It’s all Greek to OTE as Romania exit looms

The Greek incumbent this week issued a short stock market statement confirming that it is in talks with Quantum Projects Group, owner of Romanian media outfit Clever Media, geared towards the disposal of Telekom Romania Mobile. The pair have signed an MoU and have filed for approval by the relevant authorities in Romania.

It did not provide any further information on the possible sale; presumably discussions on price are still ongoing. The telco added the usual statement that it will make further announcements to investors as and when needed.

The move comes after a couple of years of OTE mulling its next move in Romania. Or, as the telco group itself puts it, “over recent years, OTE has consistently strived to improve TKRM [Telekom Romania Mobile] performance while also exploring strategic options, to secure its long term growth.”

OTE sold its fixed-line assets in Romania almost exactly two years, transferring its 45% stake in Telekom Romania Communications (TKR) to Orange for €268 million. Clearly the future of the mobile unit has been on its mind since then, although a deal to sell to an existing operator like Orange would presumably have come up against competition concerns at the EU, so selling out to someone from outside the industry was probably a good shout.

Clever Media runs around a dozen TV channels and related Internet properties in Romania, so it’s essentially an investor from an adjacent market. Whether that puts it in a decent position to get the best out of Telekom Romania Mobile – something OTE clearly did not feel able to do – is anyone’s guess, but it should smooth the regulatory process. Presuming the pair ink a final deal, that is.

As far as OTE is concerned, the sale of the asset will mark an exit from its last remaining overseas market. It sold its Bulgarian operations to Telenor just over a decade ago, and parted with its holding in Telekom Albania in mid-2019. With the Romanian business gone, the telco will be able to concentrate solely on its operations in Greece.

There is another major player involved in this deal though. OTE is majority owned by Deutsche Telekom, hence the rebadging of Telekom Romania to fit with the German incumbent’s look. Telekom Albania quickly shed its T brand after OTE sold it – it now operates as One – so it’s likely there will be a name change on the cards for Telekom Romania too.

And the deal effectively shrinks Deutsche Telekom’s Eastern European footprint too. If the sale goes ahead, Deutsche Telekom will have operations in nine European markets, outside of Germany.

Romania makes only a moderate contribution to Deutsche Telekom’s numbers though. The telco generated revenues of €306 million in Romania last year, well under half of the sum it brought in the previous year due to the sale of the fixed assets. That’s pretty small, in the context of Deutsche Telekom’s full-year service revenue figure of almost €92 billion.

For OTE, the impact is naturally bigger, but given that it has struggled to develop the business over the past few years, getting it off the balance sheet will be a positive thing. And it will leave once ambitious OTE as a Greek operator once more.