Romanian telecoms group Digi Communications announced on May 27 that it has agreed to indirectly acquire a majority stake in local mobile phone operator Telekom Romania Mobile.
Telecom Romania Mobile is the last remaining asset of the Hellenic Telecommunications Organization (OTE), the Greek group that acquired the country’s incumbent telecoms group, Romtelecom, in a process that began in 1998.
Under the new agreement announced by Digi, investment company West Network Invest, which is majority owned by Digi Romania (DIGI’s domestic subsidiary) and minority owned by Clever Media Group (owned by local businessman Adrian Tomsa), will take over 99.99% of Telekom Romania Mobile Communications (Telekom Romania Mobile) from OTE.
According to the agreement between West Network Invest’s shareholders, if the transaction is completed, Telekom Romania Mobile will remain in the market as an independent operator (although no mention was made of the brand).
The deal is the second in a series of tentative agreements announced by OTE last November.
On November 21, OTE announced in an investor note that it was in talks to sell the mobile operator to Quantum Projects Group, a company owned by Romanian businessman Adrian Tomsa, who will hold only a minority stake in Digi in the acquiring company, according to a definitive agreement announced by Digi on May 27.
The parties have signed a memorandum of understanding to facilitate the process and have submitted it to the competent authorities in Romania for approval, Digi Communications announced.
Bogdan Ciritoy, chairman of national competition body Consiliul Concurentei, commented on the deal on May 27, HotNews reported.
“In terms of competition, the situation is more complicated because Digi is the larger player in the market,” Chiritoiu said.
On November 23, Tomsa expressed “confidence” that the deal would receive necessary approvals from the National Security Council and competition authorities.
“We trust that Romanian government agencies will favorably analyze the transaction as soon as possible, as all necessary documentation in this regard has already been submitted,” he said at the time.
It is not clear whether this was an obstacle or if the obstacles were of a financial nature. Alternatively, the partnership with Digi, which Tomsa had negotiated in the meantime, may have been a better option.
Tomsa has committed to transforming Telekom Romania Mobile into “a local, dynamic and secure telecommunications operator dedicated to all residential customers in the country.” The new contract does not invalidate those plans.
Telekom Romania Mobile reported revenues of €261 million in 2023 and a net loss of €16 million.
The company currently has 3.66 million active SIMs, of which 1.93 million are postpaid subscribers, but has posted net losses in nine of the past 10 years. In total, it has about 24 million active SIMs, of which two-thirds are for postpaid services.
On 6 November 2020, OTE agreed to sell its 54% stake in fixed network company Telekom Romania Communications to Orange Romania for €295 million (the remaining 46% is owned by the Romanian government). Subject to regulatory approval, OTE committed to purchasing the remaining 30% stake in Telekom Romania Mobile. The transaction was completed in July 2021.
