OTE Telecom shares plunged to a new yearly low during yesterday's trading session of the Athens Stock Exchange, as soon as the Greek company announced it might allot up to half a billion euros more to the mobile telephony operations in Romania, Reuters reported yesterday.
The shares of Greece's top telecom company lost more than two percentage points, but managed to somehow rebound later.
"OTE's presence on the Romanian mobile telephony market is imperative, yet this announcement (i.e. the $0.5bn investment on the Romanian mobile telephony market) will probably renew the pressure on its shares in the medium run," Vassilis Karaziros, analyst with Marfin Hellenic Securities said.
The company on Friday announced it was contemplating a purchase of assets in the mobile telephony sector up to 500 million euros ($540 million) to expand its presence in Romania.
CEO Lefteris Antonakopoulos told Reuters that OTE, which had attempted to breathe new life into the mobile telephony division Cosmorom, had authorised Deutsche Bank to find new opportunities in Romania.
He added OTE was considering four options: an acquisition, a joint-venture with a competitor, establishment of a mobile virtual network operator based on an already existing service, which might entail selling Cosmorom, or feeding more money into Cosmorom.
OTE became the majority shareholder of RomTelecom, Cosmorom's parent company, following a contract signed on January 31. It has already announced plans for shedding 9,000 jobs out of the current 31,000 over the next two years, in order to keep costs in check and turn the company around.
OTE's plans did not include Cosmorom, number three on the Romanian mobile telephony market, with only 1% market share. This operator ended 2002 with 131 million euros in losses.
The other GSM operators in Romania, Connex and Orange had not provided any comment by the time the story was ready for print. Both Ted Lattimore, Connex COO, and Bernard Moscheni, Orange Romania CEO had previously told Ziarul Financiar Cosmorom was no acquisition material.
