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CTC acquires OTEnet unit in Cyprus March 27, 2008

Posted by grhomeboy in Business & Economy, Telecoms.
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Importer and retailer Cyprus Trading Corporation (CTC) said yesterday that it owns fully Cyprus-based OTEnet Telecommunications after it bought a 12.75 percent stake from Brightmind Enterprises.

The agreed price for the transaction was 1 million euros, CTC said in a statement. In February, CTC acquired from Greece’s telecom OTE its shareholding in Cyprus’s OTEnet for 3.99 million euros, which gave it 87.25 percent ownership of OTEnet Telecommunications.


Greek Government keen to expedite OTE deal with Deutsche Telekom March 26, 2008

Posted by grhomeboy in Telecoms.
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Equal equity and management shares; unions cagey about job assurances > OTE workers raised the German flag to protest plans for a DT share in management.

Consultations are gathering pace for the finalization of a deal between the government, OTE telecom’s main shareholder, and Deutsche Telekom (DT), which last week agreed to buy a 20 percent stake of OTE from buyout firm Marfin Investment Group (MIG). The talks concern DT’s possible purchase of a further stake from the government, which now owns about 28 percent.

Economy and Finance Minister Giorgos Alogoskoufis told Eleftherotypia newspaper on Sunday that the government was also willing to share the management of the country’s largest telecommunications company but the form it may take would be determined by the negotiations.

The government is anxious for a speedy conclusion, fearing union opposition and stock market speculation in OTE shares. Yesterday, investment bank Credit Suisse downgraded OTE’s target share price from 26 euros to 22.50. Officials are apprehensive that any sharp decline in the OTE share price would undermine the DT-MIG agreement and scuttle any further developments.

Meanwhile, OTE unions (OME-OTE) began preparing protests against any deal with DT, fearing it may jeopardize jobs in future. A three-day strike is due to begin today. At a meeting on Saturday, OTE CEO Panagis Vourloumis assured unionists that legislation passed last year, which obliges the government to keep a minimum 20 percent share, also provides for no dismissals. Earlier on Friday, Alogoskoufis told OME-OTE officials that the government’s intention was to keep a 25 percent stake plus one share, on a par with DT, which would make them equal partners.

He also said both sides would have veto rights protected by legislation. Alogoskoufis added that the Germans had proposed retaining Vourloumis as CEO, with which the government agreed. Vourloumis urged the unions to refrain from strikes, as this would only benefit competitors, and said the deal would improve OTE’s future prospects.

OME-OTE pressed Alogoskoufis for a separate agreement on job security, to which they would be a party. The Minister referred them to Vourloumis, who said this was a matter to be decided by the new management that would emerge from negotiations. It was after this that the three-day strike was called.

The Ministerial privatizations committee is meeting either today or tomorrow to appoint the government’s consultants who will negotiate with the Germans. It is considered likely that UBS, Credit Suisse and Eurobank will be retained, as they are already well acquainted with the matter.

Greek Government may sell 8% of OTE to Deutsche Telekom March 22, 2008

Posted by grhomeboy in Telecoms.
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The Greek government may sell up to 8 percent of telecom group OTE to suitor Deutsche Telekom as part of its plans to lock in the German telco as a strategic partner, Economy and Finance Minister Giorgos Alogoskoufis said yesterday.

Deutsche Telekom on Monday agreed to buy 20 percent of OTE [Hellenic Telecommunications Organisation] for 2.5 billion euro from buyout firm MIG and has entered talks to buy a stake from the government, which owns about 28 percent, but OTE unions have called for strikes against the deal.

“A 20 percent holding in OTE by the state should be assumed as a basic fact, given that such a stake is strategic and grants the holder certain rights,” Alogoskoufis said on Flash Radio.

Greece has long sought a strategic investor for OTE, even sounding out Deutsche Telekom in the past, but had no luck as it did not want to cede management control.

“We have entered discussions, through our advisers, with DT and believe we can reach an understanding on the levels of shareholding and the form of management,” Alogoskoufis said.

Media have reported the government is willing to share the positions of chairman and chief executive of the company. Earlier yesterday OTE’s workers union called a three-day strike next week to protest against the proposed deal.

