ECONOMY

Gov’t happy with OTE deal, DT partnership

The government does not intend to further reduce its 25 percent share in OTE telecom, the country’s main telephone operator, despite the option in a recently reached deal with Deutsche Telekom (DT), Economy and Finance Minister Giorgos Alogoskoufis said yesterday. Under the deal, DT will also hold a 25 percent share in OTE, plus the management, and the government can sell up to an additional 15 percent. Alogoskoufis denied a claim that the government had earlier negotiated with Greek buyout firm Marfin Investment Group (MIG), which had acquired an almost 20 percent stake in OTE through the stock market. «There never was any negotiation with MIG. The company in question generally had an aggressive buyout attitude, which made it even more unsuitable as a strategic partner for OTE,» he said. At a parliamentary hearing on Tuesday, MIG vice president Andreas Vgenopoulos, who subsequently agreed to sell MIG’s share to DT, claimed the two sides had entered into negotiations but the government had suddenly reneged. Alogoskoufis rejected opposition criticism that the reduction of the government’s share below 33 percent made OTE more vulnerable, a view also shared by Vgenopoulos. «The government could not secure control of OTE with 33 percent. With such a minority share you can control some decisions, but the minority rights conferred by the 33 percent are insignificant compared to those obtained in the deal with Deutsche Telekom,» he claimed. Alogoskoufis also rejected criticism that, according to law, the government and DT should have made a public offering for the remaining free float since they held a combined majority, and that small investors had been duped. «No one can claim to have been duped. We had made it clear that our goal was a strategic partnership,» he said. Besides, he added, investors have already gained from the considerable rise in the price of OTE’s share from 9.50 euros in 2004, and will also benefit further from the agreement with DT. Alogoskoufis said the government was not currently planning any other major privatizations, and was unlikely to meet its budget target of 1.6 billion euros in revenue from such sales. Vourloumis: Restructuring initiatives ‘paying off’ OTE telecom yesterday said profit was little changed in the first quarter after costs to reduce the work force at a fixed-line phone unit. Net income was 141.1 million euros ($220 million) from 140.9 million euros a year earlier, according to a statement from the Athens-based company. That missed the 145.8-million-euro median estimate of 10 analysts in a Bloomberg News survey. The company said it had voluntary retirement costs of 41.8 million euros in the first quarter. OTE is cutting workers at fixed-line phone units in Greece and Romania as it loses clients for traditional phone services and mobile-phone use increases. «The initiatives we have taken to transform OTE into a more efficient group are starting to pay off,» CEO Panagis Vourloumis said in the statement. The trends in the first quarter are expected to continue this year, with new clients for high-speed Internet services partly offsetting the falling traditional phone sales. Sales increased 1.9 percent to 1.54 billion euros, led by wireless units in Greece, Bulgaria and Romania. Revenue had been predicted at 1.55 billion euros, based on the survey. Revenue at Cosmote Mobile Telecommunications, of which OTE regained full control earlier this year for 2.8 billion euros, climbed 8.8 percent on customer additions. OTE’s EBITDA declined 1.1 percent to 533.9 million euros. It would cost Bonn-based Deutsche Telekom 3.2 billion euros in total to gain control of OTE to tap wireless growth in countries such as Romania and Bulgaria. OTE operates in six countries in Southeast Europe. (Bloomberg)