Serbia Telekom to Buy up Greek Shares

Telekom Serbia and OTE of Greece, which owns 20 per cent of Telekom, have agreed that Telekom will buy out OTE’s shares by the end of the year.

Serbian Prime Minister Mirko Cvetkovic on Tuesday said the deal was “more or less” done. Saying the exact price would be made public soon, he appeared to confirm the accuracy of media reports that the sale price is about €300 million.

As the government already owns 80 per cent of Telekom, once OTE’s shares are bought up, the company will again be 100 per cent state owned.

The company was privatised in 1997 when OTE bought 20 per cent and Italy's STET bought another 29 per cent. In December 2002 the Italians pulled out, selling their share back to Serbia.

OTE indicated that it wants to sell its share of Telekom last year, when the Serbian government tried to sell 51 per cent of the company.

The biggest share in OTE is owned by Deutsche Telekom, which holds 40 per cent. International institutional shareholders have another 29.5 per cent, the Greek state 10 per cent, Greek institutional shareholders 10.7 per cent, while the remaining 9.8 per cent of the company is owned by other shareholders.

In a tender opened in October 2010, 51 per cent of Telekom was offered to interested buyers. Serbia was selling 30 per cent of its shares and OTE its 20 per cent at a price of €1.4 billion.

Although six companies showed interest, only A1 Telekom Austria put in an offer. The company, which already operates in Serbia through VIP Serbia, offered to pay about €900 million and invest €500 million over three years. The Serbian government refused the offer.

Neither the Serbian government nor Telekom Serbia have revealed who initiated the deal with OTE. However, analysts believe that the Greek company is in a hurry to sell its shares because of the poor state of the Greek economy.

“As we are all aware of the state of Greece, I imagine OTE wants to sell its shares. For the Serbian government this is an opportunity to buy shares for a good price,” economist Goran Nikolic said.

Misa Brkic, another economic analysts, also believes that OTE’s decision to sell shares in Telekom is in line with the Greek government’s plan to make urgent savings.

“On one hand, it will be easier for Serbia to sell Telekom and get a better price for it once it owns the whole company. On the other hand, Greece's savings plan states that the government will sell and privatise state owned companies, so I’m guessing they are selling shares in other countries as well,” Brkic said.

Once the deal with OTE is signed, according to a previously announced plan, 15 per cent of the shares will be distributed to more than 4 million Serbian citizens who will be able to sell them on the market, while 6 per cent will be distributed to the company workers who can also sell them.

“My assessment is that citizens will be able to sell their shares at a price of €50 to €90. Domestic and foreign investors might be interested in buying. However, if the interest in those shares is weak, the price may be lower and then Telekom may decide to buy back the shares from citizens,” Nikolic said.