Tele-kom, Tele-go

The supervisory board of the Slovenian Sovereign Holding (SDH) is expected to finally end the sad saga of the sale of Telekom Slovenije today. The state owned telco was put up for sale as a part of the deal then-PM Alenka Bratušek and her FinMin Uroš Čufer made with Brussels in 2013 to avoid a bailout that would send Slovenia into the special Olympics category together with Greece and Cyprus (as well as Ireland and Spain, to a lesser extent).

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Telekom Slovenije management might get new bosses soon (source: The Firm™)

To cut a long story short, the company was put up for sale soon after the SDH was formed and when it became clear that the new Slovenian government will go ahead with the attempted sale, despite PM Cerar’s vocal reservations during the election campaign, all hell broke loose. Cerar’s government nearly went tits-up with the SD threatening to quit the coalition (but didn’t and wouldn’t, because gravy train), there was a very public and very loud stooshie between the PM and his defence minister Janko Veber of SD, who was then relieved of his duties. And in general, as the days passed, the debate on Telekom was becoming ever more charged.

But in the end Deutsche Telekom, the supposed bogeyman in this story did not even place a bid, leaving Cinven, a British fund to go at it alone. Which was a bit of a #wtf moment, especially for opponents of the sale as it became clear that people are not exactly queuing to snap up the company. And after much wrangling the final offer was around 110 euros per share with additional 20 per share later on if certain conditions are met and benchmarks achieved. Yesterday, Telekom Slovenije (TLSG) traded at 98 euros per share. And in the end it was all about whether the SDH will accept Cinven’s offer. And this is where the fun really starts.

The issue is so charged both politically and emotionally that any politician with at least a half-developed survival instinct would rather walk away from it or find a way to maintain status quo. And every so often even PM Cerar gave the impression that he would rather see the Telekom problem simply go away. But it didn’t and in the end, the SDH management OKd the Cinven deal and kicked the issue upstairs, to the supervisory board. Which after much deliberation OKd the deal as well but kicked it upstairs to the government, acting as SDH’s shareholder assembly. And after even more deliberation (an eight-hour cabinet meeting on Sunday last), the government decided to kick the issue downstairs, to the SHD supervisory board, saying they’re paid to do it and that it’s their job.

Thus an interesting situation was created whereupon the SDH management, its supervisory board and government green-lighted the deal, and now everyone is looking around, waiting for someone to say “sold!”. The Board is apparently scheduled to meet later today as to catch a deadline set by Cinven. The fund is threatening to pack-up and leave should the deal be nixed or final decision somehow delayed yet again.

But on the fate of the deal hinges the internal dynamic of the coalition. Namely, should the deal go south at the very last moment (and that at the moment seems unlikely, despite the massive pressure from anti-privatisation camp), the SD, now barely hanging on would probably score massive points, overtake United left (ZL) at the top spot in the polls and probably start calling the shots within the coalition. Most of them, anyway. Because not only is the SD fighting a politically symbolic battle, the outcome will have massive repercussions for the party in terms of access to resources, influencers, decision makers, and the party’s own political prospects.

Watching very carefully will be Karl Erjavec of DeSUS, who is mostly sitting this one out, but is gearing up for a similar fight over Zavarovalnica Triglav, the largest insurer in Slovenia. If Miro Cerar and his SMC prevail, then Teflon Karl better start preparing a different strategy to keep Triglav in state hands and, by extension within his sphere of influence. If, however, the Telekom is not sold, then Erjavec can simply cash in the support he gave to the SD prior to election, divide the spoils and live happily ever after.

Not that the anti-privatisation camp is throwing in the towel, either. While the SD will probably not leave the coalition over the Telekom (not that it could, with its six votes, anyhow), they are trying everything else. Thus yesterday evening an 11th hour attempt was made at derailing the deal. Mladina weekly ran a story about a due-diligence, commisioned by a potential bidder which supposedly showed Telekom shares are worth as much as 190 euro.

