OTE-Deutsche Telekom deal new dawn for Greek telecommunications?
The final agreement between OTE and Deutsche Telekom is reality since yesterday, a significant event for Greek telecommunications. Following the purchase of a 20% stake at OTE from MIG, Deutsche will proceed to a further 3% at €29,75 per share.
Eventually the Greek state and Deutsche Telekom will each own 25% with equal number of members on the company board, with Deutsche Telekom appointing the managing director. The Greek state will have a say on employment issues as long as it owns 5% or more, however it is expected that the German telecom giant will have relative freedom as the state’s control is progressively reduced. The deal requires a final vote from the Greek parliament.
Deutsche Telekom is of course no stranger to rigid employment laws, as Germany is not the most flexible of job markets. Irrespective of redundancy policies however, OTE is a huge overstuffed organisation with a large proportion of its technical stuff steadily falling behind modern developments. The incompetence of alternative companies has not helped competition. Despite OTE’s slow reaction to new telecommunication and Internet developments, it has still managed to retain the bulk of its business. The fact that Athens, Thessaloniki and a handful of Greek cities represent more than 80% of the country’s population makes things a bit easier, but there is definitely some serious work to be done on employee mentality and infrastructure.
Where Deutsche Telekom has striken a gold mine -in my opinion the main source of Deutsche Telekom’s interest- is OTE’s activities in Bulgaria, Romania, Serbia and Albania, all emerging markets with great growth potential. Balkan activities reach a population of more than 50 million consumers, nicely complementing central European activities and making the deal extremely lucrative.
Deutsche Telekom is the first European telecommunication company to make such a massive move in southeast Europe, a head start over all major competitors. The deal must have been a huge relief to the Greek government, as a deal failure would leave the OTE share price extremely vulnerable and the whole organisation could easily slip to irreversible technological lag.
Link: Kathimerini
