Bulgarian Telecommunications Company

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The government of Bulgaria, through its Privatization Agency, sold a 65% stake in fixed line operator Bulgarian Telecommunications Company (BTC) to investment fund Viva Ventures. At the time of the divestiture BTC was the only fixed line operator in Bulgaria, with some 2.9 million installed connections. The contract was awarded through a highest-offer competitive tender held in September 2002. Two bids were submitted: one from Viva Ventures and a second from a Turkish consortium of Turk telecom and Koc Holding. The winning bid was $306 million and it came from Viva Ventures, an investment fund with headquarters in Austria, Vienna. Viva Ventures was wholly owned by US based Advent International, a leading mid-market private equity investment firm with a portfolio of $6 billion invested in some 25 countries. The partial divestiture reached financial closure in June 2004, almost two years after the initial bid was submitted. The delay was caused by widespread criticism of the deal in Bulgaria. A series of lawsuits from trade unions, the Internet society, and the center right opposition party impeded the completion of the divestiture. Local lobbyists supported the Turkish bidder and eventually got the Bulgarian government to restart negotiations with the Turkish consortium. This led to the strange situation of having two sets of initialed contracts in the summer of 2003, one with each bidder. Advent International took legal action and won 13 top court decisions in Bulgaria, but these were not enough to force the government to complete the sale. Advent next filed a complaint with the international court in Washington for some $300 million. The first hearing in the trial was scheduled for February 16, 2004. The Bulgarian government finally decided to complete the deal in February 2004, before the scheduled international court hearing. One of the major concerns with the deal was the sale price – well below the $610 million offered for 51% of BTC in 2000 by Greek company OTE and rejected by the government. To counter the criticism the government attempted to increase the sale price of BTC by granting it a GSM license. On February 20th 2004 Advent agreed to pay some $340 million (280 million Euros) for the 65% package, of which some $60 million (50 million Euros) were a capital increase. Only 20% of the $340 million was paid at the February signing, as Advent insisted the GSM license be awarded to BTC before the divestiture was completed. In June 2004 BTC was granted the GSM license and the transaction was completed. Advent International pledged to invest at least $500 million (Euro 400 million) over a five year period in modernizing and expanding the BTC network. Over the five years the digitalization of BTC's network was to be completed. Viva Ventures has also agreed to maintain some minimal employment levels at BTC, and to organize the refinancing of BTC's long term debt. In November 2004 BTC signed a long term loan with the EBRD for 123 million Euros. In February 27, 2005 the Bulgarian government sold its remaining 35% BTC shares on the Sofia stock exchange. It was estimated that investors bought 2,867,888 shares of BTC for more than BGN 624 million (US$416 million). The payments were made using in compensatory notes. Compensatory notes and receipts were issued in the 1990s in exchange for property, which was seized by the state during the communist rule in Bulgaria and which could not be restored to the original owners. The issuing of compensatory papers was part of the ownership restoration process, which followed the period of communist rule in Bulgaria prior to 1989. In January 2005 BTC completed the acquisition of small analog mobile phone operator Mobikom. Mobikom had a 2.3% market share in the Bulgarian mobile phone market. In 2005 BTC launched its own GSM service - Vivacell. The company planned to gradually transfer Mobikom's customers to Vivatel. Mobikom was to be closed sometime in 2006. In May 2005, BTC was granted a 20 year license for construction of mobile 3G telecommunications systems under the UMTS standard. BTC paid BGN 42 million (US$26.5 million for the license). BTC was divested without exclusivity or fixed line monopoly. In October 2003, exclusivity rights for the provision of local, national and international fixed line voice as well as leased lines were removed by the telecommunications act. In August 2007, U.S. AIG Investments, though its company AIG Capital Partners, Inc. acquired 90% in BTC from Viva Ventures Holding and from minority shareholders after it received the relevant approval on the part of the European Union and other regulatory authorities. In January 2009, BTC announced the merger with its subsidiary BTC Mobile (Vivatel). In September 2009, BTC and Vivatel united into a new brand - Vivacom. Via the acquisition of all voting shares held by the public as well as Golden shares with special voting rights held by the government, Vivacom established itself as the sole shareholder of the company on 21 October 2013. It was subsequently delisted from the Bulgarian stock exchange. In January 2005, the Bulgarian state initiated an IPO and offered a total of 2 869 573 shares (34.78 per cent of BTC’s capital) at the Bulgarian Stock Exchange. 2010 subscriber data is the sum of (mobile subscriber data from Wireless Intelligence) and (2009 fixed-line subscriber data reduced by 14% as reported on Factiva) 2011 subscriber data - only mobile subscribers, cannot find info on fixed line subscriber 2012 and 2013 capacity data from Financial Statements 2013, and includes mobile and fixed subscribers. Same for Capex data, which includes Network and IT spending components within Capex. 2012 data was adjusted to reflect new 2013 data. #Note: The Bulgarian Lev is pegged at 1.95583 to 1 Euro. 2012 Capex - from annual report: BGN 142.3 million USD 1 = BGN 1.49 (Bulgaria Central Bank) 2010 Capex from Annual Report. 2011 Capex - annual report http://www.btc.bg/en/aboutus.php