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The Spanish telecoms giant Telefonica has bought a majority stake in Cesky Telecom. Under a contract signed in Prague on Tuesday, Telefonica will pay the Czech government 82.6 billion crowns for its 51.1 percent shares in the company. The government will use the revenue to finance social and environmental projects, cover the losses of the bail-out agency Ceska Konsolidacni Agentura and to implement the planned pension reform.

Tuesday has been confirmed for the sale of the government's 51.1 majority stake in the country's giant fixed-line operator Cesky Telecom to Spain's Telefonica. Telefonica and Czech government representatives, as well as Prime Minister Stanislav Gross himself, are expected to attend the signing of the deal, worth more than 3.5 billion U.S. dollars.

Police have charged the former head of the Czech airplane manufacturer Aero Vodochody with fraud. Petr Hora, the former head, resigned in 2001 following problems securing fighter jets for the Czech Air Force in a deal worth more than 2 billion dollars U.S. Aero Vodochody was to have delivered 72 planes by 2002, but delivered only 12. Police have charged Mr Hora with breech of trust leading to damages of more than 100 million dollars to the Aero Vodochody firm.

Representatives from the Czech automaker Skoda Auto have signed a licensing agreement in China for the production of the company's "flagship" Octavia model in that country in 2006. Skoda's parent company Volkswagen, already produces models in China. While the Skoda models have also been planned for the Chinese market, eventual export to neighbouring countries has not been ruled out. Full production will come underway by 2007 when Skoda Auto estimates it could produce at least 40, 000 cars in China.

A control test by the State Veterinary Administration has confirmed the Czech Republic's 18th case of BSE. A five-year-old cow in the region of Central Bohemia was found to be infected with the disease the third case this year. Some 260 animals will be put down. Since 2001, some 750, 000 cattle have been tested for the disease; despite the 18th positive case, the State Veterinary Administration has said it does not expect a significant increase in BSE infection in cattle in the Czech Republic.

Outgoing Minister for Information Technology, Vladimir Mlynar, has been charged by police for the alleged misuse of confidential information and property in establishing a private company handling certain aspects of government work. Mr Mlynar received notification from police on Monday but has denied any wrongdoing.

A new poll has suggested that public dissatisfaction over the current political situation in the Czech Republic has continued to grow since February. According to the poll, conducted by the CVVM agency, some 62 percent of Czechs are not happy with developments, with only 31 percent supporting the government in February. The government fell apart over unexplained financing of the prime minister's flat, as well as business dealings by the prime minister's wife. Members of the three coalition parties are continuing to negotiate on a new pro-European cabinet that would serve out the final 14 months of its term.

Inter-party negotiations to form a new government are scheduled to begin on Sunday evening. Leaders of the Social Democrats, Christian Democrats and Freedom Union will be discussing a proposal put forth by Prime Minister Stanislav Gross to form a "pro-European" government with a new Social Democrat party member at the helm. Mr Gross has agreed to step down from office on the condition that the coalition members not nominate party leaders for key Cabinet posts. Under the Czech constitution, the prime minister's resignation automatically triggers the whole Cabinet's collapse. If Mr Gross quits, it would be the second cabinet collapse in the Czech Republic in less than a year.

Ahead of Sunday night's meeting, Christian Democrat deputy chairman Libor Ambrozek, who was one of five ministers to resign in recent days, said that his party would not let Mr Gross dictate who it would nominate to take up Cabinet post in a new government. He was reacting to the Prime Minister's demands that ministers who had "undermined" the government, presumably by resigning, not be allowed to resume their posts. According to the Social Democrats, the new government, which will likely be headed by the current Czech ambassador to the European Union, Jan Kohout, would be a kind of caretaker government, formed to gain confidence in an upcoming vote before the lower house of Parliament. Prime Minister Gross has said that if the coalition members do not agree to form such a government, the Social Democrats will govern alone with a minority Cabinet.

A new Miss Czech Republic was crowned on Saturday night, in a ceremony at the Grandhotel Pupp in the spa town of Karlovy Vary. She is 23-year-old Lucie Kralova from Teplice, in northern Bohemia. Miss Kralova received over 220,000 votes via SMS, the phone text messages. As Miss Czech Republic 2005, the dark-haired, green-eyed beauty will have the chance to represent the country at the next Miss World contest.

In other news, police say that some 150 skinheads attended a concert on Saturday night in the village of Hostenice, near the Moravian capital of Brno. Police and monitors from the anti-discrimination group Tolerance say the event passed without incident, but anti-fascist groups say the bands have performed songs with anti-Semitic lyrics, a violation of Czech laws.