid prior to the closing of the purchase transaction.

AWBV is a joint venture between Verizon Communications Inc. and AT&T Wireless Services, Inc.

As at 31 March, 2003, Eurotel had 3.95 million subscribers (an increase of 16% yoy) which represents a 44% market share. For the quarter ending 31 March, 2003 (Q1 2003), Revenues and EBITDA were CZK6,804 million and CZK3,518 million respectively which represented an increase of 0.5% and 6.5% over Q1 2002. Capex for the quarter relative to Q1 2002 fell by 3.1% to CZK1,351 million. The net cash position at 31 March, 2003 was CZK 5,829 million. For the 12 months ending 31 December, 2002, Revenues, EBITDA and Capex for Eurotel were CZK 28,800 million, CZK 13,712 million and CZK 4,838 million respectively.

Before the signing of final agreement, the transaction will be subject to approval by the Supervisory Board of CESKY TELECOM and by the shareholders of CESKY TELECOM at the annual general meeting due to take place on June 13, 2003. The transaction will be subject to certain conditions, including approval by the Czech Office for Protection of Economic Competition.

Goldman Sachs International advised CESKY TELECOM on this transaction.

Cesky Telecom a.s.

Eurotel Praha spol. s.r.o.

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