Now, under normal conditions would have been a bombshell. But these are not normal conditions. The pressure brought to bear in this case is beyond anything we’ve seen in recent history. At the very least, this is the first time the wrangling, arm-twisting and threats are done out in the open, at the highest level of politics and public life in general. Therefore, the first question that begs asking is why is it then the British fund is the only bidder? This phantom bidder could have made an offer of say, EUR 150 per share and still make a deal of the decade. But it didn’t. And that’s all that matters.

At any rate, whatever the fuck the SDH supervisory board decides today, will probably mark the end of a period. Not just for Telekom Slovenije, but for Slovenian politics. The fallout will be massive. If the deal falls through, what little credibility Cerar’s administration gained at home and in Brussels, will have disappeared as the PM will be seen as being shoved around easily. If, however, the SDH board does finally OK the sale, Cerar’s problems are far from over. Not only on account of DeSUS holding a baseball bat to fend of privatisation of Zavarovalnica Triglav but also because the anti-privatisation camp nearly succeeded this time around and will be anything but disheartened in the next round.

And while early elections are not in the cards any time soon (not yet, at least), life in the ruling coalition will become increasingly difficult as the SD seem to have found their voice (their only problem being that it is the same voice the ZL is using, only much more effectively). With this in mind, the possibility of a coalition expansion or even reshuffle seems plausible.

 

 

Of Morons and Ministers

After the parliament voted to dismiss defence minister with a 68-11 vote, Janko Veber’s very own Social Democrats predictably decided not to leave the ruling coalition, regardless. And while the debate, most of it held behind closed doors under the pretext of confidential information being used, proved that security issues were indeed secondary and that the real fight was about sale of Telekom Slovenije, the whole political clusterfuck amounted to little more than a storm in a very leaky tea-cup. Namely, the company in question is not as sought for as some wanted and other feared. On Monday, only one binding offer for Telekom was submitted and – adding insult to injury – it wasn’t the Jerrys. It was, in fact, a British investment fund Cinven.

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Telekom Slovenije (TSLG) share in the past year (source: Ljubljana Stock Exchange)

In all honesty, this was in fact more than just a political dust-up as tensions did flare high and the parliament debated Veber’s dismissal. The exact content of the debate is unknown, that being closed session and all, but word on the street has it that Veber and Cerar were ripping each other a new one. Which also explains why the public was excluded. Apparently, there was next to nothing confidential info mentioned in a five-hous-plus long debate but the whole thing was an ugly sight to see and the coalition, especially the SMC wanted to avoid that. But in the end, this was not the coalition-toppling earthquake many have speculated or indeed wanted it to be.

Implosion of Janko Veber

Politically speaking, this was a marginal victory for PM Miro Cerar. Not because he would have done a marvelous job of treading this particular issue, but mostly because Veber fucked up only days before the parliament session. Just as he was gaining some ground on Cerar, he threatened the prime minister with criminal charges on a count of destabilizing country defences, basically telling the PM he should be put on trial for high treason. With that Veber went into self-destruct mode, just revving up the rhetoric and not substantiating it with, well, anything. To put it in Top Fun terms, his ego was writing checks his body couldn’t cash.

Veber’s spectacular implosion overshadowed a just as equally embarrassing event. Namely, just as Veber moved to defenestrate Veber, the newly minted science, sport and education minister Klavdija Markež stepped on a landmine in the form of her masters’ thesis being mostly plagiarized. Which turned out to be true and prompted her immediate resignation, only five days after she had been nominated to the position. A huge embarrassment for Cerar as Markež’s predecessor Setnikar Cankar was dismissed for excessive earnings, tainting the clean image of PM Cerar and his party.

But in the end, it was the SD which blinked. And for good reason. If the party followed the path its VP had set, it would have found itself in opposition together with the United Left (ZL). Which would be bad news for SD as the ZL has the same number of deputies and are much better at being the rabid opposition party than the SD ever was. Not to mention the vast ground-network the SD has to maintain which costs money. Not to mention all the debt the party has incurred over the years and is now struggling to repay. And it’s much harder to do that when you’re in the opposition. Just as the once-mighty LDS. What’s left of it, anyway.

