Search for OTE partner renewed
Privatization consultants for OTE telecom now have until the end of March to find a strategic partner in Europe. The government concluded it should extend this process, just as a strong tidal wave was hitting the Athens stock market. Greece also contemplated the placement of 15-17 percent of OTE shares. The original deadline for finding a strategic partner passed without any success at end-February, which is when a strong correction began in global stock markets. That correction affected the local market significantly, with the OTE stock losing 10.08 percent of its value from February 26 till March 1, falling from -22.06 to -19.92. The stock losses were later recouped, but this has hardly restored optimism in the government camp about the placement of OTE shares by mid-2007. Earlier this month, the Greek press reported statements by a high-level official of Telekom Austria about its interest in the Greek telecommunications giant. The Economy Ministry then responded cautiously to this reported Austrian interest, stressing that it would be expecting the consultants’ reports first. The contacts consultants will have by the end of the month will include fresh discussions with Telefonica of Spain and Deutsche Telekom. Originally negotiations with Telefonica had stopped because the Spanish company was interested in Portugal Telecom (they have joint ventures in Latin America), which was about to be acquired by another French company. Nevertheless, the Portugal Telecom acquisition has not gone ahead, at least for the time being, so it is estimated that the Spaniards may renew their interest in OTE. In Germany, the constant changes in the top level of Deutsche Telekom rendered decisions harder to make, especially for major issues. However, the recent presentation of Deutsche Telekom strategy plans by the company’s new management contained clear references to acquiring similar corporations. Developments in the above telecom companies, according to the government, were the signal for consultants to restart their search for a strategic partner. Besides the unfortunate conjunction, a major obstacle for finding a partner has been the government’s indecision on whether the management of the organization will be conceded. Management concession Originally Giorgos Alogoskoufis, the economy minister, had presented a plan whereby the European strategic partner would acquire 20 percent of the company along with its management. Then Public Works Minister Giorgos Souflias spoke in Parliament against that plan, so the concession of the management turned into a partial one. This was expressed as a directive to privatization consultants, who suddenly felt an extra burden as they were conducting their negotiations. In the first round of negotiations, the consultants realized that even without this problem the German and Spanish companies were not really interested in participating only partly in OTE management. It was actually reported that they laughed at the prospect of participating initially only by 50 percent in the administration of OTE and taking the whole of the management after five years. At this stage, the government definitely needs to cash in -1.6 billion from part-privatizations in 2007, with -1.1-1.2 billion supposed to come from the sale of OTE. The rest was expected to come from the placement of Postal Savings Bank shares. It was originally thought that both these sales of state company shares would have been completed by mid-2007. What is more, in case the plan about finding a strategic investor for OTE with the concession of its management was successful, the revenues from the telecom corporation would have exceeded -2 billion. Now the timetable has to stay behind as it is clear that the course of the local stock market will determine which is the appropriate time for these part-privatizations. At any rate, this -1.6 billion cannot be lost for the state budget, as it is destined to plug the public debt hole.
