Business News

Strict Commitments Proposed for Prospective Telekom Buyers

Ljubljana, 25 October (STA) - Minister of Education, Science and Sport Jernej Pikalo has demanded commitments for high investments in infrastructure in a letter addressed to the state-owned SOD fund in advance of the privatisation of the telecoms incumbent Telekom Slovenije, quoting $protection of the public interest$.

The minister demands that the sales agreement include a series of non-price requirements, including a commitment by the buyer that it will invest in infrastructure so that all Telekom subscribers have access to 100 Mb/s internet speeds by 2017.

The strategic investor would also be bound to expand broadband coverage to "white space" in rural areas in proportion to Telekom's share of the market for fixed-line broadband access.

The two requirements should be financially evaluated at EUR 200m over three years, according to the letter released on Friday.

These commitments should be secured with stock options, the minister has proposed.

The minister also seeks to insert a requirement that Telekom must be bought by a company that is the biggest member of its group, not a subsidiary.

It is as yet unclear how much weight the minister's proposal has, but the demands are in line with the general apprehension about privatisation in the ranks of the coalition Social Democrats (SD), of which the minister is a member.

The party had initially demanded that infrastructure be spun-off from the parent company, with the letter signalling it might have given up on this idea.

The sale of Telekom, the biggest of the 15 state-owned companies slated for privatisation, is in its initial stages.

Shareholders holding almost three-quarters of Telekom stock signed a shareholder agreement in late August and the selection of a financial consultant is under way.

SOD is managing the sale but it holds only 4.25% of Telekom directly; the state still has a 62.54% direct stake in what is Slovenia's biggest telecoms firm.

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