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Vodafone's Czech business in talks on cooperation with CEZ

·2-min read
FILE PHOTO: Different types of 4G, 5G and data radio relay antennas for mobile phone networks are pictured on a relay mast operated by Vodafone in Berlin

PRAGUE (Reuters) - Vodafone's Czech subsidiary said on Monday it has been in talks with state-controlled utility CEZ regarding strategic cooperation, but did not confirm the discussions were about a possible sale of the business as reported by a Czech newspaper.

Financial daily Hospodarske Noviny reported on Monday that CEZ, central Europe's largest listed energy group, was interested in buying Vodafone's Czech business.

Talks over a price for the market's number three operator have been ongoing, the paper said, and a decision should come by the summer.

"We confirmed to Hospodarske Noviny that there have been talks with CEZ on different options of strategic cooperation. We did not confirm, however, that it is about selling the whole Vodafone (in the country)," Vodafone's local spokesman Ondrej Lustinec said.

Vodafone did not give further details on talks. CEZ declined to comment.

Shares in CEZ, 70% owned by the state, were down 0.4% to 518 crowns by midday on Monday, outperforming the market.

The shares, which hit a 22-month high of 552 crowns in January, have been supported by expectations of a higher-than-expected dividend due to proceeds from the sale of Romanian and Bulgarian assets as CEZ exits foreign markets.

Some analysts said proceeds from the disposals could be directed toward an acquisition of Vodafone.

But they also said buying the Vodafone business would take CEZ into a new area even though the company already has a smaller mobile operator with 130,000 clients, leasing network capacity from O2 Czech Republic.

"In general, we do not see much sense in the acquisition of such a big asset outside the main sphere of CEZ's business," J&T Banka said.

Hospodarske Noviny said Vodafone's local operations could be valued in the low tens of billions of crowns in the event of a sale.

Vodafone Czech Republic has around 4 million customers in the country of 10.7 million. It reported a net profit of 1.46 billion crowns ($68.08 million) in its fiscal year to March 2020.

T-Mobile is currently the biggest operator in the Czech Republic with around 6.2 million customers, followed by O2 Czech Republic with 5.97 million, based on the companies' data.

($1 = 21.4460 Czech crowns)

(Reporting by Robert Muller and Jason Hovet, editing by Louise Heavens, Kirsten Donovan and Jane Merriman)