The state is selling more than 31.3 million shares in Eesti Telekom in the initial public offering which will last from Jan. 25 until Feb. 9.
Michael Boardman of Nomura International, who helped to organize the public offering, said the floor and ceiling prices were set on the basis of a comparative analysis of other similar companies and feedback from Estonian and international investors.
Boardman said Eesti Telekom's value should be relatively higher than the Polish TPSA company's but is on the same level with the Hungarian MATAV.
After the ministry announced bidding prices, the price of the offered shares is determined anywhere between 2.4 billion kroons and 3 billion kroons.
Out of 31.2 million shares which will be offered publicly, more than 3.4 million shares have been reserved for the Telekom group's strategic investors, Sweden's Telia and Finland's Sonera.
Telia and Sonera will be entitled to buy their shares at the price established in the bidding.
Besides this, 4.7 million shares will be acquired by international organizers of the public offering at the price established during the bidding.
Eesti Telekom's shares will be available to foreign institutional investors, while at home both public and institutional investors can acquire the company's shares.
In case of over subscription, investors who make their bids in Estonia will be assured up to 50 percent of the shares they bid for, up to a total cost of 7,500 kroons.
The Transport Ministry hopes to announce the average price of the shares on Feb. 10. The average price will be determined within the range of the minimum and maximum bidding prices.
Transport Minister Raivo Vare noted that even though Telekom is a very attractive company, foreign investors are unsure about Estonia's macroeconomic stability. He explained that potential investors see the country's small size, its eastern neighbor Russia, and current account deficit as problems.
The company is trying to prove the opposite. During the subscription period, Eesti Telekom's management will present the company to European and American investors in a road show to start in Tallinn Jan. 25 and which will take in about 25 cities in Europe and America.