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German telco giant Deutsche Telekom has confirmed it is buying a portion of Greece’s Hellenic Telecom (OTE). But there’s much more to come.
Deutsche Telekom’s (DT) first step has been to buy up the 20% OTE stake held by private equity group Marfin Investment (MIG). According to a spokesperson at Telekom, the deal will only be closed if the Greek government allows it to acquire further shares to implement its strategic objectives. “We can stand back from the contract at any time.”
But consultancy Ovum sees this as being just the first stage towards a full-scale takeover of Hellenic Telecom.
DT is paying $3.9bn for Marfin’s 98m shares. OTE has a market capitalisation of some $14bn. The Greek government holds a 28% stake, and has indicated it is prepared to reduce its holdings although in the past it has denied Marfin the chance to increase its holdings.
“On the face of it this looks like an odd deal,” says Ovum’s Mike Cansfield. “Why would DT look to take over the Greek incumbent? The answer is not to look to Greece, but OTE’s mobile investments in Bulgaria, Macedonia, Romania, and Albania. Mobile growth is difficult to find in most countries, but in the Balkan states and some eastern European markets the potential is there. What DT is buying is the top-line growth these countries can bring to T-Mobile over the next few years, plus the added opportunity to leverage scale economies across its European mobile footprint. This footprint already covers 11 countries (the UK, Austria, Netherlands, Czech Republic, Poland, Hungary, Croatia, Macedonia, Montenegro and Bosnia) in addition to its domestic market. This looks like a win-win (on revenues and costs) deal.”
"Deutsche Telekom expects to initiate discussions with the Greek government with the aim to reach agreement in the very near future," said a statement from DT.
Deutsche Telekom’s (DT) first step has been to buy up the 20% OTE stake held by private equity group Marfin Investment (MIG). According to a spokesperson at Telekom, the deal will only be closed if the Greek government allows it to acquire further shares to implement its strategic objectives. “We can stand back from the contract at any time.”
But consultancy Ovum sees this as being just the first stage towards a full-scale takeover of Hellenic Telecom.
DT is paying $3.9bn for Marfin’s 98m shares. OTE has a market capitalisation of some $14bn. The Greek government holds a 28% stake, and has indicated it is prepared to reduce its holdings although in the past it has denied Marfin the chance to increase its holdings.
“On the face of it this looks like an odd deal,” says Ovum’s Mike Cansfield. “Why would DT look to take over the Greek incumbent? The answer is not to look to Greece, but OTE’s mobile investments in Bulgaria, Macedonia, Romania, and Albania. Mobile growth is difficult to find in most countries, but in the Balkan states and some eastern European markets the potential is there. What DT is buying is the top-line growth these countries can bring to T-Mobile over the next few years, plus the added opportunity to leverage scale economies across its European mobile footprint. This footprint already covers 11 countries (the UK, Austria, Netherlands, Czech Republic, Poland, Hungary, Croatia, Macedonia, Montenegro and Bosnia) in addition to its domestic market. This looks like a win-win (on revenues and costs) deal.”
"Deutsche Telekom expects to initiate discussions with the Greek government with the aim to reach agreement in the very near future," said a statement from DT.