Eurobites: Who's Eatin' Whom

With Christmas trees packed away and the standard New Year's resolutions (take longer lunches, let phone calls ring through to voicemail, be nastier to the junior staff) still intact, Europe's carrier executives are back to business and looking at ways to splash their investors' cash around in 2005.

But it's not all M&A activity. There are job cuts, regulatory spankings, and courtroom drama to get Euroland's nouveau année off to a cracking start.

Czecking Out Cesky
There seems to be growing carrier interest in the upcoming €2 billion ($2.6 billion) privatization of central European powerhouse Cesky Telecom a.s.

Early last December, fellow national operators France Telecom SA (NYSE: FTE), Swisscom AG (NYSE: SCM), and Denmark's TDC A/S had expressed an interest (see Euro Carriers Go Xmas Shopping).

Now, says Cesky, Spain's Telefònica SA, Scandinavian giant TeliaSonera AB (Nasdaq: TLSN), mobile megilla Vodafone Group plc (NYSE: VOD), and three investment firms have also registered their interest in the Czech government's 51 percent stake.

In addition, the Belgian business press reports that Belgacom (Euronext: BELG) is also sniffing around, but hasn't yet requested any tender documents (and those documents can be very tender, you know).

Initial bids for Cesky need to be filed by February 3.

Belgacom Hedges Its Bets
The Czech Republic isn't the only country Belgacom has its eyes on, allegedly. The Belgian incumbent has requested tender documents for the sale of 55 percent of Turkey's fixed-line monopoly Turk Telekomunikasyon A.S., along with Telefònica, Deutsche Telekom AG (NYSE: DT), and Telecom Italia SpA (NYSE: TI), according to Turkish newspaper Milliyet.

The Turkish Privatization Authority will vet potential bidders up to January 11, then bids from those that pass the beauty contest are due in by May 31. Analysts estimate the stake is worth about $2 billion. In 2003, Turk Telekom's revenues were about $4.8 billion.

That's not the end of Belgacom's comings and goings, though. The operator has been seeking a partner for its international wholesale operations, and it looks likely that a joint venture deal with Swisscom could be announced soon, though neither party is commenting on the matter.

Some observers, however, are convinced that if the Belgians and Swiss are destined to collaborate on anything, it should be on making the world's finest chocolates -- a far tastier proposition.

Buying Into the Balkans
Hungary's national operator Magyar Tavkozlesi RT (Matáv Group) is the favorite to win the bidding war for a majority stake in Telekom Crne Gore, the national fixed and mobile operator in the small Eastern European country of Montenegro.

Matáv, 59 percent owned by Deutsche Telekom, is facing increasingly competitive pressure on its home turf and is looking to expand its business in neighboring countries and the Balkan region. Telekom Crne, known to its mates as Telecom Montenegro [ed. note: because no one can pronounce "Crne"?], fits the bill perfectly. It has a neat and compact operation (191,000 fixed, 190,000 mobile, and 70,000 dial-up Internet customers), and generated earnings before tax and costs of €22.8 million ($29.8 million) from revenues of €72.1 million ($94.2 million) in 2003.

Matáv, meanwhile, pulled in about €1.8 billion ($2.3 billion) in revenues in the first nine months of 2004.

Matav isn't saying how much it bid, but reports from Montenegro suggest the Hungarian carrier bid €114 million ($149 million), and pledged about the same again for future investment and a share buyback scheme.

If its bid is accepted, the acquisition will give Matáv a presence in the Balkans that could lead to bids for Serbia's fixed and mobile operators, which are due to be privatized by the Serbian government this year.

Other carriers that bid for Telecom Montenegro include Mobilkom Austria AG & Co. KG, Telekom Serbia, and Telekom Slovenije (Slovenia).

Austrians Pump Up a Warchest
As mentioned in previous Eurobites, another carrier planning acquisitions in Eastern Europe is Telekom Austria AG (NYSE: TKA; Vienna: TKA), which broke off its engagement to Swisscom last year (see No Merger for Euro Carriers and EuroBites: News Snacks From the EU).

Now it's planning to raise €1 billion ($1.3 billion) from the sale of bonds to fuel its expansionist tendencies (see Telekom Austria to Raise €1B). It recently acquired Bulgarian mobile operator Mobiltel for €1.6 billion ($2.1 billion), and now wants to extend its tentacles into Serbia and Bosnia-Herzegovina.

Poles apart
"Happy New Year" is not a greeting likely bandied about much at Poland's national incumbent Telekomunikacja Polska SA this week. And no, not simply because they don't speak English there. This week, the operator, in which France Telecom SA (NYSE: FTE) owns a 47.5 percent stake, announced it will cut 3,500 jobs in 2005.

The carrier, which cut nearly 6,000 jobs in 2004, currently has about 36,000 on staff (see France Telecom Cuts 7% of Staff). When France Telecom took control of the Polish operator in 2000, it employed about 70,000 people.

All's Fine at KPN
KPN Telecom NV (NYSE: KPN) has been fined €450,000 ($587,000) by the Dutch regulator OPTA for being naughty.

Just like fellow incumbent Telecom Italia, KPN offered discounted services to business users when it wasn't supposed to (see Eurobites: I Heard a Rumor…). When it realized its "mistake," it fessed up and shifted the head of its fixed-line division, Eelco Blok, into another top-level job (see KPN Completes Internal Probe). So that taught him a lesson.

The fine won't make too much of a dent in KPN's finances, just as the €152,000 ($198,390) penalty Telecom Italia received was hardly a major financial blow (see KPN Reports Q3 Results).

Finns Face Snooping Charges
This one keeps running and running. Just this week, and more than two years after the incident first reared its head, the former head of Finland's national operator Sonera, now TeliaSonera, has been charged along with five others with violating the country's communications secrecy laws (see Sonera Slammed Up).

Sonera's former CEO, Kaj-Erik Relander, has denied the charges, which stem from allegations of internal monitoring of phone calls and emails at the carrier as senior staff tried to uncover the identity of a "mole" who was feeding information to the business press. Relander and his five co-defendants face up to three years in prison if found guilty.

Now, that's what we call a real punishment.

— Ray Le Maistre, International News Editor, Light Reading

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