DT Secures OTE Stake

BONN, Germany -- Deutsche Telekom has brought its negotiations with the Greek government concerning an investment in the Greek telecommunications company OTE to a successful conclusion.

The Chairman of Deutsche Telekom's Board of Management René Obermann said, "We look forward to working together as partners, with OTE and its em¬ployees benefiting as much as Deutsche Telekom. With its highly motivated employees, OTE has built up a strong position in its Greek home market, as well as in Southern and Southeastern Europe in recent years and will therefore be an important partner in the Deutsche Telekom Group."

As a result of the talks, a shareholders' agreement has been signed between the Greek government and Deutsche Telekom, pursuant to which Deutsche Telekom will assume management control of OTE and fully consolidate the company. The Greek Inter-Ministerial Privatization Committee and the Supervi¬sory Board of Deutsche Telekom AG have given the agreement their approval. The agreement is subject to the necessary regulatory approvals and the agreement of the Greek parliament.

Stake of 25 percent plus 1 vote

Deutsche Telekom's investment in OTE is structured as follows.

Deutsche Telekom has consummated the agreement concluded with the Marfin Investment Group (MIG) in mid-March 2008 on the acquisition of just under 20 percent of OTE and acquired the shares for EUR 26 per share with a total purchase price of around EUR 2.55 billion.

Under the terms of the agreement with the Greek government, Deutsche Telekom will increase this stake to 25 percent plus one vote. To this end, 3 percent of the shares in OTE will be purchased from the Greek government for EUR 29 per share, which equates to a total amount of approximately EUR 0.43 billion. Deutsche Telekom will round its stake off by buying an addi¬tional 2 percent of OTE on the market. Based on OTE's current share price, this brings the total purchase price for the stake of 25 percent plus one vote to around EUR 3.2 billion.

Together, the two parties to the shareholders' agreement will hold a majority of 50 percent plus two votes in OTE after completion of all stages of the transaction.

Put-options and pre-emptive rights for additional shares

In addition to the current changes in ownership of OTE, the two partners have also agreed put-options and pre-emptive rights for additional OTE shares in several stages and over varying periods.

From the time of the acquisition of the aforementioned 3-percent stake in OTE by Deutsche Telekom, the Greek government has a put option for a further 5 percent of the shares in OTE. This option is valid for 12 months and can be exercised in October 2008 at the earliest. A price of EUR 27.50 per share has been agreed for this option equating to a total amount of around EUR 0.67 billion.

The Greek government also holds a second put option for a further 10-percent stake in OTE until 2011. In this case, the price per OTE share shall be based on the weighted market price of the share at the time the option is exercised plus a premium of 20 percent initially that will later fall to 15 percent.

In addition, the Greek government has granted Deutsche Telekom a general pre-emptive right over its shares in OTE.

Deutsche Telekom AG (NYSE: DT)