ECONOMY

Chasing the golden goose: OTE says it plans to boost stake in CosmOTE subsidiary

State-controlled telecom operator Hellenic Telecommunications Organization (OTE) yesterday signaled its intention of increasing its stake in mobile phone subsidiary CosmOTE this year following a meeting of its board of directors. Last year OTE held talks with Norway’s Telenor on the possibility of acquiring the latter’s 18-percent stake in CosmOTE. However it balked at the premium that it would have to pay for the stock, saying it needed to hire an independent consultant to evaluate the price of the stake. Since launching its operations in 1998, CosmOTE has proved to be a golden goose for OTE, boosting its profits and helping to offset declining earnings from fixed-line operations. In the first nine months of 2001, the mobile subsidiary reported a 61-percent jump in revenues, boosting its share of consolidated revenues to 15.3 percent from 8.9 percent. Telenor, on the other hand, is perceived as a sleeping partner for CosmOTE. OTE holds a 59-percent stake in CosmOTE and WR.Com Enterprises 7.27 percent. OTE said yesterday that the board had decided to increase the company’s stake in its mobile phone subsidiary this year «with the objective of improving its financial results.» Other objectives agreed upon yesterday included expanding the company’s customers to more than 20 million both locally and abroad over the next three years. Well aware of the threat to its position from the batch of new telecoms operators due to debut on the domestic market this year, OTE has in the last couple of years embarked on an expansion drive in the neighboring Balkans. The focus on overseas markets appears to be paying off. Telecom Serbia and Romtelecom, telecoms operators in Serbia and Romania in which OTE holds stakes, reported impressive net earnings in the third quarter of 2001. The board also agreed to cut operating costs and rationalize the company’s procurement policy and inventory. It also gave the green light for a strategy of decentralization with the goal of reducing red tape. Shifting passengers to later flights would be obligatory in every case unless they choose to have their tickets fully refunded.