OTE gains 70% stake in Cosmorom

12 Jul 2005

Greek telco Cosmoté (OTE) has bought a 70% stake in Romanian wireless operator Cosmorom from fixed line incumbent RomTelecom for EUR120 million, giving it responsibility for financing the loss-making cellco. The move follows OTE’s previous purchases of stakes in parent RomTelecom – 35% in 1998, and a further 16% to take its overall holding to 54.01% in 2002; the remainder is held by the government. RomTelecom, which remains a 30% stakeholder in Cosmorom, says that the capital raised by the latest sale will be poured back into GSM network development.

Cosmorom became Romania’s third digital mobile operator when it launched GSM services in May 2000. Since 2001, however, it has seen a relentless decline in its fortunes. It originally had serious ambitions of closing the gap between itself and the country’s two dominant operators, MobiFon and Orange Romania, launching a strong pre-paid offering and incentives such as free WAP access and discounted handsets, but the drawn-out privatisation of parent RomTelecom severely depleted investment and stopped any momentum it had built up. As a result it failed to roll out a full nationwide network and could not attract enough customers to achieve critical mass; at the end of March 2005 it held less than 1% of the market.