Deutsche Telekom ups OTE stake

The Greek government said yesterday it will sell a further 5 percent in OTE telecom to Deutsche Telekom for 674 million euros to pay down public debt. «The Economy and Finance Ministry announced to [Deutsche Telekom CEO Rene] Obermann the Greek government’s intention… to sell a 5 percent stake in OTE shares to Deutsche Telekom,» the ministry said in a statement. Deutsche Telekom, Europe’s biggest phone company, acquired a 25 percent stake in OTE in 2008 to expand its footprint in the Balkans. The Greek state, which holds a 25 percent stake in OTE, had an option to sell a further 5 percent to the German company this year. The additional 5 percent stake will be sold at 27.50 euros a share, above OTE’s midweek closing price of 11.77 euros, according to Economy and Finance Minister Yiannis Papathanassiou. Payment for the extra stake will be 385.5 million euros more than the shares’ current market price. The premium made the deal very appealing to the Greek government, turning the share sale into something that was much anticipated, according to brokers. The Greek state’s stake will fall to 20 percent after the transaction. The state will retain the right to have a say in the company’s management, Papathanassiou said. Under the 2008 deal between Greece and Deutsche Telekom, Greece has another option to sell a further 10 percent of OTE to Deutsche Telekom by December 2011. Opposition parties accused the conservative government of reducing its stake in OTE as a means of filling in the gaping holes in state finances created by its policies, describing the deal as «the biggest economic and political scandal in the country’s history.» The proceeds will aid Greece’s drive to reduce debt. Greece’s ratio of debt to gross domestic product will rise to 96.3 percent this year, according to a government forecast. That’s second only to Italy among the European Union nations.