A better price is not possible because of the negative impact of the international and domestic economic crisis, which affects the valuation of the telecom operator, he said.
Mircea Cazan is also vice-president of the IT&C Committee of the National Liberal Party (PNL) and former chairman and chief executive officer of state-owned Societatea Nationala de Radiocomunicatii (National Radiocommunications Company – SNR) in 2005-2008.
“I think that taking the international and domestic economic crisis into account, the Romanian government could currently get (depending on the privatization method proposed and accepted by the Information Society Ministry) EUR350 million at best for the 45.99% in Romtelecom.”
If the sale had been done in 2005-2006, when the market and the economy were different, the stake would have been worth up to EUR900 million, Mircea Cazan added.
The privatization of Romtelecom, which provides landline telephony, Internet and TV services and is the second leading player on the market with more than 1.2 million subscriptions for each service, was resumed by the Ponta Cabinet last year.
The sale is now on the finishing strait, at least in theory, after the government chose its entire team of lawyers, consultants and bankers. The team members are Swiss Capital, the largest brokerage firm on the local stock market, Swiss investment bank UBS, Musat & Asociatii, one of the largest law firms in Romania, BT Securities – brokerage firm of Banca Transilvania (TLV.RO) and Bulboaca si Asociatii law firm.
The government signed the contract with the Swiss Capital – BT Securities – UBS Limited consortium on February 28.
Romtelecom, whose majority shareholder is Greek OTE group, and mobile phone operator Cosmote, the other OTE company in Romania, generate more than EUR1 billion revenue together but operate as separate entities under the same management team, after German executive Nikolai Beckers was appointed CEO last year.
Should the government start/agree to a merger of Cosmote and Romtelecom before the sale or sell its stake in Romtelecom and let the shareholders take care of the process?
The document starting the sale of the government’s share in Romtelecom, Government Ordinance 83 on September 4, 2013 does not stipulate the possibility of a merger, Mircea Cazan said.
He added that, in his opinion, a Cosmote-Romtelecom merger would not be legal, and if the consultant team suggests such a solution, then the government should have the Parliament vote on it to avoid suspicions of corruption.
The appointment of a full top management team of Cosmote and Romtelecom, “filling two positions at the same time, with similar obligations and rights for two different legal entities, one of which with the government as minority shareholder and the other owned by private shareholders” is not “a good decision”, Mircea Cazan feels.
Asked if he thought the special building structure tax that the Ponta Cabinet suddenly introduced at the end of last year would affect the value of Romtelecom’s shares, Cazan said he did, because “the tax introduces new financial constraints for a potential international investor interested and the costs induced cannot be clearly and predictably quantified for future financial years.”
Romtelecom posted EUR447 million revenue and EUR102 million operating income in the first nine months of 2013. The company was valued at EUR1.1 billion in last year’s yearbook of most valuable companies in Romania compiled by ZF and Capital Partners, based on 2012 financials.
(English version by Loredana Fratila-Cristescu)