Bloomberg By Carol Matlack on August 30, 2012
Kosovo is preparing to sell a majority stake in its state-owned post and telecom company PTK, a deal that could yield as much as €600 million ($753 million) for Europe’s newest and poorest country.
The bidding, set to begin next month, has attracted interest from European and Turkish phone operators, as well as from an investment company headed by former U.S. Secretary of State Madeleine Albright, who was a major backer of Kosovo in its war against Serbia. Already, however, the sale process has been clouded by corruption allegations, legal challenges, and the death of the state privatization agency’s chief, Dino Asanaj. In June, his body was found in his apartment in Kosovo’s capital city of Pristina, with 11 stab wounds. Authorities say he committed suicide.
Kosovo, which declared independence in 2008, is an economic basket case. National unemployment stands near 45 percent, and per capita income hovers around $7,000, the lowest in Europe. The International Monetary Fund this year approved a $134 million bailout for the country and urged its government to raise more money by selling a stake in profitable PTK. “We expect big impacts on the economy and the telecommunication sector on the one hand, and at the same time we want to signal foreign investors that Kosovo is an attractive country to invest and do business [in],” Economy Minister Besim Beqaj says.
The government has tried, and failed, to privatize PTK before. An attempt launched in 2010 fell apart last year following a corruption investigation at the company. And earlier asset sales were tainted by accusations of wrongdoing: At the time of his death, privatization chief Asanaj faced investigation for allegedly demanding a bribe from purchasers of a privatized hotel property.
Kosovo authorities have said the stress of investigation led Asanaj to kill himself. That finding is “unbelievable,” says William Bartlett, a senior researcher at the London School of Economics who has advised the European Commission and international organizations in Kosovo. “Kosovo is a lawless place,” Bartlett says.
Serbia is contesting the PTK privatization, arguing that former Serbian employees of the company have a legal claim on its assets. On Aug. 23, Serbia announced it would file lawsuits before international courts to block investors from buying stakes in the company. “As in any asset sale, rights of former and current employees also must be respected,” including claims by Serbs who fled Kosovo during the war that began in 1999, says Aleksandar Vulin, the head of Serbia’s agency for Kosovo affairs. “The move should serve as a warning to foreign investors who want to acquire assets there.”
Despite the controversy, Kosovo’s government announced on Aug. 18 that it had approved five groups as potential bidders on the PTK stake. They include a consortium of Portugal Telecom and Albright Capital Management, a Washington (D.C.) investment firm started by the former secretary of state who urged NATO action against Serbian troops during the Kosovo conflict. Nelson Oliveira, Albright Capital’s general counsel, says the group plans to “review due diligence materials and possibly prepare a bid” but declined further comment. Consortia that include British Telecom Poland and Turkish mobile operator Turkcell have also been approved as potential bidders.
With reporting by Bekim Greicevci in Pristina and Misha Savic and Boris Cerni in Belgrade.
Matlack is a Paris correspondent for Bloomberg Businessweek.