ECONOMY

Telecom Italia pulls out of Serbian venture

BELGRADE (Combined reports) – Serbia’s Prime Minister Zoran Djindjic said yesterday the State had reached a good deal in repurchasing a 29-percent stake in Telekom Srbija from Telecom Italia, but it had no plans to buy out the remaining minority stake held by OTE. Telecom Italia announced the deal on Saturday to sell its stake for 195 million euros ($202.5 million). It had acquired it for $497 million. OTE had bought 20 percent for $425 million, and Serbia’s state-owned monopoly PTT had held a controlling 51-percent stake. The sale was the largest single privatization during the rule of Slobodan Milosevic. Djindjic said payment was divided into two parts – 120 million euros would be paid in four equal monthly installments starting from January, and the rest over six years, of which the first three years would not carry any interest. The premier said that the settled amount included some 100 million euros claimed by Telecom Italia as outstanding debts. He added that the company’s operations had been impeded with three partners and that the new ownership structure would enable it to develop more rapidly. PTT General Manager Srdjan Blagojevic said that the first part of the payment would be financed solely through domestic banks. Telekom Srbija’s shares would be put up as guarantee. Djindjic said though PTT now had an 80-percent stake in the company, it had promised the Greek partner it would protect its minority rights. «We have no ambition to purchase the remaining 20 percent of the stake,» he told a news conference. He said that despite difficulties Telekom Srbija had registered a profit of some 55-60 million euros in 2002 and expected to earn 100 million euros in 2003. Part of the profits would be invested in development and part would be earmarked to pay for the purchase. In a statement, Telecom Italia said OTE has 60 days to exercise its right of refusal in the deal. The Serbian government had long tried to revert the 1997 sale, Djindjic said. The turning point came last year when prosecutors in Turin, Italy, launched an investigation into accusations that unspecified Italian businessmen involved in the deal received millions of dollars in kickbacks. «We had meetings with Italy’s Prime Minister (Silvio) Berlusconi who said that the Italian side was ready to withdraw from Telekom Serbia,» Djindjic said. «It has been very fortunate for us that their venture has become controversial and that they decided to pull out.» He also promised to cooperate with Italian prosecutors in the kickback investigation. «Certain persons will be implicated, both in Italy and in this country,» he said. Lamberto Dini, Italy’s foreign minister in 1997, has denied allegations that he was too friendly with Milosevic or that he was involved in irregularities surrounding the deal. (Reuters, AP)