The Bosnian Serb Republic said on Tuesday it would sell a 65 percent stake in Telekom Srpske to Telekom Srbija for 646 million euros ($860.5 million) in Bosnia's biggest privatisation this year.
Belgrade-based Telekom Srbija secured the stake in Bosnia's second-largest telecoms operator by outbidding Telekom Austria which offered 467 million euros, Prime Minister Milorad Dodik said.
"The government accepted the bid by Telekom Srbija of 646 million euros," Dodik said at a government session broadcast live on regional television. "The government considers this a well done deal that will change potentials in Republika Srpska."
Officials had initially sought at least 400 million euros for the firm, which has a 35 percent market share in both fixed and mobile telephony in a country of close to 4 million people.
It had 2005 revenues of 346.3 million Bosnian marka ($236.2 million) and net profit of 80.8 million marka. In the third quarter, revenues rose 10 percent year-on-year and profits 33 percent.
"This is the offer of our dreams, an amount that we did not expect," Dodik told Reuters after the session. Telekom Austria said Telekom Srbija's offer was "crazy", but it expected other options to emerge in Bosnia soon. Telekom Austria shares traded 0.26 percent up by 1037 GMT.
Bosnia's other autonomous half, the Muslim-Croat federation, had planned to privatise majority stakes in market leader BH Telecom and HT Mostar but its parliament blocked this in July.
Market analyst Eldar Dizdarevic said the arrival of Telekom Srbija would not significantly change the situation in the telecommunication sector in Bosnia because its technology was at the same level as the existing operators.
"The price was obviously decisive but this is a worse option because Telekom Srbija will not bring new technologies," Dizdarevic told Reuters. "It will not stimulate technological development and competition nor help cut prices of services."
Telekom Srbija officials were not immediately available for comment.
Dodik said the agreement with Telekom Srbija would be signed in the next few weeks after the completion of technical preparations. Telekom Srbija will have to pay the full amount for the stake 30 days after the deal has been signed. The proceeds from the sale would go to infrastructure projects in the Serb Republic.
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