The long-running privatisation of Bulgaria’s monopoly fixed line operator BTC finally looks set to draw to a close before the end of the month following yesterday’s verification by the country’s Communications Regulation Commission (CRC) that all regulatory hurdles surrounding the deal had been cleared.
US private equity firm Advent won the tender for a 65% stake in BTC back in October 2002. As a sweetener to the deal, the government bundled Bulgaria’s third GSM concession in with the stake. However, Advent’s winning bid was rejected shortly afterwards by Bulgaria’s Privatisation Agency (BPA) following protests by the Turk Movement for Rights and Freedoms (MRF) party, which pressed for the shareholding to be awarded to a Turkish consortium led by Koc Holding. Legal battles ensued throughout 2003, with the Supreme Court eventually overruling the BPA’s decision and confirming the US firm as the rightful winner of the stake. Consequently, in February 2004 Advent agreed to pay EUR230 million for the majority shareholding, at the same time agreeing to invest EUR700 million into BTC, EUR500 million of which is to be invested before the end of 2009.
The deal encountered further problems shortly afterwards when Bulgaria’s Supreme Administrative Prosecutor’s Office declared that the award of the GSM concession to Advent was ‘unconstitutional’ on the grounds that there was no element of competition involved. However, after three months of legal wrangling the CRC yesterday announced that the 20-year licence should indeed be awarded to Advent with a price tag of BLG54 million (approximately USD34 million).
Whilst this latest decision by the CRC would seem to bring an end to the long-running saga, there remains the possibility that Bulgaria’s two existing GSM operators, MobilTel (MTel) and Cosmo Bulgaria Mobile (GloBul), could yet challenge the regulator’s decision in court. MTel and GloBul are understandably keen to protect the duopoly position they hold in Bulgaria’s rapidly growing GSM sector; a third operator, Mobikom, is also present, although its analogue NMT-450 network has been in decline for several years. During 2003 the number of mobile subscribers in Bulgaria increased by 55% to just over 3.6 million, in the process pushing the penetration rate to 46%. MTel, owned by a consortium comprising Bayerische Landesbank, BAWAG/PSK and Management Trust Holding, is the largest operator by some way with 2.5 million customers and a market share of almost 70% at the end of 2003. However, rival service provider GloBul, which is wholly owned by Greek operator OTE, has been signing up subscribers at a much faster rate recently. Its customer base increased by 111% to just over a million in 2003 and the company is aiming for 50% of the market by the end of 2004.