ECONOMY

OTE CEO to visit Romania for talks on shaky venture

OTE Telecom said yesterday its chief executive will visit Romania to tackle a long-overdue restructuring plan for Romtelecom, its biggest foreign investment, as OTE’s share price sank to a five-year low. An OTE spokeswoman said CEO Lefteris Antonakopoulos was due in Bucharest «some time soon» for talks with the Romanian government, the main shareholder in Romtelecom, about a rescue plan the Greek company has for its 35 percent-owned Romtelecom. The spokesperson would not say when the visit will take place but sources at OTE said the trip was being planned for next week. OTE’s shares on the Athens bourse fell 3.17 percent to 12.22 euros yesterday, their lowest since January 1997, after taking an 8-percent beating so far this week. Analysts said OTE’s slide was compounded by sector woes but foot-dragging on getting a restructuring plan in gear for Romtelecom also weighed. «Concerns about OTE’s Romanian investment are the main reason for this pressure. It’s continuous delays and the lack of news,» said one telecoms analyst, who declined to be named. «Fundamentally, however, it’s the perception that this is not a good investment, that it is not providing returns, raising OTE’s risk,» the analyst said. Romania has persistently failed to deliver on its promise of high growth for OTE, which has been investing abroad to offset the 2001 deregulation of its home fixed-line market. OTE paid $675 million for its 35-percent stake and management in 1998. CEO Antonakopoulos, who is likely to be accompanied by OTE International’s President George Skarpelis on his trip to Bucharest, is expected to press Bucharest for a written commitment to OTE’s business plan for Romtelecom. OTE wants a capital increase for Romtelecom to provide the company with much-needed funds for a restructuring program but has deflected demands from the Romanian government to buy the 65 percent of the company’s shares it does not already own. According to OTE, Romtelecom needs a total of $450 million for restructuring this year, of which $200 million would likely be raised by a share capital increase. A rights issue by Romtelecom in which OTE would be the only shareholder to participate, may dilute the state’s stake to a minority. But since June, when OTE said it had reached an agreement with Romania on funding plans, there has been no progress. OTE said then it expected a share capital increase to be completed by the end of August. In July, OTE wrote down the value of its investment in Romtelecom by 256 million euros to 363 million on its books, after an audit at the company cast doubt over its ability to continue as a going concern. It warned Romania it could move to further writedowns and hoped the move would nudge Bucharest into action. But the only activity since then has been in OTE’s shares. OTE’s losses of 18.3 percent since the writedown have sliced 1.4 billion euros off the company’s market capitalization. OTE’s regional ambitions aim at a market of 60 million people: A third of those are in Romania. Romania is its biggest investment and the one that promises the most, analysts say.