MIG drives a wedge into the government’s plans for OTE
Marfin Investment Group (MIG) may so far have failed to make its mark as a major player in the banking sector, but its entry to the telecom market has certainly been a success. For MIG President Andreas Vgenopoulos’s «summer assault» on OTE not only had a positive outcome but also won him strong bridgeheads for further gains. He said last week that MIG is now in control of 10.8 percent of OTE, but market sources maintain that the stake is nearer 14-15 percent. His move has created much anxiety. Everyone in the government, OTE’s largest shareholder, and in OTE itself are asking the same thing: What is Vgenopoulos up to, and who is behind him? He has said himself that he is not a «passing» investor in OTE, which is of strategic interest to MIG. Many – including some Marfin people – have spoken of a plan for majority control of OTE, including the management. «Do you think that, if necessary, Marfin will not be in a position to buy the management?» asked a Marfin official recently, noting that several equity funds had successfully invested in telecom utilities in the past, the most recent example being TIM Hellas, subsequently bought by Egyptian magnate Naguib Sawiris’s Weather Investments group and renamed Wind. Several analysts take the view that OTE simply represents an outlet for MIG’s huge liquidity, after its failure to make a mark in the banking sector. «Given that OTE has yet to show its true potential, the move may be a good one for MIG,» said one investment manager recently. Other market sources, however, say that Vgenopoulos is in a particularly difficult position, as he is said to have promised investors a 25 percent return on capital on an annual basis. Moreover, the fact that significant amounts of the capital made available to him have yet to be invested further raises the pressure. This increases the likelihood that part of the capital will be placed in OTE. Officially, MIG has invested about -1 billion in OTE so far and could become majority shareholder with around -3.5 billion. The whole affair is something of an embarrassment for the government – which was unsuccessfully seeking a strategic investor for OTE until recently. It now appears to have lost the initiative and direction. Aggressive buyout? «It could develop into an aggressive buyout. We know that Marfin now controls 10 percent of OTE. But do we know whether some others have bought other stakes on Marfin’s behalf?» says Stephanos Manos, a former deputy and minister. He says he is not against Marfin’s moves, as it acts in the best way it sees fit. But Manos does view the developments as further proof of the government’s lack of vision, particularly with respect to telecoms. He argues that the government should have drawn up a specific plan, rather than now being forced to follow others’ moves. «It is we who must decide who is best for the future of OTE and the country. We have to sit around the same table and discuss how we can maximize the national and developmental benefits of this partnership,» Manos said. It is not simply an issue of market forces. «When you have two houses, one next to the other, and you want to sell one of the two, then the sale price is not the only criterion for the prospective buyer. You will certainly be interested in who is going to be your next door neighbor.» Vgenopoulos is scheduled to meet today with Economy Minister Giorgos Alogoskoufis, who is reportedly hoping to gain a clearer picture of the former’s intentions. «For the government, Vgenopoulos is an investor buying OTE shares for reasons unknown to us. He has to inform the government and the stock market of the real reasons for this investment,» a source close to Algoskoufis said. Other officials say the government can plan no further placements of OTE after MIG’s acquisition of 10.8 percent.
