Four Bidders to Vie for Bulgaria's Vivacom - Report

Business | March 1, 2012, Thursday // 13:50| Views: | Comments: 0
Bulgaria: Four Bidders to Vie for Bulgaria's Vivacom - Report Vivacom - formerly know as the Bulgarian Telecommunications Company (BTC) - has gone through a number of controversial privatization deals. Photo by Sofia Photo Agency

Three binding bids have already been submitted for Bulgaria's telecom Vivacom and one more is expected within days, local media reports say.

Tsvetan Vassilev, the head of Bulgaria's Corporate Commercial Bank, and Icelandic businessman Thor Bjorgolfsson have made bids for Vivacom, heir to the state-owned Bulgarian Telecommunications Company (BTC), Capital daily reported, citing insiders.

The third bidder to meet the February 27 offer deadline is Pamplona Capital Management LLP, a London-based private equity firm, according to the newspaper.

The amount of the bids was not disclosed.

Turkey's biggest mobile phone company Turkcell, the only strategic investor, which was allowed to conduct a legal and financial due diligence at Vivacom, is expected to submit its bid in days, according to the article.

The delay was caused by logistic hurdles and not by a shift in the company's plans, the unnamed sources said.

The deadline for submitting binding bids, initially set at February 17, was extended by ten days at the request of one of the potential bidders, who needed more time to take a definitive decision.

Last month reports emerged that Telekom Austria AG, which already owns Mobiltel in Bulgaria, may be interested in Vivacom sale, but the information was eventually denied.

Turkcell, Turkey's biggest mobile phone company by subscribers, whose largest shareholder is the Scandinavian operator TeliaSonera, was the only potential bidder that officially declared its interest in the Bulgarian telecom.

The second bidder - the head of Bulgaria's Corporate Commercial Bank - is believed to finance the media group of mogul Irena Krasteva.

Icelandic businessman Thor Bjorgolfsson, who sold BTC to its current owners in 2007, is the third potential bidder for the telecom.

In this venture Bjorgolfsson has reportedly teamed up with Greek investor Panos Germanos, owner of the eponymous mobile phones chain.

At the beginning of 2006, right after the privatisation of Bulgaria's main telecom operator, Icelandic mogul Thor Bjorgolfsson acquired an option to buy a 100 % stake in Vienna-based Viva Ventures, which owned 65% in BTC. Later on the businessman bought another 25% stake with compensation instruments, raising his stake in BTC to 90%.

The acquisition of a majority share in BTC made Thor Bjorgolfsson the biggest private foreign shareholder in Bulgaria.

In September 2005 Thor Bjorgolfsson acquired 34% of Bulgaria's Economic and Investment Bank (EIBank). At the time he also owned three pharmaceutical plants in Bulgaria after he bought Balkanpharma, which later became Actavis.

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 Bulgaria's telecom operator 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 of 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.

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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Tags: Pamplona, Globul, OTE, Mobiltel, Tsvetan Vassilev, Corporate Commercial Bank, Turkcell, turkey, Telekom Austria, Vivacom, Richard Li, Bulgarian Telecommunications Company, BTC, PCCW, AIG, Oger Telecom, Thor Bjorgolfsson, capital, management
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