The European Commission has approved German incumbent Deutsche Telekom’s (DT) purchase of a controlling stake in Greek national telco Hellenic Telecommunications Organisation (OTE). Under the EU Merger Regulations, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. DT has a presence in around fifty countries worldwide including local fixed line services through subsidiaries in several EEA member states, whilst OTE provides fixed communications services in Greece and Romania and, through its wholly owned subsidiary Cosmote, mobile services in Greece, Bulgaria, Romania, Macedonia (FYROM) and Albania. TeleGeography’s GlobalComms database show that DT has an overlapping interest in Macedonia: fixed line provider Makedonski Telekom (T-Home Macedonia) and its mobile subsidiary T-Mobile Macedonia (formerly MobiMak) are held via DT’s Hungarian unit Magyar Telekom. The Commission also found ‘limited horizontal overlaps’ in the wholesale leased line market in Romania, but given the largely complementary scope of the networks of DT and OTE, did not raise any competition concerns.
GlobalComms says that in May 2008 DT and the Greek government agreed a deal giving DT and the state equal stakes in OTE of 25% plus one voting share and joint management control; the following month the deal was approved by a slim parliamentary majority. OTE’s remaining shares are distributed between international institutional shareholders (around 34%), Greek institutional shareholders (around 10%), and others (approximately 6%). The German heavyweight is expected to raise its stake in OTE further, as it has been granted pre-emptive rights over the remaining shares held by the government, which has a put option for a further 5% tranche, valid for twelve months from October 2008, and a second put option for a 10% stake, valid until 2011. Senior state sources were quoted by local press in June 2008 as saying that DT was likely to buy additional shares on the ASE (separate from the put options) to lift its holding to 33%, which would trigger a mandatory public offer under stock market rules — possibly as early as 2009.
In a statement, the European Commission said it had examined the potential effects of the vertical relationships created by the deal in a number of markets for wholesale international roaming and fixed and mobile wholesale call termination. On the markets for international roaming, the Commission found that foreign mobile operators would continue to be able to get access to roaming services from alternative independent providers in each of the countries where OTE is currently offering wholesale international roaming. The Commission also dismissed competition concerns regarding the possible effects of the transaction on the market for international virtual private networks (VPNs) for corporate customers with locations in two or more countries, in particular with regard to south east Europe.