OTE Group proposes immediate Romtelecom-Cosmote merger

The Hellenic group won’t buy the stock held by the Romanian state in the national landline telephony company, because the time is unfavourable, says Communications Minister Valerian Vreme.

The Hellenic Organization of Telecommunications (OTE) of Greece cannot make an offer for the state’s stock in Romtelecom for the time being, because of the economic difficulties in Greece, but may re-consider its position should circumstances change, and suggests an immediate merger between the national landline telephony provider and mobile telephony operator Cosmote Romania, reads a press release of the Ministry of Communications, quoted by Mediafax. Contacted by Nine O’Clock, Romtelecom said they could not make a statement, but promised to keep us informed as soon as an official position becomes available.

OTE also says the future of telecom companies will be dictated by technological developments and by the trend of consumers’ needs and demand.

In the letter to the Ministry of Communications, OTE notes that, if the Romanian Governments wishes to monetise its shares totally or just in part by stock exchange listing, it would send the Romtelecom management the appropriate instructions to assist the Ministry in the process under the Shareholders’ Agreement. Communications Minister Valerian Vreme sad the OTE letter would be analysed by the lawyers of the institution and that the Hellenic group would receive the Romanian position before the end of the week.

Twelve days ago, after seeing the OTE officials, Minister Vreme said the group would make a concrete offer on the stock held by the Romanian state in Romtelecom by May 27. ‘It may be a proposal for purchase, cooperation, merger (with mobile telephony operator Cosmote – our note) or listing of the state’s shares in Romtelecom on the stock exchange’, said the minister. OTE President and CEO Michael Tsamaz was saying in a press statement issued by Romtelecom at the time that the Greek group would prepare ‘a written proposal regarding the future of its investment in Romania’.

Going further back in time, in November 2010, Minister Vreme said the state intended to sell its 45.99 per cent in Romtelecom and asked OTE to come up with a price offer before the end of the year. The deadline was subsequently postponed by another three months and in March it was again postponed until the end of May. In February, he said Romtelecom and Cosmote Romania could merge before the listing process begins. In November 2010, the minister of Communications said the state’s shares in Romtelecom had been evaluated at about EUR 1 bln.

OTE holds 54.01 per cent of Romtelecom. OTE is in turn controlled by Deutsche Telecom, who holds 30 per cent and provides the management of the Greek operator. OTE became a shareholder in Romtelecom in 1998, when it took over 35 per cent of the companies registered share capital and received the usufruct on another 16 per cent of the company for USD 675 M. The Hellenic group became majority shareholder in 2003, when it grew its stake to 54.01 per cent for USD 273 M.

Romtelecom is a shareholder in Cosmote Romania – Romania’s third largest mobile telephony operator, on 30 per cent and in NextGen Communications – a company operating on the local telecom market since 2008 – where it has 100 per cent ownership. NextGen provides internet, cable TV and landline telephony services in over 120 urban and rural localities.

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