UPDATE 1-Slovenia Telekom to be privatised by year end -economy minister

Tue Mar 18, 2014 6:33am EDT

* Telecom sale is most prized in privatisation programme

* Asset sales aimed at helping Slovenia avert bailout

* Deutsche Telekom, Telenor may be interested (Adds details, NKBM sale, background)

LJUBLJANA (Reuters) - Slovenia's government is likely to sell its stake in Telekom Slovenia, the most prized asset in the euro zone country's planned privatisation programme, by the end of the year, Economy Minister Metod Dragonja said on Tuesday.

"It is my expectation that Telekom will be privatised by the end of this year," Dragonja told a news conference.

The telecoms company is the largest among more than a dozen companies the government listed for privatisation last year as part of its efforts to overhaul the economy and avoid becoming the next euro zone member to have to seek an international bailout.

Telekom Slovenia has a market capitalisation of 860 million euros ($1.20 billion) and, according to Thomson Reuters data, the government currently owns 62.5 percent of the company.

In October, the government's investment fund SOD, which is in charge of selling Telekom, chose U.S. bank Citigroup as a financial advisor in the sale but there have been no further steps reported on the privatisation since then.

Sources close to the deal told Reuters in December that Deutsche Telekom and Telenor, as well as other telecom companies and private equity groups could be interested.

SOD, which is also managing the privatisation of the country's second-biggest bank, Nova KBM (NKBM), said on Tuesday it had chosen auditing company KPMG to perform due diligence on the lender. It did not say when the bank would be sold.

In December Slovenia injected 3.3 billion euros into local banks, including NKBM, and started transferring their bad loans to a state bad bank, enabling it to narrowly avoid an international bailout. ($1=0.7180 euros) (Reporting By Marja Novak; Editing by Zoran Radosavljevic and Susan Fenton)