Government to Sell 12.6% of Albanian Mobile Communications

The Albanian government has said in a statement on its website that it will sell its 12.56% share in Albanian Mobile Communications (AMC) via a one-stage public auction. Potential bidders are requested to express their interest by 20 November 2008, after which the seller will pre-qualify them according to their ability to finance the purchase and complete the transaction in a timely manner. The qualified bidders will then be invited to submit their binding bids by 19 December 2008.

AMC's majority owner is OTE, which holds 85% of the company's stock. Over and above the government's share of 12.6%, the remaining 2.4% is owned by other minority shareholders such as former employees.

Outlook and Implications

• Going Private: AMC—the market's first mobile licensee—was first privatised back in mid-2000 when a joint venture of Telenor and OTE's CosmOTE clearly outbid (with US$85 million) another consortium comprised of Panafon and Vodafone (US$40 million). Unwilling to remain a minority shareholder in its Greek partner, the Norwegian company subsequently sold its ownership in CosmOTE to OTE, the parent company that itself recently became part of the Deutsche Telekom group (see Germany – Greece: 3 October 2008: EU Approves Deutsche Telekom's Control in OTE). This latter stage of the privatisation reflects the policy of Prime Minister Sali Berisha and his cabinet to sell the minority stakes that the government still holds in former state-owned companies—which would indicate that the 24% slice that the government retains in Albtelecom, the fixed-line incumbent privatised in 2007, will also be put up for sale soon (see Albania: 20 June 2007: Albanian Government Sells Albtelecom to Turkish Consortium). In terms of the AMC auction, Global Insight expects it to be largely a formality as acquiring the government's pot would make little sense to companies other than OTE and Deutsche Telekom. The same rationale will apply to the situation as and when the government decides to exit Albtelecom—the tandem of Calik Enerji and Turk Telekom the most likely to increase ownership.

• The End of Duopoly: AMC is the largest operator in the Albanian mobile market. Its subscriber base at mid-2008 stood at 1.28 million, up 17.4% year-on-year (y/y) and ahead of Vodafone's 1.16 million. Over the same period, ARPU dropped one euro to 13 euro and is set to see a further decline as the arrival of the third mobile operator—Eagle Mobile, run by Albtelecom—eats into the former duopoly's disproportionately high revenues (see Albania: 29 August 2008: Albanian Mobile Communications Subscriber Base at 1.28 Million at Mid-2008, Remains Market Leader). The regulator has also slashed AMC and Vodafone's termination rates by 20%, which will erode their price-setting power further, and said that it will attempt to license a fourth operator by the end of 2008 (see Albania: 3 September 2008: Phone Tariffs to Finally Go Down in Albania; Regulator Hints on Fourth Mobile Licence). This licensing process was planned to start in October 2008, but has been postponed; we expect the regulator to disclose more details during November 2008.