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With its sales slipping and fixed-line customers defecting, Deutsche Telekom looked set this week to complete plans to buy a stake worth nearly 3 billion euros ($4.6 billion) in Greece’s former phone monopoly.
The deal would give Deutsche Telekom [DT
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] control of the Greek company’s management and access to Europe’s fastest-growing telecommunications market: the Balkans.
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AP |
Details of the deal, including the final purchase price and scope of management control Deutsche Telekom will have over the company, OTE, remained unclear, but financial advisers worked over the weekend trying to complete the agreement ahead of its expected announcement sometime this week.
“We have had very constructive discussions,” said George Alogoskoufis, Greece’s finance minister. But he acknowledged that some issues he declined to describe were unsettled.
Deutsche Telekom, Europe’s biggest telephone company, has already agreed to buy a 19.9 percent stake from a private equity group, Marfin Investment Group Holdings, for 2.6 billion euros. It wants to buy an additional 3 percent from the Greek state and eventually increase its stake to control management and become OTE’s biggest shareholder.
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The deal envisions that each company will initially control half the seats on the 10-member board of directors, with Deutsche Telekom appointing OTE’s chief executive and the Greek state appointing the chairman.
The company, according to Mr. Alogoskoufis, will retain its current name, and the government will have to be consulted on labor issues and future disposals for as long as it retains control of at least 5 percent of the company.
Deutsche Telekom has been seeking growth potential in new markets on the Continent. OTE, which operates fixed-line and mobile operations in the fast-growing Balkans, fits neatly into Deutsche Telekom’s designs.
“The two companies will complement each other in a big region,” said Anna Bischof, a spokeswoman for Deutsche Telekom. “That’s what makes the deal so lucrative for us.”
The Greek state currently controls a 28.03 percent stake in OTE, part of which it wants to sell as the centerpiece of a multibillion-dollar privatization program.
The government announced plans to seek a strategic investor in OTE two years ago. A deal with another European telecommunications operator fell through. A new agreement would have to be ratified by Parliament.
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