Polkomtel shareholders to award investment bank early Christmas present
Last week Polish shareholders announced that they had trimmed a list of candidate investment banks to six. At the same time, the group has also short-listed two law firms to advise on the sale. The law firm and the investment bank chosen by the shareholder group would aid in transacting the sale of a roughly 61 percent stake in the mobile operator. CDM Pekao recently valued Polkomtel at zł.12.1 billion.
"All I can say now is that there are six banks and two law firms," said Regina Wegnerowska, spokeswoman for Polish Power Grid (PSE), which owns 16.05 percent of Polkomtel, the operator of Plus GSM brand. "Maybe we will select the firms by December 20."
She declined to give a reason why the particular date of December 20 was given priority.
As it now stands, JP Morgan, Rothschild, Credit Suisse, First Boston and ING together with Lazard, Citigroup and ABN Amro are all vying for the advisor post. Law firms Dewey Ballantine and Salans, Hertzfeld & Heilbronn are competing as well.
The deal is billed to be a lucrative one not only for the selected bank and law firm, but for the shareholders as well. The Polish shareholders include PSE, PKN, Weglokoks, Tel-Energo and Tel-Bank. Though Polkomtel has generated much-needed revenues for the shareholders, they are looking for an exit strategy because the mobile company does not fit into its core operations.
A sale would allow them to focus on their main operations and clean up their balance sheets.
Once a bank has been selected, analysts expect the stake to eventually be sold to Vodafone and TDC. Both TDC and Vodafone have expressed interest in jointly increasing their share of Polkomtel. The two foreign telecom operators each own 19.61 percent in the company.
"We are interested in buying Polkomtel at the right time and at the right price," says Kim Schaumann, TDC spokesman. He adds that TDC would likely work with the UK's Vodafone on the deal.
He declined to offer further details, but other market watchers believe TDC plans will eventually come to fruition.
Andrzej Kasperek, analyst at BM Banku Handlowego, says that although there would be a few institutions interested in buying the asset, it would land in the hands of Vodafone, along with TDC.
"From the buyer perspective there might be a few interested," says Kasperek. "It all depends on the prices. But Vodafone has shown interest from the beginning and I don't think that Vodafone would let another buyer take control."
He explains one possible scenario in which a private equity or buy-out firm could buy the shares and serve as a "parking space" for Polkomtel until Vodafone and TDC have enough capital to take control. It is more likely, however, that the British and Danish operators would find the capital to buy Polkomtel outright.
But analysts note that the longer prospective buyers wait, the higher they will have to pay for the stake in Polkomtel. This is particularly pressing because Polkomtel's performance is developing into a success story.
In the first nine months of this year the operator recorded zł.544 million in net profits. Also, the company increased its number of clients in the third quarter by 12 percent, compared to a year earlier.
Kasperek says that BM Banku Handlowego does not publicize its in-house valuation of the company, but that the firm should be worth slightly more than Polska Telefonia Cyfrowa (PTC). "We don't have any specific valuation," he says.
He explains that while PTC, the operator of Era, is a larger company than Polkomtel, its balance sheet is not as sound. "That should give it a higher premium," Kasperek says. But the deal is still in its early stages and various valuations have surfaced, he adds.
CDM Pekao gave PTC a zł.13.2 billion valuation. And that valuation, however accurate, is set to rise with the growth of the mobile market.
"Mobile telephony is set to grow at a much faster pace than fixed line," Kasperek notes.
"All I can say now is that there are six banks and two law firms," said Regina Wegnerowska, spokeswoman for Polish Power Grid (PSE), which owns 16.05 percent of Polkomtel, the operator of Plus GSM brand. "Maybe we will select the firms by December 20."
She declined to give a reason why the particular date of December 20 was given priority.
As it now stands, JP Morgan, Rothschild, Credit Suisse, First Boston and ING together with Lazard, Citigroup and ABN Amro are all vying for the advisor post. Law firms Dewey Ballantine and Salans, Hertzfeld & Heilbronn are competing as well.
The deal is billed to be a lucrative one not only for the selected bank and law firm, but for the shareholders as well. The Polish shareholders include PSE, PKN, Weglokoks, Tel-Energo and Tel-Bank. Though Polkomtel has generated much-needed revenues for the shareholders, they are looking for an exit strategy because the mobile company does not fit into its core operations.
A sale would allow them to focus on their main operations and clean up their balance sheets.
Once a bank has been selected, analysts expect the stake to eventually be sold to Vodafone and TDC. Both TDC and Vodafone have expressed interest in jointly increasing their share of Polkomtel. The two foreign telecom operators each own 19.61 percent in the company.
"We are interested in buying Polkomtel at the right time and at the right price," says Kim Schaumann, TDC spokesman. He adds that TDC would likely work with the UK's Vodafone on the deal.
He declined to offer further details, but other market watchers believe TDC plans will eventually come to fruition.
Andrzej Kasperek, analyst at BM Banku Handlowego, says that although there would be a few institutions interested in buying the asset, it would land in the hands of Vodafone, along with TDC.
"From the buyer perspective there might be a few interested," says Kasperek. "It all depends on the prices. But Vodafone has shown interest from the beginning and I don't think that Vodafone would let another buyer take control."
He explains one possible scenario in which a private equity or buy-out firm could buy the shares and serve as a "parking space" for Polkomtel until Vodafone and TDC have enough capital to take control. It is more likely, however, that the British and Danish operators would find the capital to buy Polkomtel outright.
But analysts note that the longer prospective buyers wait, the higher they will have to pay for the stake in Polkomtel. This is particularly pressing because Polkomtel's performance is developing into a success story.
In the first nine months of this year the operator recorded zł.544 million in net profits. Also, the company increased its number of clients in the third quarter by 12 percent, compared to a year earlier.
Kasperek says that BM Banku Handlowego does not publicize its in-house valuation of the company, but that the firm should be worth slightly more than Polska Telefonia Cyfrowa (PTC). "We don't have any specific valuation," he says.
He explains that while PTC, the operator of Era, is a larger company than Polkomtel, its balance sheet is not as sound. "That should give it a higher premium," Kasperek says. But the deal is still in its early stages and various valuations have surfaced, he adds.
CDM Pekao gave PTC a zł.13.2 billion valuation. And that valuation, however accurate, is set to rise with the growth of the mobile market.
"Mobile telephony is set to grow at a much faster pace than fixed line," Kasperek notes.
