The Prague Post http://www.aaaradiotaxi.cz/index.php?xSET=lang&xLANG=2
November 22nd, 2008
Prague accommodation

Public offering recommended for Telecom

Stock price falls as investors react to commission's advice to sell off Cesky Telecom

By S. Adam Cardais
Staff Writer, The Prague Post
November 4th, 2004


Shares of Cesky Telecom dropped after a government commission advised the state to sell its 51 percent stake in the company on the stock market.

The commission advising the government on how best to privatize the telecom giant made its recommendation Oct. 26. The stock decreased 5.2 percent to 315 Kc ($12.75) a day later.

Analysts attributed the drop to investor anticipation that a flood of shares on the open market would reduce the price of the stock. The government is expected to make its final decision on the method of privatization later this month.

"It's a natural reaction because if the 51 percent stake is offered on the market there will be a huge supply, so people started to sell short because in the future it might be cheaper," said Jindrich Svatek, equity analyst at Raiffeisenbank.

Cesky Telecom shares have been selling at between 310 Kc to 325 Kc, which analysts consider a relatively low price. Prices could drop further if the government goes ahead with a public offering, said Dusan Jalovy, senior equity dealer at HVB.

Investors have been reluctant to purchase Cesky Telecom stock until after the government makes a final decision. If it does decide on a public offering, investors are betting the price will go even lower.

"The market is only waiting for other information; when this stock will be sold directly," Jalovy said. "Everybody wants to buy this stock, but they are waiting so they don't lose an opportunity."

The current price range is reasonable, but the stock could drop below 310 Kc, dramatically increasing demand, he said.

If the share price does drop, investors will have a short buying opportunity because it is unlikely to stay low for long, Svatek said.

"I would not really expect that the stock will remain depressed for more than a few days," he said.

This is the government's third attempt in two years at privatization. It has the option of selling Cesky Telecom to a single investor or a consortium of investors, offering it on the stock exchange or opting for a combination of the two. It is still uncertain whether the government will take the commission's recommendation or even make its final decision later this month.

There is speculation that the government could postpone the decision until next year to see if it can attract more than the estimated 50 billion Kc it is likely to raise from a public offering.

Information Technology Minister Vladimir Mlynar said Nov. 1, though, that the government would go ahead with privatization talks before the end of the year.

S. Adam Cardais can be reached at acardais@praguepost.com




Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.