ECONOMY

Talks over Romtelecom reach impasse

Talks between representatives of OTE Telecom and the Romanian government over a proposed increase of Romania’s fixed-line telecom monopoly appeared headed for an impasse as the Romanians refused to allow OTE a free hand in running the company, even if the latter were to become the majority shareholder. On their part, OTE officials are playing it tough, making new demands on the Romanian government and demanding that several financial guarantees binding OTE, and included in the original agreement transferring to OTE a 35 percent share in Romtelecom, be scrapped. «Some of the conditions OTE wants to impose on the Romanian side are quite hard to swallow… I don’t expect talks to end so quickly,» a Reuters dispatch from Bucharest quoted a Western analyst as saying. OTE has asked the Romanian State to refrain from making any public offer of Romtelecom shares for the next two years and to continue to guarantee a $100-million loan to Romtelecom by the European Bank for Reconstruction and Development. OTE also wants Romania’s Communications Ministry to give up its veto rights on major decisions related to Romtelecom and, most importantly, to issue new rules allowing OTE to adjust Romtelecom’s tariffs according to its needs. The Romanians resent OTE’s attitude. «In other words, if the Greek managers fail to perform well, Romania will still have to pay for their mistakes. OTE… wants a dictatorship in Romania’s fixed-line telephony sector,» analyst Cristian Popescu said in daily newspaper Adevarul yesterday. The Romanian government refuses to give up its veto over decisions concerning the company and is only prepared to offer the Greek company preferred shares with no voting rights. Last Friday, OTE issued a statement, now proven to be premature, that OTE had «received the official acceptance of the Romanian government on its offer for an increase in the capital of Romtelecom, leading to OTE’s acquiring a majority share.» On Monday, Romanian officials denied such an agreement had been reached. OTE Vice President George Skarpelis leaves for Bucharest today; according to sources, his mission is to tell the Romanian government that OTE’s offer of $200 million to raise its stake from 35 to 51 percent will only be valid for a few weeks. It remains to be seen how the Romanians will respond to such strong-arm tactics.