OTE resolves share issue but in limbo on Romania

OTE shares staged a strong recovery yesterday after the telecoms operator decided to take action to shore up its flagging performance in the stock market, although the key issue of its Romanian investments remains unsolved. OTE shares posted a gain of 3.21 percent to close at 11.56 euros. The rally, however, was not enough to offset the losses recorded over the week during which OTE’s market capitalization fell by 14 percent. Since the announcement of weak first-half results, the company has seen its equity take a pummeling. OTE’s board of directors, which met yesterday, decided to ask shareholders’ approval for the continuation of a share buyback program approved during last year’s annual general meeting, Dimitris Kouvatsos, chief financial officer, told Kathimerini English Edition. He said an extraordinary general meeting will be held 20 days after an announcement of the event is made, making it likely that shareholders will convene next month. Shareholders gave the green light for a share buyback of up to 10 percent of OTE’s share capital last year. To date, the company has bought back only 2.7 percent of its stock. «The EGM will be asked to approve a renewal of the program, that is purchasing up to 7.3 percent of OTE shares,» Kouvatsos said. The figure represents 13.6 million shares, with an estimated value of 420 million euros. The share buyback program sends a positive message to the market, said Theodore Ritsios, telecoms analyst at P&K Securities. «OTE is telling investors its share price is cheap and that the company’s prospects are good,» he said. Without a solution to its Romanian investment, however, OTE could once again fall out of favor with investors. Kouvatsos said the company is still in the dark regarding a visit by chief executive Lefteris Antonakopoulos to Romania to discuss a proposed equity injection and restructuring of Romtelecom in which OTE holds a 35-percent stake. OTE had been scheduled to contribute $200 million early this month, but so far there has been no announcement on the issue. Romtelecom posted a better-than-expected net income of 47 million euros in the first half of the year. However, it is plagued by cash flow problems and desperately needs additional capital to modernize its network. «We are waiting for Romania to confirm whether the visit can go ahead. We hope it will be soon, even next week,» he said. In the meantime, he said OTE will continue to present its case to investors and analysts via roadshows, with one planned for the major US and European cities in the next four to five weeks. The communication campaign will help allay doubts among investors, Ritsios said. «It will give greater visibility to OTE’s investments in Romania. Investors will have greater clarity about the company’s plans.»