Deutsche Telekom to Buy 20% Hellenic Telecom Stake
see also DTAG press release
Deutsche Telekom AG, Europe's biggest telephone company, agreed to buy 20 percent of Hellenic Telecommunications Organization SA for 2.5 billion euros ($4 billion) and aims to increase the stake in the Greek company.
Deutsche Telekom will pay 26 euros a share for the Hellenic Telecom stake, the company said in a statement. That's 36 percent more than Athens-based Hellenic Telecom's closing price of 19.14 euros on March 14. Marfin Investment Group SA is selling the stake and the deal is conditional on approval from the Greek government to increase the stake further.
``Deutsche Telekom expects to initiate discussions with the Greek government with the aim to reach agreement in the very near future,'' according to the statement. The German company said the talks may lead to full consolidation of Hellenic Telecom.
The 20 percent stake makes Bonn-based Deutsche Telekom the biggest shareholder in the Greek operator after the Greek state, which has 28 percent. The deal values Hellenic Telecom at 12.7 billion euros. Deutsche Telekom, which reported a surprise loss last month, is seeking growth opportunities as clients cancel fixed lines in Germany and U.S. mobile competition heats up.
Hellenic Telecom, Greece's biggest phone company, has stakes in former phone monopolies in Serbia and Romania and more than 15 million mobile-phone clients in Greece, Romania, Albania, the Former Yugoslav Republic of Macedonia and Bulgaria.
The transaction is scheduled to be completed by May 7 at the latest, Marfin Investment said in a separate statement today.
Deutsche Telekom Chief Executive Officer Rene Obermann has sold assets including French and Spanish Internet units, pushed through pay cuts for 50,000 fixed-line workers and expanded T- Mobile with takeovers in the Netherlands and the U.S. He is seeking to complete two programs, started by predecessor Kai-Uwe Ricke, to cut 32,000 jobs by this year, and lower annual costs by as much as 4.7 billion euros by 2010.
Deutsche Telekom is losing fixed-line clients in Germany and faces price cuts in the U.S. by AT&T Inc. and Verizon Communications Inc. Revenue slipped at the T-Mobile USA unit for the first time in the fourth quarter as the dollar fell against the euro. That has forced the company to seek growth elsewhere.
Obermann said on Feb. 28 that last year ``was certainly not an easy year. 2008 won't be either, since the competition shows no signs of letting up.''
On Feb. 28, Deutsche Telekom posted an unexpected fourth- quarter net loss of 757 million euros on additional costs to eliminate jobs. Sales fell 0.6 percent to 15.8 billion euros in the quarter.
Greek Economy Minister George Alogoskoufis, who has been seeking to sell a stake in the company to a European telecommunications operator, wasn't available to comment when called on his mobile phone.