Český Telecom - Atlantic West reportedly gave preliminary agreement on sale of its stake in Eurotel

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Investiční bankovnictví KB

      Reuters cited sources close to transaction that Cesky Telecom reached preliminary agreement with purchase of a 49% stake in Eurotel from consortium Atlantic West. However, Cesky Telecom reportedly negotiates possible price reduction from previously mentioned USD 1.285bn. Nevertheless, the price reduction reportedly depends on unspecified conditions. If the negotiations are completed in time, shareholders could approve the transaction on the upcoming AGM on 13 June, which was confirmed by Cesky Telecom. The AGM should also discuss possible dividend payment, but firm proposal of dividends for 2002 was not decided.

       We consider taking full control of Eurotel the best scenario to solve the unfavorable capital structure of Cesky Telecom. Cesky Telecom will increase its exposure to Czech mobile market, which should balance declining demand of its fixed line business. Moreover, Cesky Telecom will strengthen its control over strong cash flow Eurotel is generating.

      

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