ECONOMY

Russian conglomerate to buy 51 percent of Intracom Telecom

The restructuring of Intracom apart from the tried and tested, but now obsolete, model of preferred supplier to state-controlled companies passes through a Russian entrepreneur with close ties to President Vladimir Putin. Following a lengthy period of rumors, with US companies Cisco Systems and Raytheon floated as likely buyers, Intracom Holdings yesterday announced, at an extraordinary shareholders’ meeting, a non-binding agreement to sell a 51 percent stake in wholly owned subsidiary Intracom Telecom to Russian company Sitronics, a member of the Sistema group, for 120 million euros. Now divided into four parts (telecommunications products, telecoms services, information technology and defense procurement), Intracom is seeking a new role and new partners, having understood that it needs a different technological and financial infrastructure to continue its profitable activity, now that state contracts – its lifeline for almost 20 years – are harder to come by. Intracom Telecom controls the parent company’s telecommunications equipment division, the one that earned lucrative contracts from telecommunications company OTE and other state-controlled entities. The relatively modest amount of the transaction, relative to the valuation of Intracom Telecom – Intracom CEO Socrates Kokkalis claimed the company was valued at 440 million euros – is due to the fact that the Russians have agreed to take on board Intracom Telecom’s significant debt. Following the sale and after the reorganization of the group, which included folding software subsidiary Intrasoft into the parent company, Kokkalis controls 27.26 percent of Intracom Holdings. The agreement with the Russian company brought back into prominence a group veteran, Constantine Dimitriadis, who owns 11.7 percent of Intracom Holdings. Some analysts believe that Dimitriadis’s re-election yesterday to the holding company’s board elevates him to the status of co-owner. The new Intracom Holdings board is made up of Kokkalis, Dimitriadis, Dimitris Klonis, Constantine Antonopoulos, George Anninos, Stylianos Zervopoulos, Nicholas Lambroukos, Anna Pouskouri-Reiche and Dimitris Hadzigrigoriadis. The latter two are outside (that is, non-executive) directors. Vladimir Evtushenkov, the founder, main shareholder (with a 64.2 percent stake) and chief executive of Sistema, is among the 10 richest Russians. He built his fortune by either founding new companies or acquiring former state firms in the telecommunications and IT sectors.