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

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

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.

Fixed telephony facing Stone Age snags March 3, 2008

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.

  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