OTE's debt mountain forces sale of Serbian Telekom holding

OTE, the leading telco in Greece, has sold its 20 per cent stake in Telekom Serbia back to the local government for €397 million. The sale will help OTE towards paying the €756 million of debt that falls due in 2012, although the company still faces paying further debts of €3.1 billion in 2013.

"The sale of Telekom Serbia will have a positive impact on our cash flow and is part of our strategy to reduce OTE's net debt," OTE's CEO Michael Tsamaz told the New York Times.

The company, which is 40 per cent owned by Deutsche Telekom, added that it will also receive a dividend payment from Telekom Serbia of €17 million when the sale is concluded in April.

OTE originally paid €300 million in 1997 to acquire its 20 per cent holding in Telekom Serbia, but has since struggled to increase its stake so as to gain management control and push through structural changes within the company.

The situation was not helped by the decade-long civil war that destroyed much of the company's fixed and mobile infrastructure, and was part'y responsible for OTE valuing its stake last year in Telekom Serbia at around €155 million.

The Serbian government has also been attempting to sell off its majority holding in the telco. However, it rejected the only offer it received--from Telekom Austria--due to the bid being significantly less than the €1.4 billion in cash the government wanted.

Telekom Serbia is reported to have made a profit of €159,000 in 2010. According to IDC, the Serbian market is saturated with 1.38 mobile phones for every member of the population.

For more:
- see this New York Times article
- see this Cellular News article

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