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Slovenia picks Deutsche Telekom, 4 funds to bid for telecoms firm, say sources-Reuters

(Reuters) – Slovenia has narrowed the field of bidders for its largest telecoms provider to Deutsche Telekom and four buyout firms, several sources said, as the government presses ahead with a privatization plan.

The buyout firms are U.S.-based Providence and Bain Capital and European peers Apax and Cinven vying for Telekom Slovenije , the sources familiar with the matter said.

About four other private equity funds and industry peers walked away after delays to the process, mainly due to parliamentary elections in July, the sources said.

Representatives at Deutsche Telekom, Providence, Cinven, Apax and Bain Capital declined to comment. A spokeswoman for Telekom Slovenije was not immediately available for comment.

On Oct. 1 newly elected Prime Minister Miro Cerar confirmed the government’s intention to sell a 72 percent stake in Telekom Slovenije.

The company is the largest of 15 firms that the previous centre-left government slated for privatization last year. The sale is aimed at consolidating public finances after the country narrowly avoided an international bailout of its banks in December.

It comes at a critical time for Slovenia as two state-owned banks, NLB and NKBM, failed ECB health checks to determine their resilience to a financial crisis, increasing pressure on the government to shore up its capital buffers.

The government, which is advised by Citigroup, wants a premium over the company’s market value of 955 million euros. It hopes to raise as much as seven times Telekom Slovenije’s core earnings of 237 million euros, giving it a valuation of 1.6 billion euros, two sources said. Its net debt stood at 341 million euros in 2013.

Deutsche Telekom is seen as a preferred bidder due to its existing operations in central and eastern Europe and long-term investment strategy, one of the source said.

Deutsche Telekom has a presence in Croatia and Hungary where its subsidiaries T-Hrvatski Telekom and Magyar Telekom could be used as vehicles to buy Telekom Slovenije, the source said.

“A solution with Deutsche Telekom will be more welcome than any type of private equity-led deal,” the source said.

The bidders will submit their offers before the end of the year, with an outcome likely in early 2015, three of the sources said.
Telekom Austria, which controls Slovenia’s second-largest mobile operator Si.mobil, is not in a position to bid due to antitrust issues, one of the sources said.