Business briefs

08-04-2005

Cabinet approves sale of Cesky Telecom to Telefonica

The biggest news of the week, although widely anticipated, was the Cabinet's unanimous decision to sell the Czech government's majority 51 percent stake in Cesky Telecom to Telefonica of Spain. Price had been the only criterion in the tender, according to Finance Minister Bohuslav Sobotka, and Telefonica had far outbid the competition with its binding of 450 crowns per share, which works out to over 3.5 billion dollars.

Telefonica will be required to make a buyout offer to minority shareholders, and the Czech government want to ensure that it gets to appoint someone to the fixed-line operator's board, but most analysts say it's still too early to say whether the Spanish company will keep Eurotel, the mobile operator wholly owned by Cesky Telecom, or pay out dividends.

The long-anticipated sale of Cesky Telecom will almost certainly be the last major privatisation the current government will handle, as five ministers have left the Cabinet of embattled Prime Minister Stanislav Gross and others have threatened to do so if he doesn't step down. Finance Minister Sobotka has said the government wants proceeds from the Cesky Telecom sale to go towards state transportation and housing funds, and perhaps pension reform initiatives.

Communists want to link confidence vote with bill on assets declaration

Meanwhile, the Communist Party, whose members' abstention from a no-confidence vote in the Prime Minster last week, and so allowed Stanislav Gross to remain the head of government for at least a while longer, now says it will consider backing the current government only if the Cabinet links an upcoming confidence vote with a vote on a bill on property statements. Communist Party chairman Miroslav Grebenicek wants inspectors to be allowed to compare the asset statements of legislators with their past income, which he said was the only way to trace dirty deals linked to political structures. The Communists also want this standard to be applied retroactively.

National carrier CSA (Czech Airlines) buys 12 Airbus planes with aim of competing for European flights

Meanwhile, another quite large state-owned company, the Czech airline carrier CSA, signed a contract this week for the purchase of 12 Airbus planes to replace its aging fleet of smaller passenger planes designed for medium-range flights. CSA is looking to increase the number of flights from Prague to other European capitals to compete with a boom in recent years of budget European airlines.

Czech MEPs pushing Brussels for change in distribution of EU funds to poor regions

Jan ZahradilJan Zahradil And speaking of Europe, Czech Members of the European Parliament say that within the next few years the Czech Republic will become a net contributor to the European Union budget. MEPs Hynek Fajmon and Jan Zahradil, both members of the centre-right Civic Democratic Party, have complained in Brussels that half of the EU funds earmarked for underdeveloped regions are going to Italy and Spain, while there are far poorer regions in the new EU member states. Mr Zahradil said this week that if this cannot be changed, the Czech Republic should at least try to strike a deal wherein true freedom of movement and labour can go into effect within a year's time; fearing an influx of jobseekers, most old EU members have placed temporary restrictions on the poorer new members.

Zentiva, Pfizer row over anti-cholesterol 'generic equivalent'

In other news this week, the Czech generic drug-maker Zentiva reportedly plans to take retaliatory legal steps against the U.S. pharmaceuticals firm Pfizer Inc. for allegedly violating Czech and EU law in trying to prevent Zentiva from advertising its anti-cholesterol drug as a generic equivalent to a Pfizer product.

Skoda Auto management agrees to workers' 7 pct wage hike

And after months of bargaining and under pressure of strike alerts, Skoda Auto has agreed to a 7 percent increase in wages, to be applied retroactively.

08-04-2005