“A total strike from March 26 to 28 will be held throughout the group,” OTE’s workers union OME-OTE said in a statement. “OTE is a piece of Greece and is not for sale.”

The union will hold a meeting on March 28 to consider further strikes, it said. OTE’s powerful unions have scuttled deals in the past amid concerns that further stake sales will lead to job cuts and affect job security.

Cosmote helps OTE profits March 21, 2008

Posted by grhomeboy in Telecoms.
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Greece’s largest telecom group Hellenic Telecommunications Organisation, OTE, soon to be 20 percent-owned by Deutsche Telekom, grew profit by 15 percent last year, with mobile and Internet operations providing the bulk of earnings.

OTE increased its stake in its Cosmote mobile phone unit to 99 percent and focused on the Internet to offset a continuing fall in income from fixed-line telephony as Greece deregulates its telecom market. The strategy may pay off – revenue from mobiles and fast Internet ADSL take-up was significantly higher than income from OTE’s fixed-line operations.

“The full integration of Cosmote… puts us in a much better position to benefit from the growing convergence between fixed, mobile and broadband,” said OTE President and CEO Panagis Vourloumis in a statement. “The nature of our competition is changing and intensifying throughout our markets.”

The total number of ADSL subscribers in the country doubled to about 1.1 million customers, OTE said.

OTE said net 2007 profit rose to 662.6 million euro compared with 575 million a year earlier, with sales up 7.3 percent to 6.32 billion. Cosmote’s contribution to the top line was about 3.06 billion for the year. “Without Cosmote’s strong 2007 performance the results would have been worse,” said an Athens-based analyst who declined to be named. “The increase in mobile users is one key to future growth, which is also why Deutsche Telekom is interested in OTE.”

On Monday, Deutsche Telekom said it had agreed to buy a 20 percent stake in the Greek group with a view to increasing its holding as part of growth plans based on the acquisition of mobile phone companies. Deutsche Telekom is also seeking to buy part of the government’s 28 percent stake. Greek media have said Deutsche wants to lift its stake to about 30 percent.

OTE expects Cosmote, which will be delisted soon, to maintain its position as Greece’s market leader and sees the unit’s revenue for 2008 up by about 15 percent, helping offset a drop of about 4 to 5 percent in fixed-line revenue, it said.

Deutsche Telekom buys MIG’s shares in Greece’s OTE March 17, 2008

Posted by grhomeboy in Business & Economy, Telecoms.
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It was possibly meant to happen. Last week’s rumors, spread fast in business circles, while the old saying “where there is smoke, then there’s a fire” which suits well Deutsche Telekom’s case. The possible sale of MIG’s shares in Hellenic Telecommunications Organisation [OTE] could solve a major problem > If it buys, Deutsche Telekom may be the strategic partner the government was looking for.

According to various sources, MIG (Marfin Investment Group) has clinched a deal to sell all or part of its minority stake in OTE, about less than 20%, to German telecoms operator, Deutsche Telekom, at an unspecified price. The latter will be at a premium compared to the share price of OTE at Friday’s close on the Athens bourse.

OTE shares closed at 19.14 euro, up 3.35 percent on Friday, and Deutsche Telekom will most likely pay more than 24 per share to buy the stake. MIG’s average acquisition cost of OTE shares is estimated between 23 and 24 without including the cost of swaps the investment company has entered into with banks to buy the stake.

This deal is important for both MIG and the Greek government. The investment company, which will be able to raise more than 2 billion if it sells its entire stake, estimated at 19.6 percent, to the German telecoms operator. In addition, it will get some capital gains at a time bourses and credit markets are under pressure as evidenced by the Fed’s extraordinary decision to bail out Bear Stearns, the second largest underwriter in US mortgage bonds on Friday.

It is worth noting that Marvin Investment Group (MIG), an investment holding company whose biggest shareholder is Dubai Group, raised more than 5 billion last summer at more than 6 per share in the biggest IPO ever by a European company of its kind but has seen its share fall dramatically since then. It gained 8.04 percent to 4.30 on Friday on speculation about the deal with Deutsche Telekom.

