The government has resumed negotiations with Deutsche Bank to consult on the privatization of the Bulgarian Telecommunications Company (BTC). It expects to sign a contract with the German institution by the end of this month. The news was revealed last Thursday after talks with Deutsche Bank's vice-president Ian Logan, who headed a team of experts that visited Bulgaria.

The previous government signed an 18-month contract with Deutsche Bank for BTC's first privatization procedure. After the new Economy Minister Nikolai Vassilev took office he sent a letter to the bank asking if it was still interested in consulting on the deal. According to some sources, the government owes around $1 million to Deutsche Bank for the work it has already done. Vassilev said that as far as he knows the government does not owe Deutsche Bank any money from the previous contract.

The new contract will ensure that Deutsche Bank remains consultant to the government until the deal for BTC is finalized, said Minister of Transport and Communications Plamen Petrov. The payment scheme envisages transferring fixed monthly fees to the bank, plus a percentage of the price achieved during negotiations for the sale of the telecommunications company.

The government promised to stop searching for other consultants. "The Bulgarian government is interested in working with the German institution because it will save us a lot of precious time and money," said Nikolai Vassilev and added he was certain that Deutsche Bank could provide professional and competent consultancy on the deal.

"The strategy for the sale of the Bulgarian Telecommunications Company has reached a very advanced stage. We are discussing which would be the easiest and most suitable approach at the moment, bearing in mind the state of the telecommunications sector worldwide," Petrov told a press conference on Thursday.

"We are discussing the possible structure of the BTC deal," he said. Government and Deutsche Bank representatives also discussed the costs that will be incurred during the company's privatization. "The talks will continue in the coming days and I hope that we can reach an agreement," said Petrov.

Apart from the parameters of the contract with Deutsche Bank, the two parties discussed potential investors for the BTC. "They presented an analysis of the international situation in the telecommunications market which shows that we cannot expect much interest. There are few companies that invest in this sector in Europe," said Privatization Agency executive director Apostol Apostolov after meeting Ian Logan.

According to Petrov, BTC may be sold as a package with the third GSM license. The government plans to allow financial institutions to bid for BTC. This was one of the possible changes in the privatization strategy that was discussed with Deutsche Bank's representatives.

Last week OTE, Greece's national telecommunications company, submitted a letter of interest in the privatization of BTC, thus confirming in writing its intentions to participate in the privatization again. In the previous privatization procedure a consortium of OTE and the Dutch KPN offered to pay $650 million for 51 per cent of the BTC and the second GSM license. The deal failed after the bidders posted additional requirements. Last December OTE won the tender for the second GSM license with a bid of $135 million.

Deutsche Bank's representatives said that since OTE submitted a letter of interest a few more companies have shown interest in BTC's privatization. They are Hungary's MATAV, Britain's Vodafone and Telecom Italia Mobile.