Greek operator OTE said it will sell its Globul unit in Bulgaria to Norway's Telenor, and will use the proceeds to reduce debt and strengthen its competitive standing in recession-hit Greece.
According to Reuters, OTE said it will receive €717 million ($946 million) for the second-largest Bulgarian mobile operator, which has around 4.5 million subscribers. The deal also includes telecoms retailer Germanos Bulgaria. Globul and Germanos accounted for almost 9 per cent of OTE's operating profits in 2012.
The deal brings to an end the ongoing efforts by OTE to sell Globul as part of a general strategy to divest assets in order to reduce debt. Deutsche Telekom, which owns 40 per cent of OTE, said last year it could buy Globul to help out the struggling Greek operator, if such a measure were required.
Reuters said the Globul deal is expected to close in a few months, and would bring total funds raised from OTE asset sales since January 2012 to €1.3 billion. As a result, OTE has been able to halve its debt pile, which stood at €4.3 billion in 2011, Reuters quoted OTE CEO Michael Tsamaz as saying.
"[The deal] reduces OTE group's debt and ensures long-term sustainability," Tsamaz said in the stock market filing about the sale.
The Globul deal allows OTE to focus on retaining its clients and winning back customers who have left. "Going forward, we can now focus on fully meeting our customers' needs by developing next-generation networks, as well as new products and services," Tsamaz said.
For its part, Telenor plans to use Globul as a way to enhance its existing businesses in neighbouring countries. Telenor currently has a presence in Hungary, Serbia and Montenegro in Central and Eastern Europe,.
"Our entrance into the Bulgarian market enhances the potential for cross-border co-operation and increased efficiency that our customers, businesses and the Telenor Group as a whole will benefit from," Kjell-Morten Johnsen, executive vice president and head of region Europe at Telenor, said in a statement. "We also see a potential in expansion of mobile data and Internet-based services in the market."
Telenor noted that Globul reported a 36 per cent subscriber market share at the end of 2012. In 2012, Globul and Germanos Bulgaria generated revenue of €378 million and EBITDA of €135 million. The Norwegian operator said the transaction is subject to relevant merger control approvals and is expected to be finalised in the third quarter.
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