The likely sale of OTE shares to Deutsche Telekom by MIG is even more important for the government, although it comes at a difficult time. The government has repeatedly said it would prefer a major Western European telecoms organization to become OTE’s strategic partner and has discouraged financial investors such as Private Equity Funds from attempting to gain control of the organization.

Deutsche Telekom (DT) was among the European operators that expressed interest in OTE in the second half of 2006 but the change of CEO at the time and DT’s other priorities at home seemed to have played a role in putting the project on hold.

It is known that the government had appointed three advisers, namely Credit Suisse, UBS and Eurobank EFG, to find a strategic investor for OTE in the last quarter of 2006 and 2007 but their efforts did not bear fruit.

It is ironic that the same company, that is MIG, which defied the government’s repeated warnings to raise its stake in OTE, is becoming the catalyst for finding a strategic partner for the country’s telecoms incumbent. The government in December last year passed legislation prohibiting investors from acquiring more than 20 percent in companies of strategic importance to the country without its approval.

By all accounts, this is a protectionist piece of legislation and the government would have had a difficult time defending it before the European Court of Justice, where it would most likely have ended up.

So, the MIG-Deutsche Telekom deal will save the government face because it will not have to go to court. Even if the case is taken to the European Court, it will have no problem doing away with the law since DT will – de facto – have become OTE’s foreign strategic partner.

The government will also be able to sell a deal with Deutsche Telekom to the international investment community as a sign that its privatization program is still on track. This may not be appreciated so much at a time when international stock markets are suffering but will be later on.

It should be noted though that how this deal will be structured is another story and will not happen tomorrow. After all, Deutsche Telekom will have to justify the deal to its shareholders. The latter must be fully aware of the Greek government’s restrictive law with regard to the shareholding of domestic corporations of strategic importance, so they will ask for clarification on that particular point.

After all, it is not popular with shareholders nowadays when their companies spend billions of euros to buy minority stakes in other companies, even if they are regarded as good assets, such as OTE mainly on account of its operations in Southeastern Europe, without having secured a road map to full control down the road. In turn, this means the government must have been informed of the deliberations between MIG and Deutsche Telekom and must have given its blessing even if it does not advertise it or even denies it in public.

It is very likely DT will ask the Greek government at some point to buy part of its 28.7 percent stake in OTE and the latter will consent to it along with the signing of a shareholders agreement. DT may even proceed with a public offering to buy the remaining OTE shares from the market and enhance its equity stake in the Greek telecoms organization.

Aside from what DT will or will not do in coming weeks and months, it is safe to say Deutsche Telekom is most likely OTE’s foreign strategic partner and this cannot escape the attention of trade unions and opposition political parties. So, the government will likely face stiffer resistance and will have to prepare for that.

Greece’s OTE selects Ericsson for IPTV project March 13, 2008

Posted by grhomeboy in Media Radio TV, Technology, Telecoms.
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Ericsson has been selected to act as end-to-end IPTV systems integrator, solution provider and business consultant for tier one Hellenic Telecommunications Organization (OTE SA).

The integrated IPTV solution for OTE comprises of headend systems from Tandberg Television, part of the Ericsson group, middleware application, content distribution platform and a customized and flexible consumer portal. The solution will also involve complete implementation and integration of tools for operational management.

Ericsson was chosen for its proven ability to deliver a complete IPTV solution that meets the market demands. The IPTV solution will enable OTE to offer new and sophisticated services to its consumers. The initial offer will include a wide variety of broadcast channels, video on demand, electronic program guide, and personal video recorder capabilities.

Ericsson offers an end-to-end IPTV solution consisting of IPTV middleware, video on demand, network-based PVR, IPTV headends, content protection, IPTV infrastructure, systems integration and IPTV applications such as games. Ericsson has to date signed more than 180 IPTV contracts. Those include commercial contracts, trials, IPTV System Integration projects, IPTV headend contracts and IPTV infrastructure contracts for access, metro transport and IP Edge.

