DT confirmed as 40% OTE owner

7 Jun 2011

German communications giant Deutsche Telekom (DT) confirmed yesterday that it will up its stake in Greek former monopoly telco OTE from 30% to 40% for approximately EUR400 million (USD585 million). DT is honouring an existing agreement under which the Greek government holds a put option expiring at the end of this year to sell the 10% stake at 15% above market value. The sale forms a small part of Greece’s EUR50 billion privatisation programme for 2011-15 aimed at reducing debts of around EUR330 billion. The deal effectively leaves the state with just a 6% stake, as in March 2009 it agreed that 4% of shares worth EUR202 million would be held by public sector pension fund IKA-ETAM, but for the time being its 10% plus one voting share means that the government retains its joint management veto rights alongside DT. However, the Greek finance ministry indicated last month that the 6% holding will also be up for grabs, with DT again the likely buyer, although the German group recently insisted that it must negotiate with the Greek government over its discontent with the regulatory environment and the wage bill at OTE.

TeleGeography’s GlobalComms Database notes that, following completion of DT’s EUR3.2 billion purchase of a 25% stake in OTE in November 2008, in July 2009 DT paid EUR674 million to buy a further 5% from the state, raising its holding to 30%. Under stock market rules, once DT lifts its holding to 33%, a mandatory public offer follows, although the German firm indicated in May 2011 that it does not intend to buy further shares on the open market. The wage bill at OTE is reportedly 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, including loosening regulations on dismissing employees.

Greece, Cosmote, Deutsche Telekom (DT)