Telekom Austria had offered €950 million for a 51% controlling stake in Telekom Serbia, and promised to invest another €450 million in the business in the future. This proved to be insufficient to close the deal, with the Serbian authorities keen to make the €1.4 billion they had earlier specified as the lowest acceptable price for the sale. Telekom Austria has been given a short period to come up with an improved offer or to relinquish its interest.
Telekom Austria was in the end the only bidder in the tender, and if successful would have gained access to almost all of Serbia’s landline network and about 60% of its mobilephone market.
At one point earlier in the year it looked as though several bidders would table an offer for the stake, including Deutsche Telekom, France Telecom, America Movil, Orascom, VimpelCom and Turkcell. At present, the Serbian government owns 80% of the company and Greek telco OTE the remainder.
The Serbian government is believed to be highly reliant on the sale of the telco, having already projected the full specified price into its 2011 budget. If unable to realise this price it may have to fall back on further borrowing in order to meet its commitments. It has faced a great deal of pressure from within the country, especially from trades unions, to cancel the sale altogether.
Telekom Austria already operates mobile networks in seven eastern European nations. It is already the third biggest mobile operator in Serbia, with its Vip Mobile brand accounting for 14% of the market. Telekom Austria decided last year to converge its fixed and mobile phone divisions in Austria to reduce costs, and bought two cable operators in Bulgaria last summer.
