Polish telco on the block for €4bn

The deal of the year may stem from one of Europe's newest members, with the sale of Polish mobile operator Polkomtel SA underway and valued by banks at around €4bn. Local press reports link TPG, Blackstone, CVC Capital and Apax to the deal. The telco is majority owned by the state, making it a quasi-privatisation.

But the deal may not come to fruition, a source told unquote", given the Polish Treasury's hefty price expectation. "If bids come back too low, the government may abandon the idea altogether, and opt for an IPO instead" the source said, adding they would "get their name on the list" of potential suitors and consider bidding, but that "at that price, we won't take the lead".

At the time of going to press, TPG and Blackstone were rumoured to be preparing a joint bid, with CVC and Apax each prepared to go it alone. Sweden's TeliaSonera is also looking at the company.

Price is one factor that may thwart the deal; a complex ownership structure is another: the firm has five parents, each of which has its own adviser. UK's Vodafone; Polish oil refiner PKN Orlen and Polish copper miner KGMH each hold a 24.39% stake. Polish energy giant PGE holds 21.85% and coal miner Weglokoks the remaining 5%. The Treasury owns stakes of between 27.52-100% in all the owners except for Vodafone.

Telecos are the darling of CEE private equity, with buyout houses proving adept at consolidating local markets and selling on to global trade players - or each other. Mid Europa is one GP which has been a leading force in the sector: In 2004 they teamed up with GMT Communications Partners to purchase Invitel, then Hungary's second largest fixed line telecoms operator, from Vivendi Telecom International for EUR 325m.

Three years later, the buyout houses sold the asset to Hungarian Telephone & Cable Corp for €470m. Then in 2010 Mid Europa re-acquired a 92% stake in the company in a de-leveraging acquisition which saw Mid Europa buy back €85m of Invitel senior debt and €125m of PIK notes. Invitel is one of several CEE telcos to have undergone several iterations of private equity ownership.

The advisers involved in the Polkomtel buyout include ING Securities (advising PGE), Rothschild (advising KGHM) and Nomura Holdings (advising PKN).

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• CVC Capital Partners
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