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OTE goes for full control of Cosmote November 13, 2007

Posted by grhomeboy in Telecoms.
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Hellenic Telecommunications Organization (OTE) SA, Greece’s biggest phone company, gained the most in almost two months in Athens trading after it bid 2.8 billion euros ($4.1 billion) in cash to buy the shares it doesn’t already own in its unit Cosmote Mobile Telecommunications SA.

OTE shares gained 1, or 4 percent, to 26, the biggest one-day gain since September 14. Cosmote shares gained 1.24, or 4.96 percent, to 26.24, the highest level since the stock began trading in 2000. The Athens-based company said it would pay 26.25 each for 107.7 million Cosmote shares, according to a bourse filing late on November 9. OTE already owns 67.8 percent of Cosmote, its most profitable unit.

Buying the Cosmote stake will give OTE access to all of the unit’s dividends and cash, as well as faster-growing sales and earnings from divisions in Eastern European countries such as Bulgaria. Cosmote, with 14 million customers in five countries, is one of the last mobile units of Europe’s former telecommunications monopolies to be publicly traded.

“Although the debt-financed nature of the offer will have a slightly negative impact on OTE’s financial ratios in the short term, it will strengthen the group’s position in the medium to long term,” Moody’s Investors Service said yesterday in a statement. The ratings service affirmed its Baa1 rating on OTE and said the outlook on all ratings “remains stable.”

OTE was raised to “outperform” from “neutral” by Natasha Roumantzi, an analyst at Piraeus Securities. The buyout will increase per-share earnings for OTE by an average of 8 percent next year and in 2009, and give the company a bigger part of Cosmote’s growth, Roumantzi wrote. The price estimate for OTE shares was raised to 28.10 from 25.60.

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