Deutsche Telekom CEO's OTE visit sparks stake hike speculation

Timotheus Hoettges, Deutsche Telekom's new chief executive, sparked rumours that the German operator could acquire the Greek government's 10 per cent stake in incumbent carrier OTE after he paid a visit to the company's headquarters.

The Athens visit is Hoettges first to any Deutsche Telekom subsidiary since he took over the CEO position on Jan. 1, 2014. The German operator currently holds a 40 per cent stake in OTE. Hoettges told 400 OTE staff that the operator is now standing on its own two feet financially, while Claudia Nemat, board member for Europe and Technology, said OTE has cut its debt following a "comprehensive restructuring plan".

Hoettges called on OTE staff to help make the Deutsche Telekom group "the leading telecommunications provider in Europe, with OTE as a strong cornerstone".

Nemat added that Deutsche Telekom's long-term goal "is to create an integrated pan-European network of mobile and fixed networks based on All IP".

A company statement reveals that Deutsche Telekom and OTE have invested around €2 billion ($2.6 billion) in the Greek telecoms market over the past five years, and plan to pump another €1.2 billion into the country over the next four years.

However, it is OTE's operations in Eastern Europe that are the focus of reports that Deutsche Telekom is negotiating the purchase of the Greek government's 10 per cent stake in the operator.

OTE has operations in Romania and Albania that could form a key part of Deutsche Telekom's pan-European strategy, Bloomberg reported, adding that the recovery in OTE's share price would make a sale an attractive prospect for the Greek government.

The share price has grown nine-fold from a record low in mid-2012, the news agency reported.

Deutsche Telekom declined to comment on the report, while Greek authorities were not available, Bloomberg said.

Deutsche Telekom could fund any move for OTE with the proceeds of a sale of its T-Mobile US operation. Reports mid-January said the German operator is on the brink of agreeing a deal to offload its 67 per cent stake in T-Mobile US to Sprint in an all-cash deal, although such a deal is expected to face an uphill battle with the US Department of Justice.

For more:
- see this Deutsche Telekom release
- see this Bloomberg article

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