ECONOMY

Advent wins from loosening of BTC privatization knot

SOFIA (Reuters) – Bulgaria said yesterday it would sign a deal with US private equity firm Advent by February 20 for the 230-million-euro privatization of telecoms operator BTC, wrapping up the landmark sale after two years of deadlock. The BTC sale, launched in the spring of 2002, has been beset by a series of procedural problems, legal wrangling and political battles, which sent negative signals to the investment community. Advent said in a statement it would pay the agreed 230 million euros for the 65 percent of BTC on offer and invest up to 700 million euros to upgrade the outdated operator over the next five years. It will also raise BTC’s capital by 50 million euros. «We believe that the deal’s successful closure will be accepted as a positive sign of Bulgaria’s will to attract foreign investment on its way to the EU,» Chris Mruck, director at Advent International, said in the statement. «That’s great news,» said Yarkin Cebeci, emerging markets analyst at JP Morgan. «I believe a major market-moving piece of news for Bulgaria this year would be an investment grade credit rating and the deadlock in privatizations was a major obstacle.» The government, which came to power in July 2001, has won a series of credit rating upgrades for efforts to reduce the country’s debt burden, sustain brisk economic growth and cut unemployment. But the sluggish privatization of BTC and tobacco monopoly Bulgartabak have so far hindered the country from getting an investment grade rating, which would give it access to a larger pool of investors. Sources close to the deal said the BTC deadlock was resolved by a political decision between Prime Minister Simeon Saxe-Coburg and Ahmed Dogan, the leader of the ruling party’s junior coalition partner, the ethnic Turks’ MRF party. Local media and commentators had been speculating that the MRF, on which the government depends for its slim parliamentary majority, wanted BTC to be sold to the only other bidder, a Turkish consortium led by Koc Holding, which offered 215 million euros. Last September, the Supreme Administrative Court issued a final ruling naming Advent as the legitimate winner in the tender competition for the BTC stake. Transport and Telecoms Minister Nikolai Vassilev, who has repeatedly urged the government to wrap up the BTC deal, said in a statement the delay had harmed the company by postponing its switch to digital networks. BTC, which lost its landline monopoly early last year, needs hefty investment to modernize its analogue network. It operates 112 telephone lines per employee, compared with a Central European average of 240 lines. The operator serves 38 percent of the country’s 8 million people. It forecast a 240-million-lev ($153 million) net profit for last year, up from 198 million levs in 2002.