UPDATE 1-Slovenia Telekom sale on hold, awaits new government approval
* New govt to take over in the middle of Sept
* Telekom has market cap of 840 mln euros (Updates with the sale on hold, SDH quote)
By Marja Novak
LJUBLJANA, Sept 2 (Reuters) - The privatisation of Slovenia's largest telecom operator Telekom has been put on hold, pending approval by the incoming centre-left government, government investment firm SDH told Reuters on Tuesday.
SDH, which is coordinating the Telekom sale, confirmed a report in daily newspaper Finance that the sale could be delayed. Privatisation is seen as a key element in Slovenia's drive to consolidate public finances after it narrowly avoided an international bailout for its banks in December.
"In line with opinions of legal and financial advisers, the SDH believes that a clear standpoint and support from the new government is needed before the sale of Telekom can continue," SDH said in a statement prepared for Reuters.
Telekom is the largest of 15 firms the outgoing government slated for privatisation last year. Only two have been sold so far. Telekom's sale process started in April and the outgoing government had hoped to finalise it by the end of the year.
But law professor Miro Cerar, who became prime minister last week after his centre-left Party of Miro Cerar (SMC) won a snap general election in July, has been sending conflicting signals about the sale of state assets.
He said he was against selling strategically important firms like Telekom. But he also said he would not stop the privatisation if that would hurt Slovenia's credibility.
Cerar will take over after parliament approves his cabinet, which is expected in the middle of September.
His SMC party is due to sign a coalition agreement with pensioners' party Desus and the centre-left Social Democrats (SD) later this week, both of which are reluctant about privatisation in general.
According to local media, a draft coalition agreement includes the possibility of separating Telekom's services and infrastructure before the sale, with the infrastructure arm remaining in state hands.
Analysts say that would halve the price of Telekom, which has a market capitalisation of 840 billion euros ($1.10 trillion) and was expected to be sold for about one billion euros.
The government and state-owned firms are selling a total of 72.75 percent of Telekom, with the rest of the company already in the hands of private investors.
"I hope the government will not divide Telekom as in that case it will probably not find a buyer at all. However, I expect that Telekom will be sold as a whole company, also due to the pressure from Brussels," said Jure Vrhunec, a trader at Raiffeisen Bank.
Sources close to the deal told Reuters in July telecom firms Deutsche Telekom and Turkcell and investment companies CVC, Cinven, Providence and Apax could be interested in purchasing Telekom.
Telekom shares closed 1.83 percent lower at 128.50 euros on Tuesday while the blue-chip SBI index gained 0.23 percent. (1 US dollar = 0.7623 euro) (Reporting by Marja Novak; Editing by Zoran Radosavljevic and)