Telenor wins, outbids Mobilkom

Telenor wins, outbids Mobilkom

Thygesen said that Telenor expects a combination of international experience and the Mobi63 employees’ knowledge to benefit Serbian citizens, who will have access to the highest quality communications services.

The bidding started with the price half a billion euros higher than the one set as minimal by the Serbian government. Egyptian operator Orascom immediately dropped out, leaving the field to the Norwegian Telenor and the Austrian Mobilkom. Both bidders stopped at 1,533 million euros, deciding not to accept the final bid even after a ten-minute break.

Telenor won based on the higher initial bid criteria, since their 1,337 million euro bid was higher than Mobikom’s initial 805 million euro offer.

The lowest price for the company owned by the Republic of Serbia and a group of Austrian investors was 800 million euros, consisting of a starting mobile telephony license fee at 320 million euro, and the state share in the Mobi 63, formerly Mobtel network.

The starting price at the auction was the highest price interested parties offered, and was increased by 20 million euros in each round of bidding. The event was open to public, and took place in the Belgrade Hyatt hotel, broadcast directly on state television.

Since the final price exceeded 1,1 billion euros, the Austian minority partner is now obligated to sell its 30 per cent of stock. The new owner will continue to employ all the current personnel.

The Norwegian Telenor currently has around 100 million subscribers in 12 European and Asian countries, and already owns the Montenegrin mobile operator Promonte.

In an interview with B92 Jan Edvard Thygesen revealed the company’s plans for the coming period.

B92: Did you expect the price to be this high?

Thygesen: We are here to stay and this is an investment in the future, we expect to be here for many years and believe this to be the only fair price, the right price, we were ready for it, and it’s fine.

B92: You said, after the auction, that the Telenor quality of services will be available to users in Serbia as early as next year. What did you have in mind?

Thygesen: Well, we have our basic philosophy that includes well-covered territory, high level of service, innovative new services on offer and we will make all this available for our users in Serbia.

B92: Serbian users expect a change in tariffs, hopefully lower tariffs - can you promise that?

Thygesen: The prices is very important, naturally, and our packages will be competitive, but we are not certain about exact figures at his time. We will see what the market and the competition will look like in the future”.

B92: When can the users, your clients in Serbia, expect first obvious signs of Telenor’s presence in the market?

Thygesen: I believe you will notice improvements in the first year of our activities.

B92: Austrian Mobilkom also took part in the auction, and have already announced they will try to obtain the country’s third license.

Thygesen: We are used to competition, we are successful, we have 100 million subscribers, and should there be three operators in Serbia that is fine by us.

B92: You operate in Hungary and in Montenegro, what are your experiences?

Thygesen: Well, we have been in the region for the past ten years. We have operations in the Ukraine, Hungary, Montenegro and now in Serbia. We are considering expanding and that is our strategic focus.

Mobi63 is a company established in April this year. Until yesterday, the state owned 70 per cent while the Austrian consortium headed by Martin Schlaff owned the remaining 30 per cent. Since the final price exceeded € 1,1 billion, Schlaff will have to sell his share in the company to Telenor. “I am not disappointed. The price is well above my expectations, well above. Whatever’s good for the seller, good for the government, is good for me”, Schlaff commented.

Positive reactions

Serbian Prime Minister Vojislav Koštunica said that with the sale of Mobi 63, the Government has shown the power of a lawful state at work and given results that will be positive for all of Serbia’s citizens and the state.

“The news that Mobi 63 has been sold for more than 1.5 billion euros will be heard around the world and this good news speaks best to foreign investors that the Serbian market and the Serbian economy are the right place for investments. I congratulate the Norwegian Telenor company and I welcome them to Serbia.” Koštunica said.

Democratic Party of Serbia official Andreja Mladenović said that the sale of Mobi 63 to Telenor will be a positive signal for other foreign investors in Serbia.

“This investment shows that the Norwegian company believes in the political stability of Serbia, and that the nation is edging closer to the European Union, that it is progressing and that good things are happening.” Mladenović said.

Serbian Finance Minister Mlađan Dinkić said that these kinds of investments will be felt by all of Serbia because the economy will grow stronger, employment will increase and Serbia will develop faster.

The Democratic Party called on the Serbian Government today to release information on the complete transactions behind the sale of Mobi 63 and how much the state gained from the sale.

“The Government needs to get this information into the light of day; how much money Schlaf invested in Mobi 63 and how much Bogoljub Karić received from the sale,” according to the party.  

Democratic Party official Đorđe Todorović said that it is good that Telenor won the auction and that the party supports the entrance of the Norwegians into the Serbian market, who have in the past shown themselves as good investors and business partners.

Foreign Economic Relations Minister Milan Parivodić said that the sale of Mobi 63 is the largest foreign investment made in Serbia, which overshoots all of last year’s investments combined.

Parivodić said that he expects that foreign investments will reach 3.5 billion euros by the end of 2006, which will be more than twice the amount received last year.

As far as important pending privatisations are concerned, he is also expecting that the Vojvođanska Bank will be sold for about 385 million euros this year.

Parivodić also expects that the prices of mobile phone service will fall because of Telenor and the fact that competition in the telecommunication market will be much stiffer.

Serbian Economic Minister Predrag Bubalo said that the price for which Mobi 63 was sold exceeded all of his expectations.

The bidders

Telenor, the Norwegian telecommunications company is in business in 12 European and Asian countries, owns the Montenegrin operator Promonte and has around 100 million subscribers. According to the Orascom telecom official web site, the company does business in Egypt, Algeria, Pakistan, Tunisia, Iraq, Bangladesh and Zimbabwe, and has had around 17,5 million subscribers at the start of 2005. Mobilkom Austria has nine million subscribers and beside the domestic, covers the markets of Lichtenstein, Slovenia, Croatia and Bulgaria, where they have acquired the company previously owned by the Martin Schlaff group. It was precisely this group that bought BK Trade, Bogoljub Karić’s company, in order to facilitate Mobilkom’s takeover of Mobi63 (previously Mobtel). Schlaff never revealed the price tag on Karić’s company, but he did say he was “conned” by Karić who withheld the information regarding possible revoking of Mobtel’s license to operate.