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Telekom Austria Submitted Bid for Telekom Srbjia

Published: March 22, 2011; 00:06 · (Vindobona)

Telekom Austria Group Submits a Conditional € 800-950m Bid for a 51% Stake in Telekom Srbija.

Telekom Austria Submitted Bid for Telekom Srbjia / Picture: © Telekom Austria Group

Today, the Telekom Austria Group  announced that it has submitted a conditional bid in the tender process conducted by the Ministry of Finance of the Republic of Serbia for the sale of a 51% stake in Telekom Srbija a.d., the incumbent telecommunication operator of the Republic of Serbia.

Following a detailed due diligence and evaluation process, the Telekom Austria Group has offered to pay an equity value in the amount of € 800-950m for a 51 % stake in Telekom Srbija a.d.. This offer is, amongst others, conditional to merger control clearance in Serbia resulting in a market consolidation. In addition, this offer is subject to negotiations with the government about certain value creating conditions that will result in an expected enterprise value/adjusted EBITDA 2011 multiple of approximately 4.8x. Moreover, the Telekom Austria Group committed to capital expenditures of € 450m within a three year horizon. These investments are part of the business plan which forms the basis of the above mentioned valuation. This offer does not comply with the requested unconditional minimum price of € 1.4bn for a 51% stake.

The submitted conditional offer compares favorably to a share buyback with respect to cash flow generation per share. The bid value will allow the Telekom Austria Group to remain within the targeted leverage range of Net Debt/EBITDA comparable of 2.0x to 2.5x. Thus, the submitted conditional offer is in line with the Group’s existing cash use policy.

Telekom Srbija is the incumbent telecommunication operator of the Republic of Serbia with operations in Montenegro as well as Bosnia Herzegovina, where Telekom Srbija owns a 65% stake in Telekom Srpske. In the Republic of Serbia, the company offers both fixed and mobile services with a 100% market share in the fixed line and 58% market share in mobile communications. In Montenegro, the mobile market shares of Telekom Srbija amounts to 25% while it has a 2% share of the fixed line market. In Bosnia Herzegovina fixed line market share amounts to 35% and mobile communication market share to 39%. In 2010, Telekom Srbija is estimated to have generated revenues of € 1,157m and an EBITDA of € 483m.