Ericsson is the world’s leading provider of technology and services to telecom operators. The market leader in 2G and 3G mobile technologies, Ericsson supplies communications services and manages networks that serve more than 185 million subscribers. The company’s portfolio comprises mobile and fixed network infrastructure, and broadband and multimedia solutions for operators, enterprises and developers. The Sony Ericsson joint venture provides consumers with feature-rich personal mobile devices. 

Fixed telephony facing Stone Age snags March 3, 2008

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Thousands of telecommunications-related complaints are being filed each year by consumers, both with the General Secretariat for Consumers (GSC) and consumer organizations. In some cases, such complaints may be as many as for products and banking services, which occupy top places in the list.

According to EU Commissioner for Consumer Protection Meglena Kuneva, who recently visited Greece, it is not the charges that make subscribers unhappy but the quality of services offered by telephony providers.

03-03-08_telcoms.jpg  Delays in service provision and incomplete information provided to consumers are at the top of the complaints lists. In 2007 alone, the GSC’s complaints phone line 1520 received more than 3,000 calls, accounting for 5.1 percent of the overall number of complaints filed for goods and services.

The Development Ministry’s Agency said that the majority of such complaints related to contract effect dates, failure to provide the agreed services, reneging on the contract, inadequate network coverage and overly high and questionable charges.

Development Ministry officials say an increasing number of consumer complaints have been made on telecommunications issues in recent years. This is attributed primarily to a new consumer mentality according to which there is a widespread hope that things in certain areas may be improved if complaints are made.

Consumer Association EKPOIZO has said that in 2007 it received more than 3,200 complaints for telecoms, an area of service which now ranks in third place in terms of number of complaints, behind goods and banking services.

Complaints have been made involving the following issues: delays in service provision and inadequate fulfillment of contract obligations; false information on line availability and time required for connection; lengthy waiting periods for connection, ranging from one to six months; lower-than-advertised Internet quality and speed, periodic line failures, low communication quality; billing of charges even when services are not being provided, and charges even after exiting a subscribed service; poor, if any, after-sales service, with waiting time at call centers reaching up to one hour; extremely high charges incurred by Internet users from so-called dialers, by global and even Greek-based companies.

The association believes that such dysfunctions are the result of specific market shortcomings, including the way problems are dealt with by both the Hellenic Telecommunications Organization (OTE) and alternative telephony providers.

In many cases, alternative phone companies deny liability for failure to provide services they have promised and agreed to, blaming OTE instead.

In addition, EKPOIZO apportions part of the blame to state agencies GSC and the National Telecommunications and Post Commission (EETT), saying they are too «soft» and must take measures to effectively protect consumers.

A similar picture is also drawn by the Consumer Protection Center (KEPKA), whose 2007 data showed a year-on-year increase of 84 percent in complaints for telecoms services, from 938 in 2006 to 1,728 in 2007. The center has demanded that an Obligations Charter be set up to protect consumers and their rights.

A message by telecoms market officials that «the worst is behind us,» holds out some hope of a gradual improvement in telecoms services.

Against this background EETT, as the agency where all consumer complaints end up, is also now more optimistic. «Based on our experience, we believe that the number of consumer complaints is gradually dropping, but to show this we need more concrete data, which we are likely to have next summer,» said Nikos Koulouris, Vice President of EETT. He admits though that all parties involved must handle certain issues very seriously.

The Commission is soon to join forces with the GSC, the Consumer Ombudsman and the Ministry of Transport and Communications, to set up a «one-stop shop» website to help consumers solve a variety of related problems. The website will include details such as the names of officials to contact to speed up the process.

But will this be enough? Can heavy fines imposed by EETT on telecom providers turn things around? The answer, according to Koulouris is not a simple yes or no. He says the market, as well as telecom providers, need to further mature. «Responsibility lies both with OTE, which up until recently objected to the opening up of this market, and with alternative providers which grossly overestimated their capabilities.»

On the other hand, alternative telephony providers have also made some tragic mistakes. For instance, they promised services and solutions which they knew they were unable to eventually provide. According to EETT, some alternative phone companies insist on referring customer complaints of service failures to OTE.

Alternative phone companies currently provide voice and Internet connection services to some 800,000 subscribers across the country.

Further reading > Free Market Pirates