Bulgaria’s Post and Telecommunications Committee announced that the buyer of state-owned Bulgarian Telecommunications Co. will receive a Global System for Mobile communications license.
The agency said it hopes to begin negotiations with potential buyers for BTC by the third quarter. Named as interested bidders to date are OTE-the Greek telephone company involved with BTC through the Bulfon joint venture-and Rom Telecom, Romania’s telephone operator.
The Post and Telecommunications Committee cited its belief that the national wireline operator also should operate a GSM system as a reason for linking the license to the sale. Industry analysts, however, suggest the move is primarily a tactic to sweeten the deal and generate more interest in the phone company.
The country’s current GSM operator, Mobiltel, is not connected to BTC. Bulgaria’s other mobile phone operator, Mobicom, operates a cellular phone system based on analog technology. Mobicom is a joint venture between BTC and the United Kingdom’s Cable and Wireless plc.
Negotiations for the sale and license have been delayed until the Bulgarian government approves a new telecom law, drafted last year. The new law, expected to pass in March, will dissolve the state’s telecom monopoly, effective Dec. 31, 2002, and stipulates other European Union membership requirements.
BTC chose a consortium led by Deutsche Morgan Grenfell to advise the sale proceedings. Other members of the consortium are the accounting firm KPMG, London-based law firm Denton Hall and the Barents Group consulting service.
The goal is to sell up to 60 percent of the company to a foreign investor, who also will obtain the GSM license.
The privatization of BTC is just one tier of the country’s Mass Privatization Program, launched in January 1996. The program represents the largest transfer of state-owned enterprises to private ownership to date and is designed to attract foreign investment, according to a report by Bethesda, Md.-based International Technology Consultants.
International investors traditionally have shied away from Bulgaria due to its unstable political and economic past. Bulgaria has had trouble finding its post-Communism legs ever since it jailed Communist Party leader Todor Zhivkov, who ruled the country for 35 years, for corruption and abuse of power in 1990-the same year the country’s Parliament voted to revoke the Communist Party’s dominant role. In late 1996 through early 1997, the country saw a series of economic and political upheavals that led to Parliament forcing the government to resign, citing an ineffective protectionist economic strategy that led to the country’s financial turmoil and the anti-Communist Union of Democratic Forces achieving power.
The International Monetary Fund bailed out Bulgaria in 1997, setting up a $657 million currency board, which went into effect July 1. These actions led to economic turnaround. Then Prime Minister Ivan Kostov accelerated the privatization effort, in which the country will sell or shut down the 30 largest state enterprises. This action further raised investor confidence, although it is seen as an effort to avoid state bankruptcy more than a renewed commitment to economic reform, the report said.
Now, the first rays of investor confidence are grazing this small country, and international analysts speculate that if things continue as they have, Bulgaria soon may see a new dawn of prosperity.
“For late 1998, people will be looking to it more and more as a new investment opportunity,” said ITC’s Aleetalyn Schenesky.
