April 10, 2015 / 7:12 AM / 4 years ago

UPDATE 2-Slovenia can expect two bids for Telekom -sources

(Updates with share price fall in para 4)

By Marja Novak

LJUBLJANA, April 10 (Reuters) - Slovenia can expect two binding bids for telecommunication operator Telekom Slovenia on Monday, both below market value, three sources familiar with the process told Reuters.

One source, who did not want to be identified, said investment fund Cinven and Deutsche Telekom were likely to bid around 110 euros ($117) per share compared to the market price which was 132.6 euros on Thursday.

Cinven and Deutsche Telekom declined to comment.

Following the Reuters report on the expected bids shares of Telekom lost almost 2 percent by 1015 GMT, falling to 130 euros, and analysts said further falls were possible.

The source said the price would be lower than the current market price because of the falling profits of Telekom and the risks from court cases against Telekom for allegedly abusing its dominant market position in past years.

“Any acquirer of the business would have to take those potential liabilities on as a risk and that risk would have to be baked into the offer price,” the source said.

Slovenian daily newspaper Dnevnik reported on Friday that Cinven and Deutsche Telekom would offer up to 115 euros per Telekom Slovenia share.

In February, Telekom reported that its profit fell to 1.6 million euros in 2014 from 51.1 million a year before, mainly on account of higher provisions for litigation risks.

According to local media, court cases against Telekom could result in damages of up to 440 million euros.

Telekom, which is majority state-owned and has market capitalisation of 867 million euros, is the largest of 15 companies that were earmarked for privatisation in 2013. Three of those firms have been sold so far.

On Thursday, parliament ousted defence minister Janko Veber because he ordered the army intelligence service to analyse the security consequences of the sale of Telekom.

Veber’s centre-left Social Democrats have been against the sale of Telekom but are expected to remain in the government in spite of Veber’s dismissal. ($1 = 0.9405 euros) (Reporting by Marja Novak, additional reporting by Arno Schuetze in Frankfurt; Editing by Jane Merriman and Keith Weir)

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