ECONOMY

Prosecutor gives green light to sale of Bulgaria’s BTC to Advent

SOFIA – The Bulgarian chief prosecutor’s office yesterday gave the green light to the planned sale of national telecom operator BTC to London private equity house Advent, raising hopes for completion of the landmark deal. The ruling resolves a legal deadlock over the sale, which the pro-Western government needs completed to boost investors’ confidence in its commitment to reforms and to raise cash in one of the poorest European Union candidates. The State Privatization Agency hailed the prosecutor’s decision, saying in a statement it would allow the agency to restart talks on the sale, suspended by the prosecutor’s office last month, while it reviewed the deal for alleged irregularities. The prosecutor’s office said its checks on procedure showed that the authorities dealing with the sale had «undertaken the necessary measures to protect the national interest.» Advent was also bullish. «We expect to resume talks soon and we believe we will find the best possible options for BTC development in a liberalized telecommunications market,» it said. The State Privatization Agency said last week it would need 30 to 40 days to finalize the deal once talks resumed. In December, the prosecutor’s office suspended the sale and asked the supreme court to declare it invalid, saying that Advent’s acquisition vehicle Viva Ventures, through which it bid for BTC, had not been properly registered. It had also said the sale «did not meet legal requirements for a transparent and economically effective privatization.» Earlier this month, the court approved Viva Ventures as the preferred buyer of 65 percent in BTC, but the sell-off body still needed the prosecutor’s permission to resume sale talks. The BTC sale, repeatedly delayed by previous governments, was launched last March and initially planned for completion in mid-2002. But Advent’s offer has triggered a high-profile debate in Bulgaria about whether the sale should go ahead at all. The fund, selected as preferred buyer over a consortium led by Turkey’s Koc Holding, plans to slash BTC’s work force to 16,000 within three years from about 24,800 and pledges to invest at least 400 million euros over five years. In 2000 at the height of the telecoms boom, the previous administration rejected a bid of $610 million for 51 percent of BTC, including a GSM license, placed by Greece’s OTE and Dutch KPN. Trade unions, the opposition and even some officials say Advent’s price offer, affected by a global sector downturn, is too low, while planned job cuts are too steep. They suggest the sale be abandoned until the telecoms market picks up. But the government’s economic team of young Western-educated technocrats vowed to press ahead with the deal, seen as a test for Sofia’s privatization performance and needed to secure BTC’s growth after it lost its landline monopoly on January 1. BTC, which serves 38 percent of the country of 8 million, expects a 7 percent rise in revenues to 1.03 billion levs ($562.5 million) and a 20 percent increase in net profit to 290 million levs in 2002, according to international accounting standards. The company, which operates 112 telephone lines per employee, compared with a central European average of 240 lines, has long been considered to be in dire need of overhaul.