ECONOMY

OTE share sale brings total privatizations revenue to 2.1 bln, 500 mln above target

The sale of a 10 percent stake in telecoms group OTE brought nearly 835 million euros into state coffers and brought this year’s revenue from the sale of state-owned assets to 2.1 billion, 500 million ahead of the year’s target, Economy and Finance Minister Giorgos Alogoskoufis announced yesterday. A total of 49 million shares were sold, at a price of 17.02 euros per share. Of these, 85 percent were placed with foreign institutional investors and the remaining 15 percent with domestic institutionals. The price at which the shares were sold was 0.94 percent lower than Wednesday’s closing price of 17.18 euros per share. Alogoskoufis called the sale an indication of investors’ belief in the economy’s positive prospects. «The sale took place in totally transparent conditions, was fast and had the lowest possible divergence (from the stock price). With this very successful divestiture, the Greek State will get 835 million euros. In total, we have earned 2.1 billion euros this year from privatizations… we have exceeded the target by 500 million,» he added. Alogoskoufis also told reporters that the government is preparing next year’s privatization plan, adding that targets will be set early but privatization announcements will take place only when the timetable is fixed. According to government sources, the sale of a 10 percent stake in ATEBank, formerly the Agricultural Bank of Greece, may take place before the end of the year, market conditions permitting. Analysts welcomed the stake sale. «The successful placement is considered positive because it will increase (OTE’s) free float and decrease state ownership,» P&K Securities wrote in a note. With the sale, the government’s stake in former telecoms monopoly OTE, still the dominant player in fixed-line telephony, will drop to 38.6 percent. Even with this successful sale, the government will not recoup the losses it sustained from a disastrously priced share-convertible bond issued by the previous, Socialist government and which expired this year. The bond, issued when the stock market was still hardly out of its bubble phase of 1998-99, matured earlier this year and none of the bondholders chose to exercise their option to buy shares, leaving the state to pay about 1 billion euros to redeem the bonds. «The state lost from that particular move. Of course it did… It was a bad investment on the state’s part,» Alogoskoufis said. No takeover suitors OTE Chairman and CEO Panayis Vourloumis told reporters yesterday that the company is not seeking a strategic investor to take over management and that there were no offers to that effect either. «At different times, interest has been expressed in (subsidiaries), such as CosmOTE or Romtelecom, but the group is not interested… It would be a mistake to deplete OTE this way,» Vourloumis said during a press conference in Thessaloniki, adding that the firm no longer plans to sell off subsidiary Armentel. Vourloumis said OTE has improved in all its activities, with the exception of fixed-line telephony, where it faces increased competition in a market only recently deregulated. OTE plans to improve its profitability by cutting down on operational costs. A voluntary early retirement program targeting some 5,000 employees will be followed by about 70 percent of them. «We will know for certain on October 14,» he said. OTE will lower monthly rental fees on ADSL Internet connections from September 20, with the tariff reductions applying to both current and prospective clients. «Widely available broadband access remains a key strategic priority,» Vourloumis said. «Our investments, along with an attractive tariff policy, underscore our commitment to the promotion of broadband technology and the Internet in Greece.» Monthly fees for 384 kilobits per second (Kbps) connections will fall 20 percent to 15.90 euros a month. Bigger cuts will apply to faster speed connections – 45 percent for 512 Kbps and 49 percent for 1,024 Kbps, to 19.9 and 32.9 euros respectively. OTE said a new pay-as-you go service, «OTE Surf,» will be launched by end-October, enabling Internet service providers to offer their customers Web access without subscription. (Kathimerini/Reuters)