America Movil, Telekom Austria abandon bid for Telekom Srbija

America Movil and its Austrian subsidiary Telekom Austria pulled out of the race to acquire Serbian operator Telekom Srbija due to the high cost of buying the company and its lack of profitability.

Neither company was named in a list of those that had expressed interest in acquiring the Serbian government's 58.1 per cent stake in Telekom Srbija by the time a deadline for such passed earlier this month, Austrian daily Die Presse reported.

The daily reported that Telekom Austria and America Movil believe the acquisition would be too costly. A previous attempt by Telekom Austria to acquire the stake in 2011 failed after Serbia's government rejected the operator's €1.1 billion ($1.2 billion) bid, Die Presse noted -- a move that suggests the government will today demand an even higher price.

In early August, Serbian newspaper Blic reported that America Movil was considering a separate bid for Telekom Srbija because Austrian shareholders were opposed to a move by Telekom Austria, which the Mexican telecoms group is using as a vehicle for expansion into Eastern European markets.

The omissions were revealed after Serbia's government said it had received nine expressions of interest from companies including Deutsche Telekom and Russian operator MTS by a mid-August deadline, Bloomberg reported.

However, Serbia's Anti-Corruption Council this week said the government should hold off on the planned sale due to a lack of transparency over Telekom Srbija's finances and doubts whether publicly held mobile infrastructure could be included in the transaction, Bloomberg said citing Serbian news agency Tanjug.

The council reportedly told Serbia's government that it should seek to restructure Telekom Srbija's finances, adding that it is difficult to assess the economic arguments for selling the operator without such a reorganisation.

That lack of transparency could be key to MTS moving forward to a formal bid, Tanjug reported in a separate article.

The news agency reported that MTS President and CEO Andrei Dubovskov said the operator would need to closely scrutinise the deal to assess how profitable Telekom Srbija could be. A decision would also hinge on how much Serbia's government asks for its stake, he said.

For more:
- see this Die Presse article (in Austrian)
- view this Bloomberg report
- read Tanjug's report on MTS
- see this Blic article (in Serbian)

Related articles:
Report: America Movil may bid separately for Telekom Srbija
Telekom Slovenia sale is cancelled after Cinven pulls out
Telekom Austria extends convergence strategy with Bulgarian cable buy
Telekom Austria wins regulatory approval for Macedonia merger
Telekom Austria to buy fixed operations in Slovenia and Croatia

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