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Greek Deutsche subsidiary says no to snapping up RomTelecom shares

The picture gets more complicated at the Deutsche Telekom controlled OTE telco in Greece, which was having talks with Romania’s telco RomTelecom last

By PETER WHITE

Published: 2 June, 2011

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The picture gets more complicated at the Deutsche Telekom controlled OTE telco in Greece, which was having talks with Romania’s telco RomTelecom last week, to see if it would buy the government’s 46% of the incumbent that it doesn’t already own.

RomTelecom is engaged in a bloody pay TV and triple play price war in Romania as UPC, RCS & RDS and RomTelecom fight it out for dominance in a country that suddenly has an huge appetite for Pay TV, which has seen it go into over 5 million homes out of a total of 6.7 million TV homes, a penetration of 77.5%

But OTE has now said it is unwilling to acquire the shares that it doesn’t already own. After all Deutsche manages to control OTE with a 30% shareholding, and ensures that local interests and the government hold the remaining shares, so holding just 54% of RomTelecom should certainly be enough.

Two weeks ago Zoltan Tezsari, who set up rival RCS & RDS, said he was interesting in bidding for the government portion of RomTelecom, and made it clear that from there he would one day push for control.

The government believes that the remaining shares are worth €1 billion while OTE has been quoted in local papers saying that it is worth more like €350 million.

The government Communication Minister, has been saying that if OTE does not buy the shareholding it will offer it on the public markets, which is probably what Deutsche Telekom wants anyway.

RCS & RDS has operations under the DigiTV brand in Romania and in the Czech Republic, Croatia, Hungary and Slovakia using both cable and satellite and has been in talks to buy UPC’s operations in Romania which have been going backwards of late, due to intense price competition.

RomTelecom has not been making healthy profits and its revenues have fallen, but its pay TV operations are what triggered the price war. It offers the same Dolce TV bouquet in both satellite and IPTV. It grew 113,000 pay TV homes in 2010 to reach 1.054 million, and has added a further 10,000 last quarter, taking it to 1.064 million. Tezsari’s DigiTV has grown even faster with an additional 300,000 pay TV homes during 2010, and both of these have put UPC under pressure.

Romtelecom is also in the process of buying out two further players Akta and Boom, to add another 155,000 satellite TV customers.

There will now be behind the scenes negotiations to see if Tezsari can raise the money, but the likely outcome is that local investors will underwrite a public flotation . OTE is also thought to have said that Romtelecom should merge with the mobile operator Cosmote, which is jointly owned by OTE (70%) and Romtelecom (30%), which would give it an even tighter grip on the company.

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