ECONOMY

CosmOTE to take majority stake and relaunch CosmoRom in ’05

Mobile phone operator CosmOTE is to take a majority stake in ailing Romanian mobile company CosmoRom from fixed-line carrier Romtelecom and will relaunch operations within the year. «CosmOTE will pay 120 million euros ($150.8 million) in cash for 70 percent of CosmoRom,» Romtelecom spokesman Dan Pazara told reporters yesterday. Greece’s dominant fixed-line telecom company OTE holds a majority stake in Romtelecom and around 64 percent in CosmOTE. Pazara said CosmOTE would also provide the financing to relaunch CosmoRom, estimating the amount needed for a relaunch at between 400 million and 500 million euros ($628.5 million). CosmoRom will resume operations this year, Communication Minister Zsolt Nagy said, adding that CosmoRom, with an estimated 190 million euros in liabilities to suppliers, would be free of debts after the completion of the transaction with CosmOTE. «For CosmOTE, the transaction can be interpreted dually, as it adds risk given the capital expenditure requirements for the restarting and the increased penetration of the Romanian market,» said analyst Vassilis Kararizos at Athens-based Proton Securities. In Athens, telecoms equipment-maker Intracom said it had settled with OTE on liabilities owed by CosmoRom, and that it would receive 78.2 million euros in a deal with OTE to settle liabilities owed by CosmoRom. It said the deal was conditional on an investor taking majority control of CosmoRom. Under the deal, Intracom would drop its lawsuit against OTE, Romtelecom and CosmoRom, while CosmoRom would end litigation against Intracom. CosmOTE said in a statement that all of of CosmoRom’s liabilities, except for liabilities to OTE’s international arm of up to 16 million euros and third-party liabilities of up to 2 million euros, will be capitalized or written off after finalizing the deal. Romtelecom lifted first-quarter net profit by 356 percent to 46 million euros on a 12.2 percent rise in operating revenues to 225.7 million euros. (Reuters)