Romania’s leading telecommunications group Digi Communications (BVB: DIGI, Digi), the last asset of Greek group OTE, which bought the country’s existing telecommunications group Romtelecom in a process that began in 1998, has agreed to indirectly acquire a majority stake in local mobile operator Telekom Romania Mobile.
“In terms of competition, the situation is more complicated, as Digi is the leading company on the market,” commented Bogdan Chiritoiu, head of national competition body Consiliul Concurentei, as quoted by Hotnews.ro.
Under the new agreement announced by Digi on May 27, 2024, investment company West Network Invest, 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 Hellenic Telecommunications Organization (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 21st of last year, OTE announced in an investor note that it was in negotiations to sell the company to Quantum Project Group, a company owned by Romanian businessman Adrian Tomsa, who will only have a minority stake in the acquiring company, according to a definitive agreement announced by Romanian telecommunications group Digi on May 27th.
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.
On November 23, Tomsa expressed “confidence” that the deal would receive the 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 unclear whether this was an obstacle or if the obstacles were of a financial nature. Alternatively, the partnership with Digi, negotiated by Tomsa, may have been a better option.
Tomsa has pledged to transform Telekom Romania Mobile into “a local, dynamic and secure 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 euros in 2023 and a net loss of 16 million euros.
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, two-thirds of which 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 of the transaction, OTE committed to purchasing the remaining 30% stake in Telekom Romania Mobile S.A. The transaction was completed in July 2021.
iulian@romania-insider.com
(Photo courtesy of Digi)
