Telenor ASA (TEL), the Nordic region’s largest telecommunications operator, agreed to buy Hellenic Telecommunications Organization's (OTE) Bulgarian mobile unit for 717 million euros ($934 million).
Telenor’s acquisition of Globul, the second-largest mobile carrier in Bulgaria with a 36 percent share of the market, allows the Fornebu, Norway-based operator to grow its presence in central and eastern Europe, while enabling the Athens-based operator to reduce costs. Germany’s Deutsche Telekom AG (DTE), which holds a 40 percent stake in OTE, considered aiding the unit in August. The deal will be finalized in the third quarter.
Telenor, which generated 58 percent of its revenue outside Norway, Sweden and Denmark last year, has continued to push into faster-growing countries in Europe and Asia to boost sales. The carrier already operates in Hungary, Serbia, Montenegro as well as Thailand and Malaysia.
“Based on our experience in Telenor’s well-performing operations in the region, we strongly believe that we will be able to create value in the Bulgarian market,” Telenor Chief Executive Officer Jon Fredrik Baksaas said in an April 26 statement.
OTE, Greece’s second-biggest company by market value, has cut staff and sold international assets to reduce debt as the nation’s recession damps demand for its products. In January, the company issued 700 million euros of five-year bonds to redeem more than 1 billion euros of notes due this year and next. Demand for those notes exceeded supply, with OTE Chief Executive Officer Michael Tsamaz calling it a “vote of confidence” in the company.
Globul has been in Bulgaria since 2001, Telenor said. At the end of 2012, the carrier had 4.5 million subscribers. The company, along with OTE’s Germanos Bulgaria unit, had revenue of 378 million euros and earnings before interest, taxes, depreciation and amortization of 135 million euros.
OTE reported a fourth-quarter net loss of 43.7 million euros on Feb. 28 as sales slipped to 1.1 billion euros from 1.2 billion euros a year earlier. OTE is scheduled to report its first-quarter results May 8. Telenor reported April 26 first- quarter sales slipped 1.6 percent to 24.7 billion kroner ($4.22 billion), while net income rose to 3.6 billion kroner.