Greece close to clinching OTE deal with DT

A deal for Deutsche Telekom (DT) to buy a stake in OTE telecom and have a say in the management of the company has moved a step closer after gaining the backing of the Inner Cabinet based on a compromise over the running of the state-controlled telephony firm. A key stumbling block appears to have been removed, sources said yesterday, as the government has agreed that the OTE CEO, who is appointed by the Greek state, should not have a power of veto over the managing director, who would be appointed by DT. Under the framework agreement that has been drawn up, the managing director would generally be given complete freedom as far as OTE’s business operations are concerned but the president would be able to intervene in matters that are considered to be of «strategic importance» for the state. In such a case, sources said, the CEO would not be able to veto decisions but would be able to bring them before the board, whose members would vote on the particular issue. What matters might be of strategic importance are currently under discussion but they could include the possible renaming of OTE and issues of national security. Sources said that the government’s decision to back down on this point could make the German telecoms giant willing to pay more than 28 euros per share to buy a small part of the government’s stake. DT has agreed to buy a 20 percent stake from buyout firm Marfin Investment Group (MIG) at 26 euros per share but is also seeking to buy 3 percent of the state’s 28 percent holding in OTE. Negotiations began in March and one of the major obstacles to an agreement has been the management of the company. DT wanted control of management but the government is under pressure from unions not to hand it over. Both sides have agreed that Panagis Vourloumis, the current CEO and chairman, will stay on for the time being. The draft agreement on the powers of the CEO now appears to have been given the green light by the Inner Cabinet. Sources said that Economy and Finance Minister Giorgos Alogoskoufis presented the outline to ministers on Wednesday and it met with the approval of all those present. Alogoskoufis reportedly informed ministers that negotiations are going well and it has been agreed that DT will take over the daily management of OTE but that the state will have a say in who will be appointed general manager and with the proviso that he or she will speak Greek. DT has reserved the right to pull out of the deal altogether if it cannot agree on terms with the Greek government.