Foreign Telcos Set To Mobilize
By Timothy Sifert
Deutsche Telekom's last minute rejection of a proposal to buy the coveted 51 percent stake in Polska Telefonia Cyfrowa (PTC) will hardly put a damper on foreign-investor plans to sweep up majority ownership of the country's profitable mobile assets.
Foreign investors maintain stakes in PTC, the operator of Era mobile network; PTK Centertel, the operator of Idea; and Polkomtel, the operator Plus GSM. And to varying degrees - depending on what day it is - these investors have expressed interest in boosting their stakes to majority holdings. It fails to make sense, analysts say, for these companies to collect dividends on investments, but to also have little influence in business operations.
Now that Europe's telecom operators have chipped away at their own hefty debt loads, companies such as DT, Orange (the mobile arm of France Telecom) and the UK's Vodafone look ready, according to analysts at least, to tighten their hold in Poland by increasing their investments in PTC, Centertel and Polkomtel, respectively.
"I think it's rather inevitable now," says Anna Bossong, head of eastern Europe telecom research at CA IB. She points out that in PTC, and Polkomtel in particular, the local investors are non-strategic partners in the holdings. They add very little strategic value to the companies, as compared to the foreign telecom company investors in the investor base. "They are not very strategic," she adds.
It is expected that, though DT reneged its offer to buy PTC, it is still interested. The rationale behind quitting the deal was that Elektrim failed to reach terms with its bondholders, who were unhappy with a less-than-savory agreement that Elektrim tried to broker. Reportedly, Elektrim was to receive €400 million and Vivendi €691 million from DT. Elektrim Telekomunikacja and Vivendi own a 51 percent stake in PTC and Elektrim owns a 49 percent stake in ET. DT controls 49 percent of PTC.
Bossong notes that Elektrim still has time to negotiate with its bondholders, and within roughly the next year, DT would be able to trim down its debt pile further and free up cash for investment.
Vodafone owns 19.6 percent in Polkomtel and analysts expect that to increase to a majority stake - even though the company declined to comment for this article on the grounds that it never discusses future plans. "Analysts and investors expect this for sure," says Michał Marczak, telecom analyst at BRE Bank.
"They have a strategy to increase their control of companies," he adds, noting that in most of Vodafone's other telecom holdings, it maintains a majority stake. "It's just a question of when, and how much does it cost."
The industry expects the UK mobile service provider to grow its stake in the next two years, at the latest. Danish mobile company TDC also owns 19.6 percent in Polkomtel, but its considered less likely to attempt to invest further, especially because it has fewer cash resources than Vodafone. Analysts add that deal with Vodafone could be hastened by the fact that its other stockholders, such as PKN Orlen and PSE, are willing to sell. Centertel looks to be the least likely of the bunch to change hands.
