Greece, Deutsche Telekom Talks Focus on OTE Price, Veto
ATHENS -(Dow Jones)- Ongoing talks between Greece and Deutsche Telekom about control of the country's largest telephone company have still to resolve issues relating to the share price of the company, and the veto rights of the government.
Speaking in an interview with Greek state television Sunday, Finance Minister George Alogoskoufis said the Greek government aims to sell a 3% stake in Hellenic Telecommunications Organization (OTE) to Deutsche Telekom at a price over EUR26 a share.
Alogoskoufis also said the Greek government would have the final say in management decisions relating to national defense issues and labor relations.
"Greece will sell 3% of its stake, and have the option to sell more shares in the coming years at a good price," Alogoskoufis said.
"But we haven't resolved all the details in the agreement, we still have some thorny issues to address. Those have to do with the veto rights of the state, and price the state will get (for its shares)," he added.
In March, Deutsche Telekom announced plans to acquire a 20% stake in OTE, Greece's former monopoly telecom operator, for about EUR2.5 billion, from Marfin Investment Group Holdings SA (MIG.AT). That deal, however, was contingent on a follow-on agreement with the Greek government.
Since then, Deutsche Telekom has been in talks with the Greek government to discuss raising its stake in OTE further - as well as the delicate issue of management control at the company.
The deadline for the talks has been set for May 7 - the day before Deutsche Telekom releases its first-quarter results - but negotiations are expected to conclude this week, possibly as early as Tuesday or Wednesday.
The Greek government is the largest shareholder in OTE, with a stake of just over 28%, and effectively appoints the chairman and chief executive of the company.
Under the outlines of a deal with Deutsche Telekom disclosed so far, the Greek government and Deutsche Telekom would each control a 25%-plus-one share stake of OTE. The Greek state would name the future chairman of the company, and Deutsche Telekom would name the chief executive.
In the interview, Alogoskoufis said the Greek state would have the right to reject up to three candidates named by Deutsche Telekom. But he also said that the CEO would be responsible for the day-to-day running of the company without meddling from the Greek government.
"It is logical that someone who invests in a company, and foresees further investments in the future, they want to have complete freedom of action," Alogoskoufis said.
"That which we are trying to ensure in the shareholders' agreement, is that there won't be complete freedom of action. That on certain issues, that we think are important, we will protect our interests," he said. "But the day-to-day management will be held by the (CEO) put forward by Deutsche Telekom."
The Greek government says a deal would be good for OTE, bringing synergies and experience to the company, while also shielding OTE from the political meddling the past and future hostile acquisitions.
For Deutsche Telekom, a deal with OTE would help extend the German telecommunications company's footprint in central and eastern Europe, offering access to long-coveted markets such as Romania and Bulgaria.
However, Greece's telecommunication workers' union, OME-OTE, which is opposed to the deal, has announced two nationwide strikes Tuesday and Wednesday and a public demonstration opposing the sale. The union fears the deal will lead to the complete privatization of one of Greece's major companies.
-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 4th May 2008
