Global Insight Perspective | |
Significance | Telekom Slovenije is discussing a loan worth US$508 million, in order to finance acquisitions. |
Implications | The company's primary target is Cosmofon, FYR Macedonia's second-largest cellco, but it is also eyeing opportunities in Bosnia-Herzegovina and Croatia. |
Outlook | For companies with access to credit the current financial climate can create good acquisition opportunities as the sellers under pressure cannot overplay their hands—something which the privatisation of BH Telecom, the Bosnian incumbent, may become a good example. |
Darinka Pavlic Kamien, a Telekom Slovenije spokesperson, has confirmed to Reuters that her company hopes to acquire Cosmofon, the second-largest mobile operator in FYR Macedonia, from OTE. She was quoted as saying that the Slovenian incumbent is "focused on the opportunity in Macedonia" but "also interested in purchases in other states of the former Yugoslavia", adding that Cosmofon is expected to be sold in February or March 2009.
Furthermore, Kamien said that Telekom Slovenije is also interested in buying into BH Telekom—the incumbent of the Muslim-Croat entity (FBiH) of Bosnia and Herzegovina, and currently to be privatised—but did not directly comment on the company's acquisition plans in Croatia, where local media reports have linked it to ISPs Metronet, H1 Telekom, and Optima. According to Reuters, Kamien however said that Telekom Slovenije is "looking for opportunities in Croatia, too".
Telekom Slovenije is currently in talks with various banks to secure a 400-million-euro loan (US$508 million) for acquisitions.
Outlook and Implications
- Usual Suspect: In FYR Macedonia, Telekom Slovenije owns On.Net, the country's second-largest ISP after the local T-Com unit, and has been an almost certain bidder ever since it became clear that Cosmofon would be sold for anti-trust reasons (see FYR Macedonia: 16 September 2008: Telekom Slovenije, Telekom Austria Eyeing OTE's Cosmofon in FYR Macedonia—Report). Besides the Slovenian incumbent and its neighbouring counterpart, Telekom Austria, reports have hinted also Turkey's Turkcell as a potential suitor; last week Turkcell's chief executive confirmed that the firm had been in talks with the seller side.
- Bosnian Bargain: In Bosnia and Herzegovina, as in FYR Macedonia, Telekom Slovenije is active through an ISP subsidiary (see Bosnia and Herzegovina – Slovenia: 25 September 2008: Telekom Slovenije Invests 8.1 mil. Euro in Bosnia; To Be Probed on Market Abuse in Domestic Broadband Market). As regards the privatisation of BH Telecom, Telekom Slovenije has also expressed its interest earlier. The purchase in question may well prove a good bargain for the company which will pull it off, since the FBiH government, having previously wasted too much time on politicking over the privatisation, has awakened to the harsh reality of deteriorating public finances and worsened M&A outlook, and must now sell in haste. This indicates that it cannot risk being too picky about the price (see Bosnia and Herzegovina: 23 October 2008: Muslim-Croat Federation to Sell 51% of BH Telecom to Strategic Investor). As it happens, Telekom Slovenije itself is set to be privatised, but in this case the Slovenian government can afford to play a waiting game and has put the process practically on hold; however, one of the two statutory investment funds with smaller slices is tendering 10% of the company stock (see Slovenia: 12 November 2008: Government's Investment Fund Announces Tender for 10% of Telekom Slovenije).
- And Then to Croatia? Croatia, just east of its home market, would be a new pasture for Telekom Slovenije, but a step rather logical as it attempts to expand its South East European (SEE) footprint. Of the suggested ISPs, Optima Telekom, the market's leading alternative (excluding Iskon, which is nowadays owned by incumbent T-Hrvatski Telekom) would be the biggest fish, with consolidated revenue of 324.6 million kunas (US$58.2 million) in 2007. The company is majority owned by Matthias Martic, the founder, with a stock of 67.73%.