When a company starts looking for an adviser to oversee the sale of its subsidiary, it is a sure signal that it is serious about finding a buyer, reports Athens News.
OTE and the Romanian government have done just that for their mobile failure, Cosmorom.
The loss-making player is expected to be sold at a cut price, but could turn into a gold mine for a dynamic investor, say analysts.
"Although it's small and has less than 2 percent of the mobile market, competent management could make a viable company out of Cosmorom, especially since Romania has a low mobile penetration," a leading analyst, who preferred not to be named, told the Athens News.
OTE's Romanian subsidiary, Romtelecom, is to mandate an adviser to evaluate the possible sale of Cosmorom, the company stated on January 19.
Shareholders, which include the Romanian government, "agreed to instruct Romtelecom to proceed with the selection of a suitable Investment Bank to assess possibilities," the communications ministry said in a statement.
Alpha Bank, Citigroup, and JP Morgan Chase are among firms being considered for the mandate on the sale, according to one source close to the situation.
Romania's communications minister, Dan Nica added that "a number of very serious companies" were eyeing the player. OTE's chief executive officer, Lefteris Antonakopoulos, has also referred recently to "bidder interest", despite a statement last autumn to the contrary.
Cosmorom needs an investment of up to 150 million euros in order to become competitive, but last year OTE ruled out any further cash being pumped into what, in OTE's case, has turned out to be a money drainer rather than a gold mine.
The mobile player's debts amount to over 190 million euros with losses mounting on an almost daily basis.
Intracom denial
Asked about the size of the debt owed to local giant, Intracom, a spokesperson for the supplier told the Athens News that the figure was 100 million euros "plus interest".
The firm, headed by Socrates Kokkalis, is one name on traders' lips as a potential buyer. " It would make sense for Intracom to use the debt plus some cash on top as a way of acquiring the company," said one financial expert.
"However it would be a somewhat delicate situation if this emerged prior to the elections," they added.
"Some might see it as the government [which is the main shareholder in OTE] virtually giving the firm to Intracom, which of course wouldn't look good," they added.
A spokesperson from Intracom denied that the company had any aspirations to acquire Cosmorom.
"As far as I know there is no such plan," the spokesperson said, although he admitted that the firm was watching events closely.
In 2001, Kokkalis suggested that an OTE-Intracom cooperation would create a strong joint Greek presence abroad.
A potential Intracom-OTE merger scenario also caused some political controversy at the time.
Other likely bidders are existing rivals.
"If I was a mobile operator in Romania, I would consider buying Cosmorom just to keep anyone else from getting it," said one industry observer.
"You only have to look at the cut-throat competition in Greece to see what Romania could become in a few years' time," they added.
Successful existing mobile operators in Romania are Mobifon, run by Canada's TIW (formerly Connex), France Telecom's Orange and Romania's Zapp.
They hold roughly equal proportions of the 22 percent of the market so far penetrated, representing some 2.5 million subscribers.
As yet, only mobifon has denied interest in its tiny peer. Telecom Austria is also eyeing events, according to the Romanian media.
Source: SEEurope.net
