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October 4, 2022

Romtelecom-Cosmote merger underway before BVB listing

Representatives of Citibank, Goldman Sachs and Rothschild already voiced interest.

Romtelecom and Cosmote Romania may merge before the listing of the first telecom operator at the Bucharest Stock Exchange (BVB), a process following which the Romanian state’s share in Romtelecom will be reduced, the minister of Communications, Valerian Vreme, stated, at the end of last week, Mediafax reports. “Romtelecom owns 30 per cent of Cosmote Romania’s shares. The Ministry of Communications and Information Technology (MCTI) proposed, to the OTE group (e.n. which controls both operators), the merger of the two companies before the listing of Romtelecom shares, in which case the Romanian state’s shares, at present accounting for 45.99 pc of the company’s capital, would be reduced. We are waiting for OTE’s response to this proposal,” Vreme added.

Cosmote Romania is the third local mobile phone operator, after Orange Romania and Vodafone Romania, and Romtelecom is the biggest fixed telecommunications operator. Vreme stated he had met representatives of several investment banks, including Citibank, Goldman Sachs and Rothschild, for talks on the potential listing of state-owned Romtelecom shares. “According to the privatisation contract, the Ministry of Communications called on OTE to present, by the end of 2010, a bid for the share package owned by the state in Romtelecom, a deadline extended, subsequently, by another three months, at the request of the Greek group. On the other hand, the ministry initiated procedures for public listing, a process which will be conducted via a consultant, that is, an investment bank,” Vreme stated. The latter added the consultant would be selected together with OTE.

“We are waiting for OTE’s offer. If it rises to our expectations, we will sell the shares owned in Romtelecom to the Greek group, after prior consultation with several analysts on the offer. We wouldn’t sell for anything significantly lower than EUR 1 bln. If the OTE offer is unacceptable, we will launch the operator’s stocks on the capital market, a process in which the ministry will resort to the services of a consultant, selected following a public auction,” the Communications Min stated. In his view, the listing of Romtelecom shares would have to take place after a merger with the mobile phone operator Cosmote Romania.

“There are numerous synergies between the two operators and, if they do merge, the new entity will become the biggest local telecommunications operator. In this scenario, the investors’ interest in the listing would be stimulated,” Vreme underlined.

In 1998, Goldman Sachs provided the Romanian state with consultancy services in the selling of a share package accounting for 35 per cent of the Romtelecom capital to the Greek group OTE, as well as granting it usufruct right for another 16 per cent of the operator’s shares.

Goldman Sachs was, also, alongside CA-IB, ABN-AMRO and Rothschild, part of a consortium which made, in November 2005, a bid for the listing of Romtelecom shares on the stock market.

At the same time, Citibank, alongside EFG Eurobank and Ergasias, took part in the bid organized by the Ministry of Communications six years ago. The bid was won by the consortium made up of the investment bank Credit Suisse First Boston and IEBA Trust, and the consultancy and financial services contract was signed in August 2006. Scheduled for 2008, the listing of Romtelecom shares was adjourned for 2009 as a consequence of troubles on the financial markets, a deadline which was not met, in the end.

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