OTE steadfast on Balkan ventures, sees prospects

Telecoms operator Hellenic Telecommunications Organization (OTE) plans to maintain and even strengthen its activities in the Balkans, with the focus on mobile telephony operations, its chief executive officer said yesterday. In his first press conference since his appointment in March, Lefteris Antonakopoulos said OTE aims to reinforce its existing businesses in Romania, Bulgaria, Serbia and Armenia despite poor performances to date but would not expand to other countries. Telecom Serbia, in which OTE holds a 20-percent stake, was the only overseas operation to post a profit in the first quarter of the year. Armentel, 90-percent controlled by OTE; CosmoBulgaria, a fully owned mobile telephony subsidiary in Bulgaria; and Romtelecom in contrast reported losses. Overseas operations accounted for 4 percent of OTE’s revenues last year and 1 percent of earnings before interest, tax, depreciation and amortization (EBITDA). The Balkans acquisitions have cost the company a total of $1.5 billion. Despite the companies’ poor record to date, OTE’s Balkan expansion constitutes «a very wise investment,» Antonakopoulos said. He said the operations had yet to fulfil their potential because the expected improvement in the region’s economy and telecoms market had not materialized. OTE’s decision to bolster its existing Balkan businesses and not invest in new markets is a positive move, said John Noikokyrakis of Omega Securities. «These operations could be profitable in the future and they ensure OTE a presence in the region,» he said. Antonakopoulos said OTE is currently drawing up a business plan for its regional businesses with the goal of returning the companies to a sound footing. For Romtelecom, he said the company is willing to inject $200 million into the Romanian fixed-line operator in return for an additional 16-percent stake which would give it a controlling 51-percent share. The Romanian government last month rejected the option, offering instead its entire stake. Antonakopoulos said OTE is reviewing several alternatives including withdrawing from Romtelecom should the government stick to its guns. Antonakopoulos said a decision on whether to bid for Bulgaria’s fixed-line monopoly BTC will be tied to the benefits accruing to its mobile business. CosmoBulgaria has a 10-percent market share and is expected to show positive EBITDA this year. Regarding Telecom Serbia, which has fixed-line and mobile operations, he said OTE is open to a share or asset swap with Telecom Italia in return for its 29-percent stake. He said OTE aims to counter the increasing competition on home turf by improving its total package of prices and quality services. It expects to lose 5 percent of its market share to competitors by the end of the year. Antonakopoulos said OTE is interested in acquiring the 18 percent of CosmOTE held by Norway’s Telenor, valued at around 650 million euros, and hopes to finalize the issue by year-end.

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