German communications giant Deutsche Telekom (DT) is reportedly planning extensive negotiations with the Greek government on issues including market regulation and labour relations before it commits to increasing its stake in the financially-troubled country’s dominant telecoms group Hellenic Telecommunications Organisation (OTE). Greek online newspaper Capital.gr writes that DT’s cautious approach is influenced by the fact that it has already deleted from its finance sheets around EUR900 million (USD1.28 billion) of its EUR3.8 billion investment in OTE due to a sharp drop in share price, whilst DT’s head Rene Obermann recently commented that Greek telecoms watchdog the EETT is the toughest regulatory authority that he has ever encountered. Regarding labour relations, the wage bill at OTE is 46% of operating costs, compared to the 25% average across Europe, and DT is thought to be aiming to negotiate a change in rules to force this percentage down.
Greece has already confirmed that it will exercise a put option to sell a 10% stake in incumbent PSTN operator OTE by the end of this year as part of a series of asset sales aimed at raising EUR50 billion by 2015. The state holds 16% equity in OTE (including 3% via DEKA SA), plus one voting share and joint management control with the telco’s largest shareholder DT, which controls 30% of equity. TeleGeography’s GlobalComms Database adds that a put option expiring December 2011 entitles the government to sell 10% of OTE at a price 15%-20% above market value. DT has first refusal over the stake, and if the German group lifts its interest to 33% it will trigger a mandatory public offer under stock market rules.