Marfin Sells Hellenic Telecom Stake

BERLIN (AP) – Deutsche Telekom AG said Monday that it has agreed to take a 20-percent stake in Greece's biggest phone company in a EUR 2.5 billion (US$3.9 billion) deal and hopes to increase the stake even more.

The Bonn-based company, Europe's biggest telecom, said it would buy the shares in Hellenic Telecommunications Organization SA, or OTE, from Greek private equity firm Marfin Investment Group for EUR 26 (US$40.46) apiece.

MIG currently holds just shy of 20 percent of Hellenic Telecom, making it the company's second-largest shareholder, with slightly more than 98 million shares.

Greece's government is the biggest shareholder, with just more than 28 percent of the company.

Ovum analyst Mike Cansfield said that on the surface the deal would seem odd.

“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,” he said of Cosmote, Hellenic's mobile phone unit.

Hellenic also holds a controlling share of Romtelecom, the former Romanian telephone monopoly.

“Mobile growth is difficult to find in most countries, but in the Balkan states and some eastern European markets the potential is there,” Cansfield said. “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.”

T-Mobile is Deutsche Telekom's wireless unit.

The deal is subject to approval by Deutsche Telekom's supervisory board, the U.S. equivalent to a board of directors, along with the Greek government.

Deutsche Telekom said it was hopeful it could hold talks with the Greek government about increasing its stake in Hellenic even more.

In a statement, Deutsche Telekom said it hoped to “initiate discussions with the Greek government with the aim to reach agreement in the very near future.

“The conditional agreement which was announced today, is a welcome development, compatible with the policy of the Greek government for OTE,” according to a statement released by George Alogoskoufis, the economy minister, and Costis Hatzidakis, the country's minister of transport and communications.

However, they cautioned that several “issues remain to be resolved between the Greek government and Deutsche Telecom. The procedures will begin when Deutsche Telecom submits its formal request.”

Shares of Deutsche Telekom fell more than 2.7 percent to EUR 11.11 (US$17.29) in Frankfurt, part of a wider decline by the DAX index.