PRAGUE (Reuters) - O2 Czech Republic’s extensive telecoms infrastructure assets that are to be spun off into a separate company contribute about 50 percent of the group’s operating profit, O2 said on Friday.
The spin-off, designed to revive O2 Czech’s fortunes, will create a new firm, called CETIN, which will not be publicly traded. What remains of Czech O2 will continue as a publicly-listed operator, providing voice and data services as well as television.
Chief Financial Officer Toms Koura said in a presentation that O2 and CETIN were about equal in terms of their contribution to operating earnings as well as operating cash flow.
In terms net income in 2014, O2 accounted for about 80 percent due to higher write-offs at CETIN.
The plan by the country’s former telephone monopoly has been under consideration for some time and has supervisory board approval, but still requires the shareholder backing.
The majority shareholder is Czech billionaire Petra Keller’s PPI investment group, with an 83 percent stake.
O2 shareholders, including PPI, will vote on the plan at a shareholder meeting on April 28.
CETIN was valued at 150 crowns per share, or 46.9 billion crowns ($1.84 billion) for the purposes of the split. The final price will be set by a new valuation after the split, expected on June 1. On Friday, the whole company had a market capitalization of 68.9 billion crowns.
Shareholders will get 1 share in CETIN per each 1 share they hold in Czech O2. Shareholders who vote against will be offered a buy back of CETIN shares.
Czech O2 shares have been trading around 200 crowns in the past few weeks. They rose to 219.90 on Thursday, the highest level since before the spin-off was announced on Feb. 27. They fell to 217.20 on Friday.
Editing by Jane Merriman