Final Word from Friday, April 23, 2004

There are two basic ways to sell a state company on the cheap, and Interior Minister Stanislav Gross is well-versed in both of them. The first, which was used in coal privatization, is to make sure some potential buyers can't bid. This allows the preferred buyer to come in at a below-value price. The second method, which is Gross' choice for Český Telecom, is to drive down the price an arms-length buyer is willing to pay. This allows the preferred buyer to get depressed assets in a controlled sale and to perform a miraculous "turnaround" later. The market has shown that there's more value in keeping Telecom and Eurotel operationally separate, yet Gross' people are pushing hard to integrate the two. This will destroy shareholder value and increase the "leakage" in the procurement process. Apparently, Premier Vladimír Špidla is too weak to prevent it.


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