BATTLE FOR PTC RESOLVED – OCTOBER 2001
Vivendi Universal and Deutsche Telekom (DT) have been involved in a battle to gain control of Polish alternative telecoms operator Elektrim and its 51% share of Eastern Europe’s largest mobile operator, PTC of Poland.
Elektrim also owned fixed line local operators El-Net and TV Tel and had 99% ownership of Telefonia Regionalna. Its subsidiary Elektrim Telekomunikacja (ET), of which Vivendi owned a 49% share, owned Telefonia Polska-Zachod (TPZ) and Bresnan International Partners, Poland’s second largest cable TV company. El-Net has five local licences, including a licence for Warsaw to compete against TP SA which it won in December 1998.
The other major shareholder with Elektrim in PTC is DT with a 45% stake. The purchase by Elektrim of 15.8% of PTC shares in August 1999, and a plan to transfer shares to ET ownership (and therefore to Vivendi co-ownership), led to a dispute with DT, which had a right of first refusal of 3% of the shares. This was initially resolved by a preliminary agreement in December 2000 for Elektrim to sell controlling stakes in its fixed-line and data communications companies to DT but this plan fell through in May 2001.
By early 2001, in addition to its 49% share of ET, Vivendi had built up its holding in Elektrim to over 10%. Vivendi attempted to prevent the conclusion of the fixed line sale to DT through legal action in an international arbitration court, alleging that Elektrim had breached a 1999 pact which stipulated that if the firms reached a deadlock over the running of ET, Elektrim would be forced to buy out Vivendi. However, if Elektrim were forced to buy back Vivendi’s share of ET, Elektrim would be bankrupt.
DT then offered US$400 million for control of PTC. On the same day that the board were due to consider the DT proposal, Vivendi put forward a plan to merge Elektrim with ET in exchange for new shares that would give Vivendi control of Elektrim.
Finally, in early September 2001, Elektrim completed negotiations to sell its telecom related assets to Vivendi for E491 million. The deal includes Elektrim’s three fixed line operators, El-Net, TV Tel and Telefonia Regionalna, and mobile operator PTC. The assets will be transferred into ET, which will be majority owned by Vivendi with Elektrim retaining 49%. The deal does not include Elektrim’s three Internet units. Vivendi said it plans to float ET on the Warsaw Stock Exchange within the next year and a half and will pay for the transaction by 2 January 2002.
For more information see web reports Poland – Key Statistics, Telecommunications Market and Major Players and Poland – Internet, Wireless Communications and Broadcasting.
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