Telekom Austria ponders Belarusian bid

by Iain Morris

Operator could pay $3.65 billion for new asset, says CEO

Telekom Austria has confirmed rumors it is in talks over a possible acquisition in Belarus.

The Austrian incumbent would not provide further details of the target at this time, but sought to allay any fears it might overbid.

"The Telekom Austria Group reiterates its strategy for profitable growth and remains committed to the financial discipline it has repeatedly demonstrated in the past," it said in a written statement.

Speculation stemmed from a report published by Austrian newswire APA last week, claiming that Telekom Austria was looking to spend more than ?1.6 billion ($2.2 billion) on a mobile operator in Belarus.

According to Reuters, CEO Boris Nemsic has recently expressed an interest in buying another asset in central or eastern Europe worth more than ?2.65 billion ($3.65 billion).

But any bid for a Belarusian mobile operator could put Telekom Austria in competition with some of the big Russian operators targeting the CIS region, driving up the final price.

Analyst firm Telegeography notes there are currently four mobile operators in Belarus: MDC, MTS Belarus, BeST and BelCel. All were government controlled until last month, when Cypriot-based SB Telecom reportedly acquired 100 percent of MDC.

Acquisitive incumbent

Telekom Austria has been one of the most acquisitive European incumbents in recent years, buying a string of mobile operators in the Balkans as well as Austrian ISP eTel.

But in April its attempts to capture a controlling stake in Greek operator OTE were thwarted when OTE reportedly refused to cede management control to Telekom Austria.

At home, the Austrian operator faces a stagnating market. In the fixed-line sector it is diversifying into new broadband services, such as IPTV, to counter the effects of a declining voice business. Austria's mobile sector, meanwhile, remains one of the most price-competitive in Europe.

Last month Telekom Austria reported a 3.3 percent year-on- year rise in Q2 revenues to ?1.21 billion ($1.63 billion) and a 2.7 percent fall in EBITDA to ?465 million ($641 million). The EBITDA decline was blamed on start-up costs in Serbia and Macedonia, where Telekom Austria is launching a mobile service.