Telekom Austria Gives Up Bid for Bulgaria's Vivacom - ReportBusiness | February 17, 2012, Friday // 09:46| views
Pictured here are the headquarters of Vivacom, which is now the successor of state Bulgarian Telecommunications Company (BTC). Photo by BGNES
Telekom Austria is no longer interested in the sale of Bulgaria's Vivacom, heir to the state-owned Bulgarian Telecommunications Company (BTC), a foreign media report says.
Telekom Austria AG, which already owns Mobiltel in Bulgaria, will not submit a binding bid, Austrian newspaper Die Presse reported.
The company did not submit an indicative offer, but just indicated it is holding talks with BTC creditors.
Die Presse reported in the middle of January that part of Telekom Austria's management was in favor of a takeover, but that Chief Financial Officer Hans Tschuden was not, due to fears that problems in Belarus could repeat themselves in Bulgaria.
Telekom Austria could have faced difficulties with competition authorities and planned to break up the company and sell off Vivacom's mobile business to avoid this hurdle, according to Die Presse.
Vivacom is Bulgaria's third biggest mobile operator. It also dominates the fixed-line segment with 2.9 million phone lines, which accounts for 97% of the market, but it has been losing customers at an alarming rate in recent years, due to the spread of mobile communications and alternative telecoms in the country.
Vivacom - formerly know as the Bulgarian Telecommunications Company (BTC) - has gone through a number of controversial privatization deals.
The long-drawn-out and widely criticized EUR 230 M sale deal for 65% stake in BTC was sealed at the end of February 2004 after nearly two years of procedural predicaments, legal and political battles.
Months later Icelandic businessman Thor Bjorgolfsson bought Viva's stake for EUR 300 M and resold it to the investment company AIG Central Europe for EUR 1.08 B.
AIG Investments acquired 65% of the former state-owned telecommunications firm in May 2007. Then in August the same year it upped its investment to 90%.
Chinese telecoms and media tycoon Richard Li, chairman of Asian telco PCCW, inherited control of Vivacom in March 2010 as part of the acquisition of AIG Investments, a unit of the troubled US insurance group which spans asset management and private equity investments. The unit was renamed Pinebridge Investments ahead of the takeover by Li's Pacific Century group.
Dubai-based Oger Telecom was the closest to taking over the management of the company following negotiations that have dragged on for nearly half a year.
The deal however failed because the final offer was not satisfactory, according to insiders.
Li and Oger have been in a battle over Vivacom for the last few months after it was put for sale by US insurance giant AIG.
The BTC sale was among the top priorities of Bulgaria's centrist government of former king Simeon Saxe-Coburg, which took over in July 2001.
In 2000, the right-wing government of Ivan Kostov declined to sell BTC to the sole bidder consortium of Greek OTE and Dutch KPN which was offering USD 610 M for a 51%, in a package with a mobile licence.
The license, the country's second for a digital mobile telephone operator, was won separately by OTE in a tender in 2000 for USD 135 M.
The nation of 7.7 million people has three mobile operators, which are foreign owned. Mobiltel is controlled by Telekom Austria, Globul is the local unit of Greece's OTE.
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