Slovenian Stake Sale Hits Speedbump

Telekom Slovenije saw its share price fall by nearly 5 percent Monday morning after the Slovenian government’s finance ministry confirmed that the carrier’s privatization process had come to a standstill.

The Slovenian government plans to reduce its direct and indirect holdings in the national operator to 25 percent by selling a 49.13 percent stake, and had narrowed its list of prospective buyers to just two by late January. (See And Then There Were Two.)

But reports from Slovenia’s Press Agency suggest that both bidders -- Skipti, the holding company that owns Iceland's main carrier Síminn , and a consortium of Bain Capital , Germany's Axos Capital GmbH, and Slovenian outfit BT Globalne storitve d.o.o., an affiliate of BT Group plc (NYSE: BT; London: BTA) -- were unhappy with the possible terms of the investment, and that the Bain-led consortium had even withdrawn its bid.

Then this morning, Slovenia’s Ministry of the Economy announced that neither of the shortlisted parties had met its investment criteria, so ending any hope that a deal might be struck any time soon.

The news sent Telekom Slovenije’s share price down by 4.7 percent to €306.18. About 10.4 percent of the carrier’s shares are traded on the Slovenian stock exchange.

The news comes as Telekom Slovenije, which provides fixed and mobile services to Slovenia’s 2 million residents, reported a 5 percent increase in annual revenues to €785.9 million (US$1.2 billion) for 2007, but a 15 percent drop in net income to €87.8 million ($134 million).

That fall in profit is due mainly to increased investments in new operations and networks. In 2007 the carrier accelerated its fiber-to-the-home broadband rollout, expanded its 3G network in Slovenia, built a mobile network in Kosovo, and made some strategic acquisitions. (See Slovenia Attracts M&A Action, Slovenia Snacks on Fiber Diet, and iPKO Launches in Kosovo.)

— Ray Le Maistre, International News Editor, Light Reading

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