Telecoms operator OTE appears to be stuck in a web of high-interest loans this year as it joined other telecoms operators that have found themselves in the same situation in the last five years. Many of these companies are now currently liquidating their stakes or selling their assets, such as their real estate holdings. OTE will need to decide this week on its funding needs for 2003, which include a short-term loan of 1 billion euros and the renewal of medium-term loans of about 1.5 billion euros. Although P. Kaliabetsos, the new fund management head at OTE, has attempted to rationalize the group’s loan strategy, the impression of an unclear description of additional funding capital to the amount of 600 million euros set aside for possible new investments is distressing. These investments are not specified, with many believing that they are targeted for Cosmorom, the Romanian mobile operator which is in bad shape. OTE’s board of directors and management also consider the loan obligations of its subsidiaries, now under the full control of the group, as being problematic. If it can come up with better lending conditions and, in the process, abolish the subsidiaries’ autonomy, OTE will take on an additional burden. This could even affect its creditworthiness. OTE is currently preparing to take out a short-term loan of up to 1 billion euros via short-term corporate bonds. It is also trying to find a way to refinance short-term loans of 1.2 billion euros. Furthermore, it is attempting to release itself from negative pledge and cross-default conditions related to a corporate loan taken out in 2001. This is likely to cost it even more.