DT's Romanian fixed assets finally turn OrangeDT's Romanian fixed assets finally turn Orange
France-based group completes deal to buy 54% of Telekom Romania Communications from DT-controlled OTE.
October 1, 2021
France's Orange completed the previously announced transaction to buy a controlling stake in Telekom Romania Communications (TRC), the former state-owned incumbent that provides fixed-line services to Romanian consumers.
The group has acquired a 54% stake in the business from Greek operator OTE Group on a debt-free, cash-free basis.
The final equity consideration amounted to €295.6 million (US$342 million) and gives TRC an enterprise value of €497 million ($575.5 million). The other 46% remains in the hands of the Romanian state. Deutsche Telekom (DT) holds a minority but controlling stake of 45% in OTE.
For Orange, the deal marks a further advancement of its ambition to become a provider of fixed and mobile services in Europe. Like many of its operations in the region, Orange Romania already provides convergent packages under Orange Love.
The France-based group said Orange Romania and TRC will continue to operate as two separate legal entities, with Liudmila Climoc remaining as CEO of the former. Andrei Popovici, who has been with Telekom Romania for six years, has been appointed CEO of TRC.
Orange said TRC is Romania's second-largest player in fixed telecoms with revenues of €633 million ($733 million) reported in 2020. The operator provides fixed voice, broadband and pay-TV services to around 5 million customers, and its 90,000km fiber network connects almost 3 million households.
It also provides convergent services to close to 916,000 fixed-mobile subscribers through a mobile virtual network operator (MVNO) contract with Telekom Romania Mobile Communications (TRMC). These customers will be migrated to Orange Romania's network following the completion of the transaction.
TRMC currently remains in the hands of OTE and Deutsche Telekom. Indeed, OTE was obliged to buy TRC's 30% stake in TRMC for €58.9 million ($68 million) in order to secure European Commission approval of the sale of the fixed-line business to Orange. This means that the Greek operator owns a near 100% stake in TRMC.
Dina Tsybulskaya, formerly CEO of Crnogorski Telekom, took on the CEO role at TRMC in early September to reflect its separation from the fixed business. Tsybulskaya replaced Vladan Pekovic, who was appointed CEO of Telekom Romania in November 2020, to oversee the sale to Orange.
As things stand, OTE appears to have no immediate plan to sell its Romanian mobile business, according to comments made by Charalampos Mazarakis, chief financial officer of OTE, during the Greek operator's earnings call in March.
According to OTE, the operator had 3.5 million mobile subscribers as of the end of June 2021, of which just over half were prepaid users. In the April to June quarter, total revenues from TRMC fell 5.6% to €74.7 million ($84.5 million), although OTE noted this was a significant improvement in trends compared to earlier quarters.
— Anne Morris, contributing editor, special to Light Reading
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