Dialog expects investor deal this year

Telefonia Dialog expects to finalize a contract with one or two investors by the end of the year, Katarzyna Muszkat, the company's president told the WBJ last week. Dialog's owner, state-controlled copper and silver concern KGHM Polska Miedź, has searched for an investor for its indebted telecom for about a year and a half. Based in Wrocław, Dialog is the second-largest independent fixed-line operator in Poland and has more than 330,000 individual and corporate subscribers. But with about zł. 1.23 billion ($308 million) in debt, Dialog has been unable to attract investors. "The market is not like it used to be two or three years ago, and we cannot expect it to improve soon," Muszkat said. "It has become shallow, and there are only a few investors willing to enter IT and telecom companies."

Muszkat declined to comment on recent local press accounts that Deutsche Telekom had held acquisition talks with KGHM. The reports said that Telekom halted the negotiations due to its own financial problems. Telekom, which owns a 45% stake in Polish mobile operator Polska Telefonia Cyfrowa (PTC), has about €67 billion ($63.65 billion) in debt from costly acquisitions and purchases of mobile phone licenses. Muszkat also said that previous reports that Dialog signed a letter of intent with British firms CVC Capital Partners and Spectrum Equity Investors were untrue. "Until we finalize the talks with our potential partners we can reveal neither their names nor the stage of negotiations," she said, adding that the prospective investors could be from outside the telecoms and IT sectors. She also said that this week Dialog would issue a shortlist of candidates for the position of investment consultant. Wojciech Marciniak, KGHM's investor relations director, said he had no information about the talks.