Government Has No Consultant To Help With Romtelecom Listing

11.04.2011 By Adrian Seceleanu

The Communications Ministry run by the vice-president of the Onesti (eastern Romania) branch of the Democratic-Liberal Party (PD-L) Valerian Vreme has yet to choose a consultant to assist the government in the harsh negotiations with the Greek OTE group in December. The two parties should discuss the flotation of Romtelecom and the stake Romania should have in the new entity created by a merger with mobile telephony operator Cosmote.

"The [consultant selection] procedure was started" and it will be completed "at the latest" by the time US investment bank Morgan Stanley hands in a report to OTE and to Minister Valerian Vreme, which will tell shareholders whether Romtelecom and Cosmote should merge or not before the floatation, some time around December 1.

The institution had initially announced it would complete the procedure by the end of October but it did not happen. The Communications Ministry needs a consultant to evaluate Morgan Stanley's report and provide support to it during the talks with OTE over the flotation conditions and the manner in which the potential merger with Cosmote will be done.

Morgan Stanley, which was chosen by Romtelecom, will also come up with recommendations about a delicate topic, the percentage of shares OTE and the Romanian government should own in the new entity. OTE owns 54% in Romtelecom and the controlling stake in Cosmote Romania, and the Romanian government owns 46% in the landline operator. According to market data, Morgan Stanley is already in talks with the shareholders in order to do its report.

After six months of talks, the OTE group and the Communications Ministry on July 1 agreed that Romtelecom would be listed on the stock market within the year. Is the deadline still standing considering the government has yet to select a consultant for these talks? "No reasons have been identified so far that should lead to a postponement of the date," Communications Ministry sources told ZF.

Romtelecom is the largest landline operator on the local market and number two on the fixed Internet and TV market. Cosmote is number three on the mobile communications market. The two companies' sales reach about EUR1.2 billion a year together, so that they are the largest telecom group on the market.

(English version by Loredana Fratila)