BTC sale saga may continue as political concerns take over

SOFIA – The drawn-out sale of Bulgaria’s state telecoms operator BTC may be delayed once again due to haggling over the company’s dividend and a mobile phone license, sources close to the sale said yesterday. Last month the government invited US private equity fund Advent to wrap up the long-delayed 230-million-euro ($293.1 million) sale for 65 percent of BTC by tomorrow, breaking months of deadlock. The sale has become symbolic for Bulgaria, with analysts and investors viewing it as a test for the Balkan country’s ability to press ahead with key structural reforms needed to prepare its ex-communist economy for European Union entry in 2007. Two sources close to the sale told Reuters the government and Advent had so far failed to agree on who would get BTC’s dividend for 2003 and whether the new owner would be granted a mobile phone license as pledged or a tender was needed. «We cannot rule out a new delay. There are outstanding hurdles which are not overcome,» one of the sources said. A spokeswoman for the sell-off agency said the body would keep the February 20 deadline to sign the deal but declined further comment. Advent officials in Sofia declined comment. The BTC sale was launched in the spring of 2002 and has been beset by a series of procedural problems, legal wrangling and political battles, which have worried investors. Analysts say a new delay would harm Bulgaria’s image among the investment community and hurt its efforts to win further credit rating upgrades. The sources said the sell-off agency was under political pressure to allocate BTC’s 2003 dividend, expected to exceed 200 million levs ($151 million), to the State. But they said it was contrary to initial agreements with Advent, under which a dividend would be distributed only after the privatization was completed. Ahmed Dogan, leader of the ethnic Turkish MRF party which is the ruling party’s junior coalition partner, has indicated over the past week he was not fully pleased with the planned sale of BTC to Advent. Local media had been speculating that the MRF wanted BTC to be sold to the only other bidder, a Turkish consortium led by Koc Holding, which offered 215 million euros. Finding a legal way to award Advent a GSM license was the other problem facing the deal, the sources said. The government has offered a GSM license as a sweetener to the winner in the BTC deal. But under recent legal amendments, a license could be issued only after holding a tender. The sources said a way out was for the sell-off agency to seek exception from the telecommunication watchdog and grant the GSM license after the BTC deal was signed. «The sale has turned into a soap opera. Last-minute twists and turns are always possible. I wouldn’t believe it’s over until I see the signatures in the contract,» one source said.