* OTE sells Bulgarian unit for 717 mln euros
* Sale makes OTE's debt manageable -CEO
* Globul unit sold at six times expected 2013 EBITDA
(Adds comment by OTE CEO, Telenor; adds byline)
By Harry Papachristou
ATHENS, April 26 Greek telecoms company OTE
struck a deal on Friday to sell its Bulgarian unit to
Norway's Telenor and will use the proceeds to reduce
its debt and fight for clients in its recession-hit home market.
OTE, which is controlled by Germany's Deutsche Telekom
, said it would receive 717 million euros ($934
million) for its Globul unit, Bulgaria's second-biggest mobile
operator with 4.5 million customers. The deal also includes
telecoms retailer Germanos Bulgaria, OTE said in a bourse
OTE is selling off assets and cutting costs amid Greece's
worst recession since the Second World War.
Following completion of the Globul sale in a few months, OTE
will have raised 1.3 billion euros from asset sales since
January 2012. Apart from Globul, it has sold its satellite
venture, Hellas Sat, and a 20 percent stake in Telekom Serbia.
This has helped slash its debt pile by half, from about 4.3
billion euros in early 2011, making it manageable, OTE Chief
Executive Michael Tsamaz said.
"It (the deal) reduces OTE group's debt and ensures
long-term sustainability," he said in the filing.
OTE, which has not paid a dividend in two years, faces 1.6
billion euros in maturing debt in 2013-2014.
Falling credit ratings amid fears of a chaotic Greek
sovereign default have made it hard and pricey for Greek
companies such as OTE to service their bonds and loans.
The company, with a rating of 'B-' from S&P, sold a 700
million euro five-year bond earlier this year at a steep fixed
coupon of 7.875 percent.
ASSET SALES, COST CUTS
Apart from asset sales, Tsamaz has been cutting labour costs
and investment to offset a slide in revenue, as
austerity-pinched customers in Greece and Romania, OTE's two
biggest markets, leave the company in droves for cheaper
In January, about 15 percent of the workforce at OTE's Greek
fixed-line unit accepted early retirement. The unit had paid
overly generous wages from the time it was a state monopoly.
The Globul deal allows OTE to focus on retaining its clients
and winning back customers who have left. "Going forward, we can
now focus on fully meeting our customers' needs by developing
next-generation networks, as well as new products and services,"
Globul and Germanos accounted for almost 9 percent of OTE's
operating profits in 2012. They had earnings before interest,
taxes, depreciation and amortisation (EBITDA) of 135 million
euros on sales of 378 million euros.
The deal values Globul at six times expected 2013 EBITDA,
OTE said. The price will be adjusted depending on Globul's net
debt and changes in working capital on the day the transaction
State-controlled Telenor said it bought Globul to create
synergies with the other telecoms companies it runs in the
neighboring countries of Hungary, Serbia and Montenegro.
"Our entrance into the Bulgarian market enhances the
potential for cross-border co-operation and increased
efficiency," Kjell-Morten Johnsen, Telenor's executive
vice-president and head of European operations, said in a
Telenor's recent efforts have been focused on countries such
as Thailand and India; it has also looked at acquiring a license
Telenor has been among the best performing telecom stocks in
Europe. Its shares have risen 28 percent over the past year,
outperforming a 4 percent rise in the telecom index, as
it focused on Asia's fast-growing economies and its stable
markets in the Nordics.
($1 = 0.7676 euros)
(Additional reporting by Balazs Koranyi in Oslo.; Editing by
Jane Merriman and David Goodman)