The current economic crisis, the shortage of capital and an overcrowded telecom market from the service supply side may lead to cooperation between telecom service suppliers operating in Greece.
Kathimerini Newspaper reports on January 20, 2011 that telecom companies offering telecommunications services in the Greek market are engaged in discussions for possible synergies, and further cooperation. Companies such as Cypriot-based CYTA Hellas, Forthnet and Hellas on Line are currently engaged in talks, under the hawkish eye of the Greek National Regulating Agency (EETT) that may lead at some future time to benign cooperation.
Possible Mergers
According to the Kathimerini, these talks, in all probability, may result to some of the existing companies – most of them with a considerably high debt – merging and thus decreasing the amount of suppliers operating in the Greek Telecom market, hopefully through synergies, streamlined costs and improved efficiencies.
In the last 12 to 18 months, a number of alternative Greek telecom providers including mobile/fixed operator Wind Hellas – which has had its share of debt tribulations – and which also includes the brand name of Tellas and Q Telecom, have engaged in exploratory discussions that may lead to a convergence of operations, gathering of resources and rationalization of assets and other capital factors.
One of the main stumbling blocks in these discussions is that the Greek alternative telecom providers, acknowledging the need for some sort of operation convergence, disagree on which will assume what role as well as other issues such as who will lead and who will follow.
Previous convergence efforts for example, according to Kathimerini, between Cyta Hellas and On Telecoms as well as Hellas on Line Hol and Forthnet failed because of such trifles and tribulations.
On the other hand, the continuing problems of the Greek alternative telecom sector, which has its roots in the Greek alternative telecom carriers engaged in high debt and high losses with a decreasing revenue base (price reductions as well as accounts receivables turning to cash), multiply considerably the pressure for some sort of action.
Lackluster Telecom
Although the past decade saw telecom as a prime investment vehicle for large scale investment houses, the current status of telecommunications, in Greece and in the western world, can be described as a highly competitive sector incurring millions of dollars in losses. Indeed, telecom seems to have lost its luster as a prime target for investment and growth.
Indicative of the situation is Vodafone’s unwillingness to engage in Hellas on Line’s Hol’s capital-raising efforts, where Hol desires to raise about 40 million euro from its shareholders, but its low share price impedes HoL’s capital infusion objectives.
Regardless of the current negotiation inertia, market sources outline that once the alternative Greek Telecom service providers start to really hurt, then the motivational aspect of mergers or cooperations will overshadow any other agendas that may be detrimental to such actions at the present.
Source:
Kathimerini, January 20 2011, pg.24
Antonis Hontzeas - Antonis Hontzeas has been in the forefront of the Telecommunications industry for over twenty years. Tenures include positions ranging ...
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