The main building of Post Telecom of Kosovo, PTK. Photo: BIRN.

Kosovo Government initiate procedures for selling Telecom Kosovo

The Kosovo Government agreed on Tuesday to initiate preparations for the privatization of Kosovo Telecom, with international companies already interested in its purchase.

This is the third attempt of the Kosovo Government to complete the privatization process of Kosovo Telecom, following two previous failed attempts in 2011 and 2013.

In a statement given through his Facebook account, the Minister of Economy and Development, Valdrin Lluka, wrote that he asked The European Bank for Reconstruction and Development, EBRD, to be involved in the privatization process of Kosovo Telecom, which would involve EBRD assisting the Kosovo Government in restructuring the company in order to improve its performance.

“In the request I have stated that the Government of Kosovo, according to its governmental plan, foresees the privatization of this enterprise. Additionally, I have made it clear to everyone that before each decision for privatization, the improvement of performance and practices within the enterprise is a priority,” said Lluka.

The Minister indicated that his request to EBRD aims to ensure technical assistance in the restructuring and reorganization phase of this enterprise, and underlined the fact that the Government of Kosovo foresees the privatization of the Kosovo’s telecommunication authority.

According to the minister, EBRD positively responded and expressed its readiness to provide technical assistance in the restructuring phase, providing a loan of up to 25 million euros, and drafting a document over the steps that the Kosovo Government should pursue which would then lead to this enterprise privatization.

Lluka said that the EBRD would ensure the fair evaluation of each privatization offer for Kosovo Telecom, commitment and transparency throughout the process, encouragement of competition and examination of processes and structures within Telecom Kosovo.

Four international companies interested to purchase Telecom Kosovo

Meanwhile, four international companies are interested in buying Kosovo Telecom, regardless of the fact that no open procedure for this sale has been planned.

These companies submitted their request to the Ministry of Economic Development, MED, for the privatization of Kosovo Telecom.

“Companies such as A1 Telekom Austria, Orange, Rockaway Capital of PFF Group and Artillery One showed their interest in the privatization of Kosovo Telecom,” said the reply of the MED to BIRN.

According to the MED, prior to selling Kosovo Telecom, some arrangements must first be met.

“Restructuring the enterprise will be done with EBRD assistance, who will work closely with the Government of Kosovo in order to have proper preparations for this privatization process,” reads the MED’s response.

“All companies will have equal access to the privatization process of Kosovo Telecom,” the reply continued.

The most prominent company in the competition to buy Telecom is Artillery One, a real estate company whose founder and chief executive officer is Daniel Peter Cannon, a US investor. A day before the Kosovo Government made the decision to sell Kosovo Telecom, Prime Minister Haradinaj hosted the heads of this company.  

Senton Kacaniku, a representative of Artillery One, told BIRN that they asked the MED for access to Kosovo Telecom’s financial records in order to assess the value of the company.

According to Kacaniku, the company was interested in the purchase of up to 75 per cent of Kosovo Telecom’s shares, through any procedure that would be recommended by the MED and the Government.

“Only after having done the ‘due diligence’ process could we continue with an exact offer to purchase 75 per cent of Kosovo Telecom shares through any procedure recommended by the MED,” said Kacaniku. “Therefore, we are open either for application for strategic investor status, or through any procedure that the Government of Kosovo would determine in a timely manner,” said Kacaniku.

On the other hand, the MED told BIRN that Artillery One had demanded exclusivity in the privatization and advertising process.

“The above-mentioned enterprise [Artillery One] has put in an expression of interest to the MED to carry out analysis of financial activity, organizational and capital structure as well as the economic and intellectual property assets of this enterprise,” the MED response reads. “In addition, the same has sought after exclusivity during the analysis phase and the absolute priority in any process of privatization or advertising of the aforementioned enterprise.”

According to MED, at this stage, Kosovo Telecom is not open for privatization or advertising. In addition, the Artillery One claim violates  legal rules related to ensuring a free market economy and competition.

Previously, Artillery One had stated that it withdrew its interest in privatizing Kosovo Telecom on the grounds that they did not receive a response from the MED.

The first privatization failure occurred in 2011, when the bid for privatization of Kosovo Telecom was cancelled during the pre-qualification phase, as it was suspected that the bid was rigged and the winner was known in advance.

The company Hrvatski Telekom was convinced that the winner of the bid would eventually be Telekom Austrian AG. Hrvatski Telekom then withdrew from the competition after communicating their understanding that the tender was to be awarded to  Telekom Austria AG.

The second failure occurred in 2013, when the government failed to convince the Kosovo Assembly to approve the sale of Kosovo Telecom to Axos Capital. Axos Capital was declared the winner, sold for the value 277 million euros, , but the contract, according to the winning company, was never implemented. The company sued the Kosovo Government and the trial process is still underway.

Kosovo Telecom has around 2,500 employees whose fate at this stage is not certain. On Wednesday in an interview for KTV, Lluka said that he foresees “an attractive financial package” for those who voluntarily want to leave the post and telecommunications of Kosovo.

24/01/2019 - 10:01

24 January 2019 - 10:01

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