Government takes on Hrvatski Telekom over Mostar stake

Hrvatski Telekom could be set to lose the right of first refusal to buy out HT Mostar, the fixed-line and mobile operator in the Bosnia and Herzegovina in which it currently owns a 39.1% stake.

According to a report by news website Poslovni, the government of the Federation of Bosnia and Herzegovina intends to discuss HT’s right of first refusal in the event of a privatisation at an extraordinary assembly of HT Mostar that has been called for 24 August 2020. The government is currently the largest shareholder in HT Mostar, with a 50.1% stake.

Poslovni noted that HT has so far refused to comment on the issue. In addition, Deutsche Telekom, HT’s majority shareholder, did not respond to a request for comment before publication. The Croatian NatCo and DT are no doubt watching developments closely.

HT’s right of first refusal on the government’s shares has been a contentious issue over the years. The right was apparently enshrined in HT’s shareholder agreement in 2006, and then incorporated into HT Mostar’s articles of association when the operator was listed on the Sarajevo Stock Exchange in 2009 (Deutsche Telekomwatch, #50).

Seebiz reported that the government has instructed the Federal Ministry of Transport and Communications to draft a new statute for HT Mostar that would be harmonised with corporate governance and securities market laws in the country. HT’s right of first refusal is said to not be in accordance with the securities market law.

In recent years, there have been suggestions that the government could sell part of its majority stake in HT Mostar, potentially opening up an opportunity for DT to expand its position via HT. Other shareholders include Hrvatska pošta Zagreb, with a 5.2% stake. In 2017, it was also speculated that DT could take a minority ownership of BH Telecom as part of telecoms sector reforms (Deutsche Telekomwatch, #60, #74, and #84).

It is not entirely clear whether the government still intends to privatise HT Mostar or BH Telecom, in which the state owns a 90% stake, although the latest developments do indicate that it wishes to open up the possibility of selling a stake in HT Mostar.

DT yet to respond

Neither DT nor HT have indicated whether they would wish to expand their position in HT Mostar, particularly in view of current Group reticence towards investment in Europe. Tidying up peripheral assets in Europe remains high on DT’s agenda as it looks to tighten performance in its home continent, and ease balance sheet pressures following the Sprint takeover in the USA (Deutsche Telekomwatch, #95 and passim).

At the same time, HT has previously indicated eagerness to expand its regional presence. Neither Crnogorski Telekom nor HT Mostar — HT’s two foreign telco interests — have been put into storage within HT Holding, a special purpose vehicle the Croatian operator set up in 2018 to house adjacent businesses such as Combis (IT services), E‑Tours (travel services, sold in 2019), Iskon Internet (internet and data services), a 17.4% stake in Optima Telekom (an alternative operator HT has long been attempting to exit, following a management contract), and KDS (cable TV).