Germany’s Deutsche Telekom (DT) is reportedly nearing an agreement to acquire the Greek state’s 10% stake in incumbent OTE, which would boost its stake to 50%. The German incumbent is in advanced talks with the Greek government and “ready to shake…
Germany’s Deutsche Telekom (DT) is reportedly nearing an agreement to acquire the Greek state’s 10% stake in incumbent OTE, which would boost its stake to 50%.
The German incumbent is in advanced talks with the Greek government and “ready to shake hands”, Greek newspaper To Vima reported without citing sources.
DT acquired its existing 40% stake in OTE in 2008, securing a right of first refusal if the state decides to sell more shares. In addition to the state’s 10% stake, the remaining shares are held by Greek and international institutional investors and private shareholders.
OTE has a market cap of €572.86m (US$784.91m) on the London Stock Exchange, valuing a 10% stake at €57.29m (US$78.49m).
OTE, DT and Greece’s ministry of finance have declined to comment on the report.
Greece is working to privatise numerous companies to meet the requirements of its European Union/IMF bailout, however the OTE stake has so far not been part of this.
Antonis Diapoulis, an analyst with Alpha Finance in Greece, noted that such an acquisition by DT would not oblige it to launch an offer for the remaining shares as, under Greek law, privatisation deals are exempt. Diapoulis said that he would expect DT to pay close to market price for the stake.
Constantinos Zouzoulas, managing director for research at private investment bank Axia Ventures in Athens, said the stake increase would make sense for DT as it would enable it to fully control the board of directors. DT would also then be able to position OTE more strategically in the Balkans and potentially enter new markets or market segments, he added.
Signs the Greek economy could return to positive growth in 2014 and consolidation within the local fixed telecoms spaces is “finally under consideration” would also make the timing opportune, he said.
“The rebound of the economy and more sensible competition should allow OTE to start increasing revenues and further expand margins.”
Last week, Deutsche Telekom agreed to buy out minority shareholders in T-Mobile Czech Republic for €828m (US$1.13bn). The German telco plans to merge the Czech mobile operator with its other operations in the country, T-Systems Czech Republic and the local operations of GTS Central Europe. DT acquired the GTS Group late last year for €546m, allowing it to boost its fixed-line infrastructure in a number of Central and Eastern European markets.
Last week, Bloomberg quoted DT’s head of European operations outside Germany, Claudia Nemat, as saying the company aims to become the market leader in all of its CEE markets by 2018.
OTE has been working to cut debt which stood at €3.39bn (US$4.64bn) on 30 September 2013. Of this, about €822m (US$1.13bn) is set to mature in 2014, €817m (US$1.12bn) in 2015 and €936m (US$1.28bn) in 2016.
