OTE blunder

The visit by top executives of the Hellenic Telecommunications Organization (OTE) to Romania for talks concerning the future of Romtelecom seems, at first glance, an effort to break the current deadlock. In truth, however, it is yet another sign that the managers of the organization are avoiding tackling a crisis which threatens to damage OTE to the tune of a billion dollars. This evasive or ignorant stance is not new, but rather a typical characteristic of OTE’s four-year-old overture in the Balkans. On top of the preferential treatment it gives to its usual suppliers, this logic has led to the latest failure. OTE purchased 35 percent of Romtelecom shares and took over the firm’s management in an attempt to expand in the Balkan market; not through the acquisition of some small minority stake, but instead through an aggressive penetration of a market which is potentially far bigger than Greece’s, and with hopes that this move would mark the onset of a different entrepreneurial logic. The fact that OTE completed the purchase having already signed contracts with its usual suppliers created a severe financial strain, as Romtelecom hastened to sign agreements that were not proportionate to its revenue. This symptom would be curable had OTE, the parent company, shown some interest in its foreign subsidiary. OTE, however, abandoned Romtelecom to its fate, avoiding any brave initiatives, deferring crucial decisions, and entrusting this colossal investment with executives who clearly were not up to the challenge. As a consequence, apart from the 200 billion drachmas (587 million euros) spent on investing in the Romanian company, OTE has undertaken additional guarantees of up to $350 million, while Romtelecom’s liabilities entail a financial strain of up to 2.9 million euros (a billion drachmas). Most strikingly, these heavy costs have failed to awaken OTE’s management and the government. OTE’s Chief Executive Lefteris Antonakopoulos has shirked responsibility, claiming that the investment had not been his decision. Thus what had been announced as a top-level mobilization has degenerated into a low-key executive visit led by the financial services chief. This downgrades a situation which affects bilateral ties and, therefore, requires top-level political contacts. Avoiding problems, independent of who is to blame for them, is not an option, as it can cause serious political and economic damage. The government and OTE need to realize what is at stake in this case and try to save what they still can.

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