Minister for agriculture and defence

As a result, Slovenia is now in a mildly bizarre situation where it’s government in effect has a minister for agriculture and defence as Dejan Židan, SD’s main honcho temporarily took on defence portfolio as well. Technically, this set-up can last six months at the longest (three months, plus one three-months extension, as per law).

This is not the first time defence department was attached to another sitting minister, however. Years ago, under one of Drnovšek governments, the legendary PM, during one of his defence-minister-voes simply appointed science minister Lojze Marinček. An overall joyous character, the professor-turned-politician took the role in stride and went around official functions (which usually included then-president Milan Kučan) running around asking “has anyone seen my Commander-in-Chief?” and generally making light of the embarrassingly protracted situation.

To their credit, the SD said they will come with a suitable candidate sooner than in six months. although what passes as a “suitable candidate” in this day and age is debatable, to be honest.

Homo homini minister (of defence)

But as if one (former) defence minister making a fool out of himself wasn’t enough, his predecessor (many times removed) had to add his two cents. Or whatever the fuck his measure of monetary value is. Namely, while Veber, or more precisely, his social media manager was doing his best to make his case on Twitter (and failing badly), at some point he responded to a tweet by Janez Janša who accused Veber of lying with regard to secure locations used by the army. Veber replied with some sort of  rebuttal upon which Janša replied with calling Veber a moron. Literally.

While Janša might have actually had a point (at the very least is takes one to know one) the ease with which elected officials, senior political leaders at that, dig new lows in public communication is flabbergasting. Perhaps this is the result of Janša slipping ever more into irrelevance and being unable to do anything about it, but it does explain just why exactly fewer and fewer people want to have anything to do with him. Case in point being the NSi, which stands to reap benefits from what has since been dubbed The Veberkom Affair.

Last week Janša floated the idea of a shadow government, inviting anybody who would join, to well, join. The “everybody” was of course limited to the NSi, the only other opposition party on the political right-wing and the NSi said “thanks, but no thanks”. Janša took the rejection badly (as he always does) and threatened the rejectors will pay a heavy price for it. The truth, however, is that the NSi can in the long run only profit from its newfound spine. Indeed, they will most likely push for some sort of concessions from PM Cerar on issues dear to them. This will probably include but will not be limited to legislation regarding post-war grave-sites, an issue Cerar has already hinted he is willing to meet them at least half way.

And all of a sudden, nobody is in a hurry to sell the Telekom. Even the NSi, disappointed that there was only one offer (more likely: disappointed Deutsche Telekom did not bid), now say it might be prudent to halt the sale. The PM’s office, wisely, is not commenting on the ongoing procedures, but it seems that the political parties at large see the sale of Telekom in terms of short-term income, either for the budget or for party coffers and not in terms of what is best for the company.

For what it’s worth…

In fact, the current political elite is behaving as your average Slovenian small-time entrepreneur, valuing his business by the time and money he invested and not by what other people are willing to pay for it (i.e. it’s market value). As if we learned nothing from the numerous false starts of sale of Mercator retail chain resulting in the final price-tag being only a fraction of what it used to be or from the so-called Brewery Wars, which have led to rise and fall of Boško Šrot of Laško Brewery and, ultimately to the sale of the company for only good 50% more what Laško paid for Union ten years ago to monopolize the beer market in Slovenia.

Thus, the expectations that the value of Telekom Slovenije will rise on its own, are naive at least and the share price reflects that. It has been in a free-fall for the better part of the last two weeks and has rebounded slightly only today. A company which has not released an innovative product of its own for the better part of the decade, has spread itself too thin across the region only so see itself rolling back Balkan operations in the past few years and is being dragged through courts for allegedly abusing its market positions will require much more than just responsible management and ownership to increase its value. Since the state has, unfortunately, repeatedly failed to provide either (with a few notable exceptions far between), there is no compelling reason for the sale not to be realised, pending negotiations.

Unless, of course, the political elite suddenly wants to prove Janko Veber right.