Telekom Srbjia sale may be cancelled due to lack of interest

The sale of Telekom Srbjia looks set to be cancelled following the likely rejection of the lone bid for a 51 per cent stake in the company. The Serbian government, which owns 80 per cent of the telco, was hoping to raise €1.4bn from the sale; under those circumstances, it seems unlikely that the lone bid of €950m for a 51 per cent stake from Telekom Austria will be accepted.

France Telecom, which had expressed interest in buying into the company, withdrew from the bidding process earlier this year, saying that the price tag was too high. Deutsche Telekom’s Greek subsidiary OTE owns the remaining 20 per cent of the country but did not bid to increase its stake.

Telekom Srbija is the incumbent operator in Serbia, with over 6.3 million subscribers. The Serbian government is expected to announce today whether or not it will accept the lone bid. With Prime Minister Mirko Cvetkovic under massive pressure to balance the country’s books under the terms of an international bailout plan, analyst Goran Saravania told Bloomberg that the government is suffering from “poor expectation management” in terms of a realistic selloff. Out of seven companies that originally registered their interest, Telekom Austria is the only one to make a bid.

If accepted, the  propsed deal would give the Austrian telco almost 100 per cent access to the country’s landline network and up to 60 per cent of the mobile market in Serbia.

Telecom Austria launched VIPnet in Serbia in 2007 and currently holds 17 per cent market share there. Last week, VIPnet announced the completion of its LTE trial in the 800MHz “digital dividend” band. The company expects to launch commercial LTE services in Serbia in 2012.

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