Profit from selling the shares could be substantially lower than expected.
Not even a day after Prime Minister Tihomir Orešković announced the sale of the Croatian stake in the satellite operator Eutelsat, shares of that company on the Paris Stock Exchange fell by 30 percent, reports tportal.hr on May 13, 2016.
Of course, the reason was not the Prime Minister’s announcement, but the fact that the company’s management has lowered its estimates for this and the next financial year, warning that they expected a decline in revenues.
The world’s third largest satellite operator, which is based in Paris, announced that in the current financial year which ends on 30 June it expected stagnation of incomes on an annual basis, lowering the earlier estimate when the increase of between two and three percent was expected.
In the next business year 2016/2017, Eutelsat expects revenues to decline between one and three percent. Its earlier forecast was an increase by between four and six percent. In the first three months of this year, the company made 383 million euros in income, which is 4.2 percent more compared to the same period last year, but below analysts’ expectations.
Croatia has a 0.45 percent stake in the company, and the Governing Council of the Centre for Restructuring and Sale on Thursday decided that the state would sell its shares.
Although Croatia’s stake is small, the Prime Minister on Thursday said that it could be worth as much as 30 million euros, which would mean that with this drop in stock prices Croatia could lose around nine million euros.
European Telecommunications Satellite Organization (Eutelsat) was founded in 1977 as a European intergovernmental organization for satellite communications. One of the founders was the former Yugoslavia. In the process of succession, Croatia has received its 0.45 percent stake.
Proposals for the shares to be sold were first mentioned six years ago, but the government at the time decided it was better to keep them and receive annual dividends. It seems that the decision was the right one, since the company’s business has been quite successful. According to estimates, between 4 and 8.5 million kuna came each year to the state budget as a dividend.
