Банкеръ Weekly



The procedure for the sale of the Bulgarian Telecommunications Company (BTC) will be opened on April 2, Apostol Apostolov, Executive Director of the Privatisation Agency (PA) announced at a press conference in the middle of the week. It will be late regarding the term in the strategy for the telecom's privatisation. The reason, according to Mr. Apostolov is purely technical.One of the specific moments before opening the sale procedure for BTC is the license for a third local GSM-operator. It has been included in the strategy on the telecom's privatisation and according to Deutsche Bank's consultants is the sweet course of the deal. However, there are at least two major problems here. The first one is the vagueness regarding the procedure for granting that licence. There are different stances in the expert team working on BTC's sale. Some of the experts insist that the third licence for a GSM-operator should be granted through a separate open bidding tender. This would guarantee the highest price for the mobile phone licence, which only the top world operators could afford. The level of USD135MN, reached in the deal for the second GSM-licence cannot be even approached. A summarized analysis of the domestic mobile telephone market and of the economic situation in the country outlines the possible price for the third local GSM-licence in the range between USD25-27MN.But such an option would deprive BTC from the sweet course, for which the consultants insist. In fact, all natinal telecoms, divested over the last dozen of years in Bulgaria's neighbour countries, owned a GSM-licence as well.The possibility that some of the big operators who have decalred interest in BTC would bid for the mobile telephone licence only, should not be reuled out. Thus, not so experienced and serious candidates may remain to bid for the telecom.If the GSM-licence is granted to BTC's buyer (as it is written in the strategy for the telecom's privatisation, approved by paliament) it is not very likely to achieve an acceptable price for the package. And it will be much more difficult for the Government to expalin the eventual low price, especially having in mind the recently heated atmosphere.The is a compromise option as well. During the second round of the tender procedure the deal on BTC's sale could be sepaarted from that on the GSM-licence. Then only candidates whose offers have been approved by the Government during the first round of the tendet would be allowed to bid for the GSM-licence. The experts are presently drafting a detailed procedure for BTC's sale and the start of the deal is postponed for that reason, opundits claim.The other big problem is the Mobikom case, which is still open after the first attempt for the sale of the national telecom. If the future owner of BTC wants a licence for a third GSM-operator, it should buy out the share of the British Cable Wireless in the Radio Telecommunications Company (RTC), which opeartes the analogue mobile network Mobikom. The partners in RTC are: the British company, with a 49% stake; Radio Electronic System (an enterprise within the system of the Ministry of Internal Affairs), with a 12% stake, and BTC, with 39% share. Under article 16, item 4 of RTC's Articles of Association, each of the partners pledges not to carry out on its own activities that compete with the common cellular mobile system unless it has its partners' written permission. If the future BTC owner wants a licence for a third GSM-operator it will have two possibilities. One of them is to get a written permission from Cable Wireless for carrying out competitive activities. This possibility can be entirely ruled out. The second one is to buy out the share of the British company in the RTC through trade negotiations that are normal for such a deal. The agreed price will be a part of the real investment of BTC''s future owner and holder of the third GSM-operator licence. This would in fact lower BTC's price for Bulgaria.It is another question how attarctive RTC is at present. According to official statements of company's officials, the task for 2002 is to retain teh analogue network by developing money-making activities - INTERNET and Mobika (street telephones, operated by phone-cards). The analogue network is still functioning but the number of its subscribers has dropped below 100,000. Most of them keep their mobile phone just in case they may need it and rarely use it. Thus, RTC's proceeds from mobile telephones have dropped below the critical minimum which is necessary for maintaining the network. The company did not succeed to gain strong a strong position on teh aggressively developing INTERNET market and remained far behind Bulfon in installing street card-operated telephones. So, RTC could hadly boast of good and attractive financial performance. RTC's analogue network is valuable mostly as a possible step for the development of the third GSM-operator. The company has premises for telephone exchanges, a distribution network with qualified personnel, and a well-developed billing system for preparing and checking subscribers bill. But the 49% stake of the British company would be very costly to the future BTC owner. During the first attempt for the sale of Bulgaria's telecom in 2000 the consortium between the Greek OTE and the Dutch KPN had agreed with Cable Wireless to buy its share in Mobikom at between USD40-50MN, pundits claim. OTE also held negotiatiosn with the Britsh company after winning the licence for a second GSM-operator in Bulgaria, but no deal was reached then because the high price, demande by the British.

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