Telekom Austria acquires call option to buy Bulgarian wireless operator

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VIENNA, Austria-Telekom Austria said Friday it acquired a call option to purchase Bulgarian wireless carrier Mobiltel AD. The call option gives the Austrian carrier the right to purchase full control of Mobiltel for up to $2.1 billion in late 2005.

“The terms of the transaction underline Telekom Austria’s prudent growth strategy in southeastern Europe and perfectly match the criteria, which we have communicated for our expansion policy,” said Heinz Sundt, chief executive officer of Telekom Austria.

The call option is priced at $106 million, which would be offset against the purchase price. The option is payable in the first quarter of 2005 and is exercisable in the third quarter of 2005.

The $199 million purchase price is contingent on Mobiltel achieving certain operating and financial performance criteria in 2005 and will be payable in the second quarter of 2006. If Telekom Austria exercises the option, it plans to fund the buy mainly from its cash flow and in part through issuance of debt.

As of end-June, Mobiltel had about 2.75 million subscribers, making it the largest carrier in Bulgaria with a 67-percent market share. A consortium of Austrian and international financial investors owns the carrier.

Lehman Brothers and Raiffeisen Investment AG are advising Telekom Austria on the transaction.

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