Telekom Austria has made an indicative bid to acquire 51 percent in Telekom Srbija for EUR 800-950 million. The offer is well below the requested minimum bid of EUR 1.4 billion in the government's tender of its stake in the incumbent operator. Other operator's such as Turkcell, Deutsche Telekom and Vimpelcom were reportedly interested in the operator but dropped out ahead of the deadline of 21 March for offers. The Austrian operator said its offer is conditional on a number of issues, including clearance from the regulator as it already operates the second-largest mobile operator in Serbia, Vip. If the conditions are met, the offer would represent an enterprise value of 4.8 times expected 2011 EBITDA at Telekom Srbija. In terms of cash flow per share, Telekom Austria said the acquisition compares favourably with a share buyback. Telekom Austria also pledged to invest EUR 450 million in Serbia over the next three years if its offer is accepted. Telekom Srbija controls the local fixed market and leads the mobile market, as well as operating in Montenegro and owning a 65 percent stake in Bosnian operator Telekom Srpske. In 2010, Telekom Srbija is estimated to have generated revenues of EUR 1.157 billion and EBITDA of EUR 483 million. The Serbian government, which earlier threatened to cancel the auction if its price was not met, now has five days to respond to the offer. Unions at Telekom Srbija have protested the sale, saying the government should first in invest in the company. Greek operator OTE, controlled by Deutsche Telekom, already holds a 20 percent stake in Telekom Srbija, and has expressed interest in selling its stake if the right price is agreed.
