Hands off telecom sector
Panagis Vourloumis, the chairman and CEO of OTE, Greece’s largest telecommunications company, yesterday declared himself opposed to the regulation of the telecoms market, at least in its present form, calling it «the most serious long-term problem (telecoms companies) face.» Speaking at the opening session of the world conference of UNI Telecom, the global union of telecommunications employees, Vourloumis said that «in the name of so-called consumer interest, the way that Europe regulates telecommunications is creating a climate of uncertainty, deterring investment and encouraging parasitic behavior. It is a problem that should concern us all.» «We need to work together to create competitiveness, to create jobs and to keep our economic units healthy,» Vourloumis added. The OTE boss told the gathering of unionists that he saw a positive and a negative side to unions. The 70-year-old Vourloumis called himself a 58-year veteran of hard work who understands very well the notion of exploitation in the workplace. «I know what exploitation means and I have no delusions about the nature of economic relations. If you do not protest, you are buried alive,» he said. Organized unions have a central role in the economy and, if they tackle this role responsibly «unionism contributes to economic progress and the protection and well-being of employees.» Unfortunately, said Vourloumis, a large section of Greece’s unionist movement «has gone off the rails» and, instead of protecting the interests of employees, it serves the interests of political parties and furthers the political careers of several union officials. «In this way, unionism has been denatured by interests alien to those of the employees.» Despite these problems, Vourloumis said cooperation between management and the unions is essential if telecoms companies are to adapt fast to changing technologies and market conditions. He also praised unions for agreeing with the company’s voluntary retirement program. Vourloumis also said that technological change means an increased reliance on specialists, which inevitably means a shake-up in the composition of the work force. (OTE unionists have opposed plans to further erode the state’s share, currently at around 38 percent, effectively privatizing the company.) A domestic investor The government’s quest for a potential OTE manager abroad may not have succeeded, but the hoped-for strategic investor may be found right here in Greece. In that case, there is no better candidate than OTE itself, which can buy back up to 10 percent of its shares. Such a solution would enable the state to put into its coffers the money it had planned to receive with privatization and would resolve a thorny political question, since even elements within the ruling New Democracy party are opposed to outright privatization. OTE managers said this possibility was not yet being considered, but added that a share buyback was legal and would take downward pressure off the shares, a case that would definitely exist ahead of a placement to institutional investors. Based on OTE’s current capitalization, of about -10 billion, a 10 percent buyback would provide -1 billion in state revenues, more than half of the total revenues from privatizations envisaged in the 2007 budget (-1.7 billion). Citigroup has invoked the buyback possibility in its latest upgrade of OTE stock to «buy/medium risk» from «hold/high risk.» Citigroup also raised the share target price to -25 from -24. (OTE yesterday closed at -21.56.) Citigroup said that the main reason for the upgrade were the «hidden added value» (up to -1.5 billion) of OTE’s property holdings and the growth of broadband connections.
