By Leos Rousek and Sean Carney
BRATISLAVA, Slovakia--Slovak Telekom, a telecommunications
company majority-owned by Deutsche Telekom AG (DTE.XE), said on
Tuesday that the value for the remaining 49% shares set to be sold
by the state ranges between 750 million euros ($807.6 million) and
EUR1 billion.
This puts the lower end of the valuation spread just below the
amount desired by the Slovak government.
"The government has budgeted some EUR800 million in potential
proceeds from the sale of our Slovak Telekom shares," Economy
Minister Pavol Pavlis told The Wall Street Journal.
The ministry is overseeing the state-held shares in Slovak
Telekom. Deutsche Telekom isn't selling its Slovak Telekom stake in
this initial public offering on Bratislava and London stock
exchanges.
The German company doesn't intend to reduce its stake below 51%
because it considers Slovak Telekom to be one of its core assets, a
Deutsche Telekom spokesperson said.
The offering price ranges from EUR17.7 to EUR23.6 a share and
the subscription period for the shares will run until May 6 with
the trading to start May 12, Slovak Telekom said.
"The IPO price sale will be subject to the government approval,"
Mr. Pavlis said, declining to say whether the government would vote
against sale if it generates less than the sum penciled in its 2015
budget.
However, Mr. Pavlis said he was confident about the sale's
success: "We believe that current market conditions are favorable
for such a transaction like the Slovak Telekom offering."
The offering process bares Deutsche Telekom from tendering its
Slovak Telekom shares for up to 180 days following the state-held
stake sale. The same lock-up period applies to any state-held
shares in the Slovak company that the government fails to sell
during the public offering.
Citigroup and J.P. Morgan are acting as joint global
coordinators and joint bookrunners, while Erste Group and Wood
& Co. are acting as joint lead managers, the Slovak company
said.
At the end of 2014, Slovak Telekom had EUR670 million in net
cash including retained profits from previous years, suggesting
attractive dividend prospects.
Slovak Telekom has set guidance for its dividend policy as a
payout of 50% to 80% of net profits, said Milan Jesko, the head of
corporate banking at Citigroup's Slovak unit.
In the past Deutsche Telekom opposed paying dividends by its
Slovak unit.
Although the approval of actual dividend payments will still
hinge on the Deutsche Telekom approval, investors are likely to
snap up Slovak Telekom shares offered by the state.
"We certainly see interest among investors especially on the
lower end of the valuation range because it prices the Slovak
Telekom shares at a roughly 40% discount to its peers in Central
Europe," said Ondrej Cabejsek, a Wood & Co. brokerage analyst,
adding that even at the upper valuation, the company will still
offer prospects for solid dividend yields.
The government aims to use its proceeds from the sale to pay
some of the state's debts or invest in Slovak power-generation
assets majority-owned by Italy's utility Enel SpA (ENEL.MI), he
said.
The Italian company is considering divesting its Slovak assets
in which the Slovak government already holds a 34% share.
--Archibald Preuschat in Frankfurt contributed to this
article.
Write to Leos Rousek at leos.rousek@wsj.com and Sean Carney at
Sean.Carney@wsj.com