ECONOMY

PPC defends its telecoms venture with Italy’s Wind

State-controlled electricity group Public Power Corporation (PPC) rushed yesterday to defend its joint venture in the local telecommunications market with Italian telecoms company Wind, noting that the decision had been taken on the recommendation of its advisers National Bank, Eurobank and the London-based Rothschilds bank. PPC emphasized the Italian company’s credentials, especially its success in its own domestic market and the fact that its counterpart in Italy, Enel, as well as France Telecom, are shareholders in Wind. PPC’s clarification came in response to criticism in local Sunday newspapers charging that the terms of the joint venture favor Wind and that the Greek group would pay excessively for its expansion into the telecommunications industry. PPC, which acquired a fixed-line wireless telecoms license last year, announced the joint venture with Wind last Wednesday. The agreement gives the Greek group a 49-percent stake in the new company while the Italian firm will take a 51-percent share. It also contains an option for PPC to acquire a share from Wind after three years, making the companies equal partners in the project. While the partners will exercise management jointly, the Italian company will have the upper hand. This was only natural as Wind possesses both the relevant experience and technical know-how, PPC said yesterday in a statement. It will need to approve all decisions despite the Italian company’s controlling stake in the joint venture. PPC also referred to the option allowing it to acquire two more shares in the joint undertaking, making it the majority stakeholder, once the telecommunications company posts profits before taxes, depreciation and amortization. On the services to be provided by the joint venture, it said the terms agreed to were based on market conditions. PPC also defended a controversial clause which calls for the joint venture to service all its telecommunications needs. It is only natural that PPC will prefer its subsidiary and not a third party to provide telecommunication services, it said. PPC sought to defuse criticism of alleged excessive pay packets for Wind employees, noting that the staff would be paid a proportion of their wages on a daily basis. The joint venture plans to take advantage of PPC’s infrastructure and nationwide customer base. It projects sales of 356 million euros in 2005, more than doubling to 856 million euros by 2011. The market share of commercial and household users is estimated at 18 percent and 14 percent respectively in 2006, making it the second-leading telecoms provider after the Hellenic Telecommunications Organization.