VAIN HOPES FOR THE BSE The listing of Romtelecom is uncertain

• Cotovelea: "The stake owned by the state would be worth somewhere between 300 and 600 million Euros"

The Bucharest Stock Exchange may miss out on the IPO of Romtelecom, even though the hopes of the telecom operator being listed on the BSE have been fueled for years.

The Minister for the Information Society seems to no longer support the idea of selling the 45.99% stake held by the state in an IPO (45.99%), as Răzvan Cotovelea, the new minister seems to favor the sale of Romtelecom through direct negotiation.

"I tend to believe that direct negotiation is the best option", he said yesterday.

Răzvan Cotovelea said, in a conference, that by the end of the first semester of 2014, a team of consultants will decide on the best alternative from a financial standpoint and in terms of the ability to meet the deadline by which the company should be privatized: "It could be an IPO, it could be a direct negotiation".

Răzvan Cotovelea also made estimates concerning the value of the stake: "The real value of the Romtelecom stake is somewhere between 300 and 600 million Euros, and it will definitely be a very difficult negotiation, because we believe that this operator has an extraordinary market potential, and in that regard it is enough to be talking exclusively to the investments that are in the process of being prepared and the investments that will follow in the near period financed using the European grants in the 2014-2020 period. In quantifying this potential, we believe it is absolutely necessary to ask for a fair price, that would reflect the fact that Romtelecom is one of the main three telecom operators on the local market", Cotovelea said.

• Marcel Murgoci, Estinvest: "The statement of minister Cotovelea does the government no credit"

Marcel Murgoci, head of operations at "Estinvest" Focşani, considers that the statement of minister Cotovelea concerning the listing of Romtelecom does the government no credit. "It is important for the sale to be done through an IPO because all the IPOs have the advantage of transparency. Furthermore, with the listing on the BSE, some of the retail investors will be able to buy shares as well".

He also considers that in the end, the company will be sold on the stock exchange because in doing so, there will be more interest from investors, and the government will only stand to gain.

• Elian, Transilvania Capital: "It would be more rational if the sale were done through the BSE"

Alexandru Elian, a director at "Transilvania Capital", considers that it would be more rational if the sale of the block of shares in Romtelecom were done through the BSE. "Moreover, it is also more advantageous for the company, because this will bring in more buyers, supply will meet demand and the fair price would be reached. In a direct negotiation, there are less buyers, which would not be a good thing for the company", Mr. Elian told us.

Simion Tihon, broker at "Prime Transaction", also considers that the IPO is a better alternative than direct negotiation.

Dumitru Beze, the president of the Association of Stock Market Investors (AIPC) told us that the authorities should publish the contract for the privatization of Romtelecom, like the AIPC has repeatedly asked.

From the very beginning of his term, at the conference where he was handed over the position of minister of communications, in the beginning of March, Răzvan Cotovelea was a lot more cautious in his statements than his predecessor, Dan Nica, who said: "I am banking on the fact that this year we will witness both the listing of Romtelecom, as well as the completion of the privatization of the Romanian Postal Office. We are now nearing the finish line when it comes to the privatization of Romtelecom. In 2014 we are doing everything in our power to achieve the listing". The current minister was a lot more cautious, expressing his reservations even back then, about the continuation of the process for taking the company public: "As for Romtelecom, the Government must be very careful as to when and how much of it should be taken public. I know many examples of listings of major companies in the EU and the US, that failed to spark any interest", he said, and he didn't hesitate to express his full support for all the projects proposed and begun by Dan Nica: "This position is a great challenge for me. I want to proceed with the whole team that I have found here. I have great faith in the projects and in the strategic vision of Mr. Nica and I will continue them with the utmost seriousness".

At the end of February, MSI and the consortium made up of Swiss Capital, BT Securities and UBS signed the contract for providing consulting services on the sale of the government's stake in Romtelecom.

According to information sent by the Ministry of Information Society (MSI), made public in December 2013, the bid of the winning consortium has a fixed component of zero lei and a variable component of 2.085% plus VAT, which will be calculated based on the gross profit, determined as the mathematical difference between the value of the block of shares sold and the face/book value of the same block of shares recorded in the accounting records of the Ministry.

Since 2001, the majority stake in Romtelecom belongs to Greek telecommunication group OTE, which holds 54.01% of its equity. Romtelecom is a shareholder in Cosmote România, the third largest local mobile telephony operator, with a stake of 30%, and in NextGen Communications, a company that has been operating on the telecom market since 2008, in which it holds 100%. NextGen provides internet services, cable television and land line telephony in over 120 urban and rural localities.

• On April 30, the shareholders will vote on the rebranding of Romtelecom and Cosmote using the "Telekom" moniker

The Board of Greek telecommunications operator OTE has summoned a general shareholder meeting to approve a licensing agreement with Deutsche Telekom by which Romtelecom and Cosmote România will be granted the right to use the "Telekom" brand.

The agreement will come into effect at the time of its signing, and will be valid indefinitely, according to information published on the OTE website, Mediafax announces.

Through this agreement, Romtelecom and Cosmote România will be allowed to register in Romania a corporate name including the "Telekom" name and also use it outside Romania.

The two telephony operators will be allowed to use the Deutsche Telekom brand to offer, distribute and promote the licensed products and services. The use of the brand will be allowed on the licensed stores, buildings, equipment, business documents, the clothing of the employees, for email addresses, as well as in registering internet domains.

Also, the two companies will have the right to sublicense the brand only to the wholly owned subsidiaries, as well as to distribution partners, subject to certain conditions.

The licensing fee will be 0.25% of the net revenues of Romtelecom and Cosmote România, as well as of the net revenues made by the companies that have sublicensed the brand, from the sale of the products and services provided.

Sources from Romtelecom said, in mid-March that Romtelecom could change its name to România Telecom or Telecom România by the end of this year, if the proposal agreed by the Board of Directors gets approved by the shareholders, and the services of the operator, as well as those of Cosmote will be promoted under the "T" brand of Deutsche Telekom.

The quoted sources also said that in the case of Cosmote România, where Romtelecom holds 30% of the shares, the operations of the mobile telephony operator will change their name to T-Mobile.

"In the case of Cosmote we will have T-Mobile, and in the case of Romtelecom the alternative of the services known as T-Home is being discussed. One way or another, at the end of the rebranding process, the two operators will be identified with the «T» brand of Deutsche Telekom", the sources also said.