Intracom buy upsets OTE

News of telecoms equipment-maker Intracom’s acquisition of a 18.3 percent interest in alternative telephony provider FORTHnet last week came as a bombshell to the sector’s main provider, OTE. Intracom has for years been one of OTE’s two main suppliers – the other being Siemens’s Greek arm – acquiring in the process the rather dubious distinction of «national» supplier amid repeated charges of being immune to competitive tenders. Its president, Socrates Kokkalis, had long declared (as far back as 1999) Intracom’s intention of evolving into a service provider, due to the inevitable declining trend in equipment orders, but the FORTHnet acquisition still seems to have caught everyone at OTE by surprise. The prospect of Intracom’s acquisition of a majority stake in one of OTE’s main competitors sent the utility’s management scurrying into consultations with the government, still the utility’s main shareholder. Half price To be sure, Intracom is more than OTE’s main supplier. It has also been, along with Siemens, its main technical support provider in recent years. On December 18, 2004, OTE’s board approved the technical support contracts for the three years 2005-2007, mainly for Ericsson AXE-10 systems. These contracts were still not signed by February 24, 2005, when Ericsson, which would subcontract for Intracom, submitted a rival technical support bid for about half the prices that Intracom and Siemens had offered. The new offer created strong upheaval at OTE and the signing of the original contracts kept being put off. Early last week, the signing appeared well set for Wednesday, when Intracom announced its acquisition of a minority share in FORTHnet. OTE’s CEO Panagis Vourloumis discussed the issue with ministers and said he would freeze the signing of the three-year contract with Intracom, claiming «force majeure.» On Thursday, after an exhaustive briefing by senior technical department officials, the board approved the signing with Siemens and ANKO – a smaller participant – but not Intracom. The outstanding issue will no doubt have to be tackled at a future meeting but Intracom’s move has bolstered the side of its critics who have long attacked its oligopolistic market status, going as far as to charge it with holding OTE ransom. The original combined technical support offer by Intracom and Siemens, approved in December, was for 8.85 million euros, including 1.65 million for Ericsson’s subcontracting participation. In its rival bid, Ericsson asked for just 4.67 million euros.

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