Deutsche Telekom explores different exit strategy in Romania

Deutsche Telekom (DT) has made no secret about wanting to disentangle itself from Romania's telecom market. Rumors of potential buyers for Telekom Romania, in which DT holds indirect stakes, have persisted for months on end.

In what seems like an attempt to hasten its departure, local news outlet Ziarul Financiar (paywall applies) reports that DT is now actively looking to offload Telekom Romania to a single buyer.

Up until now, if local reports are correct, the thinking has been to sell Telekom Romania's fixed and mobile assets separately. By doing so the hope was national antitrust authorities could be appeased and that the European Commission would then see no need to get involved.

According to sources at Ziarul Finaciar, DT is now growing cold on this approach because it would mean a difficult and presumably expensive process of separating technical and IT infrastructures.

Digi, Romania's biggest cable TV and fixed broadband Internet provider, was apparently in the frame to snap up Telekom Romania's mobile network and licenses, while Orange was reportedly the leading candidate to take on the fixed-line business.

The single-buyer approach is not without its difficulties, however. The Supreme Defense Council in Bucharest would still need to give any such deal its blessing, and antitrust authorities will surely be alerted if the proposed buyer were local and had infrastructure assets already in the ground.

Telekom Romania has a convoluted ownership structure, which denies DT overall control. This might help explain why the German incumbent wants out, but Telekom Romania also has a long history of underperformance.

While DT owns majority or full stakes in most of its other European subsidiaries, it holds shares in Telekom Romania through its 45% stake in OTE, the telecom incumbent in Greece.

Despite the single brand, Telekom Romania is formed of two companies: Telekom Romania Communications (previously Romtelecom), the fixed-line business; and Telekom Romania Mobile (previously Cosmote).

Local press reports indicate that OTE owns 54% of the former and 70% of the latter, with the remaining shares mainly in government hands. Indirectly, this would leave Deutsche Telekom with just 24.3% of the fixed-line business and 31.5% of the mobile operator.

— Ken Wieland, contributing editor, special to Light Reading

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