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Hunter and I will see you at the Four Seasons at 2:30pm. In advance of that, below are the questions from BHR. Some of these we can answer based on what you have told us already but I wanted you to see them and we can discuss further at 2:30pm.

1) The official process and scope of the transaction: our current understanding is that the Government of Serbia is selling its controlling stake in TS , but some news reported that the Government will decide the scope and form of the transaction after Lazard presents their recommendations. Would be helpful to get more guidance on how large the stake is being offered and the official time line of the transaction, and whether the government is open for a transaction of selling a minority stake? Also could you clarify on the exact % of stake in TS that the Government is entitled to? From what I can see on page 3 of “Telekom Srbija Acquisition Options - Government v21.pdf”, it seems that if sold upfront, the “effective” stake of government is 72.64%, given the treasury stocks have already been bought back (and therefore out of the equation). Kindly let me know if my understanding is correct.


2) Roles and participants: it seems Lazard sits at the sell side advising the Government of Serbia. In this case what roles do Novator and VTB play here (as in the materials sent over by you)? What other participants, particularly potential investors, are currently in the game? News run shows Telekom Austria (had unsuccessful bid a few years back), Deutsche Telekom, and investors from Russia, the UAE and the US might also be in the race. Any color on that?


3) Any view on the potential political sensitivity associated with this transaction? Reported opponents to the potential privatization may include the Democratic Party of Serbia (DSS) and the movement Dveri, as well as the labor union. Also it is speculated that Russian and the US both see this as a strategic asset in the region.


4) The Government has been trying to offload for several years. What is the rationale and motivation for the sale? Is any specific legal and regulatory requirement governing such a divestiture by the government?


Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com <x-msg://59/eschwerin@obblaw.com>
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