German Nikolai Beckers, who has 18 years’ experience in the Deutsche Telekom group, will have to integrate Cosmote and Romtelecom and their subsidiaries under terms that also have to be agreed by the Romanian state. The integration will have to occur while meeting strict profitability targets and keeping the operators’ commercial offer competitive amid tough competition from rivals Orange, Vodafone and RCS&RDS.
Deutsche Telekom controls Cosmote and Romtelecom through OTE.
Beckers is the first German CEO to the operations of Cosmote and Romtelecom since Greek group OTE became a shareholder of fixed telephony company Romtelecom in 1998. In the 15 years since OTE became a shareholder of Romtelecom, the latter has been run only by managers from Greece, with one exception – American James Hubley (2003-2007). Cosmote, the mobile telephony company of OTE, has up to now had only managers from the Greek group.
What priorities have the majority shareholders of Cosmote and Romtelecom set for the new CEO? To integrate the two operators, to improve profitability and services to clients, Michael Tsamaz. CEO and chairman of the OTE group, who supervises from Athens what happens at the Romanian subsidiaries, told ZF in a recent interview.
“The number one priority for the new CEO is to finalize the merger of the two companies. His number two priority and equally important will be to further improve the customer service of both mobile and fixed operations. So in other words what we expect him to do is to sustain the profitability of the two companies and further improve it,” Tsamaz said. Television and mobile and fixed internet services are the sectors where the biggest investments will be made, he added.
The group of companies to be run by Beckers on the Romanian market will be, if there is no other transaction on the market, the largest in Romania in terms of number of subscriptions and of revenues, as well as in terms of number of employees – around 10,000. Since two of the key targets set by the shareholders are integration and improving profitability, Nikolai Beckers will not only have to strictly control costs, but also find ways to cut them.
For almost two years the number of OTE companies in Romania has been stagnating, but the new CEO will have to calculate whether the group will continue with 10,000 employees – turnover of EUR1 billion, or whether it will launch an adjustment program.
Market leader Orange has less than 3,000 employees and turnover of over EUR900 million, while RCS&RDS – a company with extensive fixed operations, and which is expanding on the mobile segment, has around 7,000 employees with turnover of almost EUR500 million. Since agreement has not yet been reached between OTE and the Romanian state on how the merger will occur or on a schedule, nobody from the management of Cosmote and of Romtelecom has ever spoken publicly about what the merged operations of the two companies would look like – apart from obvious things such as the two operators will have one headquarters, but clearly “the ice will be broken” during Beckers’s term in office.
The standstill of talks with the state about the merger (the state owns 46% in Romtelecom and 14% in Cosmote Romania), is also reflected in the management structure of the two operators, which have only two positions in common. Since 2011 the two companies have had the same CEO and since December 2012 – for a one-year trial period, a position as chief commercial officer was created for Romania, which is held by Panos Makris, Cosmote’s chief commercial officer. Beckers will have a major say in what the future management team of the new integrated operator will look like and in what the transition period will look like.
Apart from the complex internal agenda of conducting the biggest merger in the history of the local communications market, a task further complicated by the participation of the Romanian state as a shareholder, as well as by OTE’s shareholder structure, Beckers will have to coordinate the response of the two operators to the new challenges of the Romanian market, one of the most competitive in Europe.
The first challenge could be the entrance of Orange – leader of the Romanian mobile telephony market – on a segment where Romtelecom, RCS&RDS and UPC have been the only ones to call the shots so far: television. The mobile telephony company is set to launch satellite television operations in April or May at the latest, according to ZF information. On the TV segment Beckers will also be expected to have his say in terms of Romtelecom’s cable TV operations and approve (or not) further acquisitions by the company on this segment.
On the mobile telephony segment Nikolai Beckers has to continue efforts to catch up with Orange and Vodafone, especially on the residential and business segment, the client category that brings the biggest revenues. Cosmote has caught up with Vodafone on the prepaid cards segment – where last year it almost equaled Vodafone’s number of valid cards, but it has around 1.6 million subscribers to mobile telephony, which compares with Vodafone’s around 3.3 million and Orange’s over 4 million subscribers.
Beckers comes to Romania from France, where he was CEO of T-Systems, a division of Deutsche Telekom as of September 2011.
He started his career in 1989 at Deutsche Bank and later had several management positions, such as President and CEO at Deutsche Telekom France, Managing Director of Deutsche Telekom Philippines and CFO of T-Online France.
(English version by Daniela Stoican)