BUCHAREST (Romania), November 9 (SeeNews) - Greek telecom group OTE said on Monday it has entered into an agreement to sell its 54% stake in fixed-line operator Telekom Romania Communications for 268 million euro ($318 million) to Orange Romania, a unit of France Telecom's Internet and mobile arm Orange.
The agreed consideration is 497 million euro for 100%, corresponding to 268 million euro for OTE’s stake, on a debt free, cash-free basis and is subject to customary adjustments at closing of the transaction, such as for net debt, working capital and pre-closing items, OTE said in a press release.
Telekom Romania’s acquisition by Orange Romania will enhance the market’s competitiveness while securing the company’s future, through long term investments, supporting the digital transformation of the Romanian economy and society, as well as offering stability and positive prospects to its employees, the Greek group also said.
The transaction is subject to regulatory approvals and other conditions and is expected to be completed within the second half of 2021.
Following completion, the net consideration after transaction expenses and required provisions will be distributed to OTE shareholders. Also, OTE will retain ownership of Telekom Romania Mobile Communications.
Currently, Telekom Romania operates a nationwide fixed network serving approximately 930,000 broadband customers and 1.2 million TV subscribers.
In 2019, Telekom Romania Communications generated 622 million euro in revenues.
The sale is not expected to have a material impact on OTE’s free cash flow outlook, or its debt position, it said.
"The sale of Telekom Romania is a strategic decision in the context of OTE Group’s redefined priorities and growth plans, in order to support the Group’s development and create value for all stakeholders. OTE has committed extensive resources over the years to support Telekom Romania’s performance, while it remains in the market through Telekom Romania Mobile," OTE’s Chairman and CEO Michael Tsamaz said.
"The acquisition of the company by Orange Romania ensures its future growth and creates the conditions to further strengthen market competitiveness to the benefit of its customers and to support the digital transformation of the Romanian economy and society," Tsamaz added.
In a separate statement issued on Monday, Orange Romania said that the acquisition will accelerate its convergent operator strategy which, when combined with Telekom Romania’s fixed network, will create a fully infrastructure-based convergent operator across B2C, B2B and ICT markets.
"This is a significant milestone for the Romanian telecom market that will enhance its attractiveness both in terms of converged telecoms services and high quality infrastructure, while increasing competition," Orange Romania CEO Liudmila Climoc said.
According to Orange Romania, the deal will also generate significant synergies deriving mainly from the cross-selling of services to existing customers, as well as the optimization of the network including economies of scale and scope.
The closing of the transaction is subject to customary condition precedents, notably antitrust clearance by the European Commission, Orange also said.
"This acquisition is an important step to accelerate our convergence strategy in Europe. Romania is a key market for Orange and a great success story. This transaction confirms our long term commitment to the Romanian market," Mari-Noelle Jego-Laveissier, deputy CEO in charge of Orange in Europe, said in the statement.
In July 2019, Telekom Romania announced it will lay off 692 of all 5,831 people it employs, as part of a reorganisation programme which began in 2017. Also in July, local media reported that Deutsche Telekom could sell its Romanian subsidiary’s business lines separately to speed up the divestment process.
OTE, in which Deutsche Telekom is the largest shareholder, is present in Romania since 2014. OTE's units in Romania - fixed-line operator RomTelecom and mobile operator Cosmote - were rebranded as Telekom Communications Romania and Telekom Mobile Romania, respectively, in September 2014.
Telekom Communications Romania is majority owned by OTE with 54%, while Romania's communications ministry holds 45.99%. Telekom Mobile Romania is owned by OTE Group member Cosmote Mobile Communications with 69.9%, Telekom Romania Communications with 30% and other minority shareholders.
($ = 0.8423 euro)
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