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Orange Romania, agreement for the acquisition of of 54% of the fixed services operator Telekom Romania Communications
Orange Romania announced on Monday that it has signed the agreement for the acquisition of the majority stake of 54% of Telekom Romania Communications shares, Orange will pay a total purchase price of 268 million euros.
"Orange Romania announces that it has signed the agreement for the acquisition of the majority stake of 54% of Telekom Romania Communications (TKR) shares, in a transaction that will significantly accelerate Orange's strategy to become customers' first choice for convergent services on the market Orange will pay a total purchase price of EUR 268 million, without excess or deficit of net cash and taking into account the adjustments that usually take place at the end of the transaction, which corresponds to an economic value of the company of EUR 497 million, representing 100% of the capital of Telekom Romania Communications and including the converged customer base ", announced the Orange Group.
Hellenic Telecommunications Organization S.A. (“OTE S.A.” or the “Company”) announces that it has entered into an agreement to sell its 54% stake in Telekom Romania Communications S.A. (Fixed, Telekom Romania or “TKR”) to Orange Romania.
The agreed consideration is €497m for 100%, corresponding to €268m for OTE’s stake, on a debt-free, cash-free basis and is subject to customary adjustments at closing of the transaction, such as for net debt, working capital and pre-Closing items.
OTE will retain ownership of Telekom Romania Mobile Communications S.A.
Currently, TKR operates a nationwide fixed network serving approximately 930,000 broadband customers and 1.2m TV subscribers. In 2019, TKR generated €622m revenues.
The sale is not expected to have a material impact on OTE’s free cash flow outlook, or its debt position.
Telekom Romania’s acquisition by Orange Romania will enhance the market’s competitiveness while securing the company’s future, through long term investments, supporting the digital transformation of the Romanian economy and society, as well as offering stability and positive prospects to its employees.
The transaction is subject to regulatory approvals and other conditions, notably antitrust clearance by the European Commission and other relevant authorities, and is expected to be completed within the second half of 2021. Following completion, the net consideration after transaction expenses and required provisions, will be distributed to OTE shareholders. Until this approval and the completion of the transaction is obtained, both companies will continue to operate independently.
OTE’s Chairman and CEO, Mr. Michael Tsamaz, noted: “The sale of Telekom Romania is a strategic decision in the context of OTE Group’s redefined priorities and growth plans, in order to support the Group’s development and create value for all stakeholders. OTE has committed extensive resources over the years to support Telekom Romania’s performance, while it remains in the market through Telekom Romania Mobile. I would like to thank Telekom Romania’s management and employees for the company’s accomplishments to date and I am confident that they will continue to offer their best not only during the period till the completion of the transaction, but also under the new ownership. The acquisition of the company by Orange Romania ensures its future growth and creates the conditions to further strengthen market competitiveness to the benefit of its customers and to support the digital transformation of the Romanian economy and society.”
In her turn, Mari-Noëlle Jégo-Laveissière, Deputy CEO, in charge of Orange in Europe, commented: “This acquisition is an important step to accelerate our convergence strategy in Europe. Romania is a key market for Orange and a great success story. This transaction confirms our long term commitment to the Romanian market. We are looking forward to contribute to the development of the telecoms sector through sustained investments in top performing network infrastructures and innovative services.”
Liudmila Climoc, CEO, Orange Romania, commented: “This is a significant milestone for the Romanian telecom market that will enhance its attractiveness both in terms of converged telecoms services and high quality infrastructure, while increasing competition. It will provide the opportunity to scale up innovative convergent services, bringing broader benefits and wider choices to the customers and also to the country’s digital economy sustainable development. Orange Romania’s and Telekom Romania Communications’ network complementarity will allow us to bring together not only customers and teams, but also the best of expertise in terms of quality of service and future-proof mobile and fixed networks infrastructure.”
Barclays Bank PLC is acting as OTE’s financial advisor. Dechert, Eversheds and Freshfields act as OTE’s legal and regulatory advisors.
TKR is Romania’s second largest player in fixed telecoms with revenues of €622m reported in 2019. Through its owned network infrastructure, TKR provides fixed voice, broadband and paytv services to 5 million customers and its approximately 90,000 km fiber network connects some 3 million households. It also provides convergent services to approximately 881 thousand fixed-mobile convergent subscribers, as at 30 June 2020 through an MVNO contract with Telekom Romania Mobile. These customers will migrate to Orange Romania’s network, following the completion of the transaction.
Orange Romania reported €1.1Bn revenues in 2019 and is the number one mobile operator in Romania. Thanks to this acquisition Orange will accelerate its convergent operator strategy which, when combined with TKR’s fixed network, will create a fully infrastructure-based convergent operator across B2C, B2B and ICT markets. The future combined entity will aim to become the preferred choice of customers for convergent services in the Romanian market both for consumer and business segments. This transaction will also generate significant synergies deriving mainly from the cross-selling of services to existing customers, as well as the optimization of the network including economies of scale and scope.
At the same time, as of Monday, the tenure of the CEO of Telekom Romania Communications S.A. and Telekom Romania Mobile Communications S.A., Miroslav Majoroš, is successfully coming to its end. Vladan Pekovic is appointed as CEO, with the mandate to ensure a smooth transition upon the transaction’s completion and further develop the mobile operations.
„I would like to thank Mr. Majoroš for his valuable contribution during the past five years. Focused on digitalization, convergence and growth mindset, he achieved a sustainable business turnaround. The constant effort and commitment of the entire Telekom Romania team, resulted in the company’s significant transformation and improved performance”, Michael Tsamaz said.
Vladan Pekovic (49 years) is a management professional with an international carrier in various markets across Europe, Africa, Latin America and USA, with over 22 year experience in telecom field with focus on network and IT integration, implementation, development and operation of the most advanced and complex mobile and fixed networks. At the same time, during his career he demonstrated leadership skills and commitment to his role, effectively guiding and leading complex, multicultural teams.
Customer, results and business performance oriented, Vladan Pekovic also has significant experience in Telekom, with a varied portfolio of initiatives he has managed. Prior to joining the Telekom Romania team in 2017, Vladan Pekovic was Chief Technology Information Officer with Crnogorski Telekom.
From the position of Chief Technology and Information Officer, Telekom Romania, he has significantly contributed to the digitization and improvement of processes, technological expansion and simplification of offers, and the innovative approach he adopted has led to improved quality of services provided to customers. Thus, through the large-scale projects he has developed and managed, Vladan Pekovic has demonstrated a deep understanding of the Romanian market, a clear vision of the technological and financial needs of any company to successfully serve its customers, and especially a good ability to coordinate and motivate teams.
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Vladan Pekovic holds a Bachelor of Science Degree in Electrical Engineering, specializations in Mobile Telecommunication and Information Technology with the University of Montenegro and during his professional career supplemented his education through management education programmes at the European School of Management and Technology Berlin, ESSEC Business School, France, Duke University, United Dtates of America, INSEAD Business School, France.
He started his career in 1998 as an engineer for ProMonte GSM. In 2000-2004 he held several positions in Ericsson Mexico, USA, Algeria, and in 2004 he had his first contact with Telekom, USA, as Switch Manager. He later held the position of Integration Project Manager for Crnogorski Telekom (2005-2006), Regional Program Manager at Glotel Inc (2006-2007), Chief Technology Officer at M: tel d.o.o. (2007-2009). In the summer of 2009 he returned to Crnogorski Telekom, where he held the position of Programme Director (2009-2010) and Network and Services Operations Director (2010-2013). During 2013-2014, he served as Chairman of the Supervisory Board of NetWorkS!.
Since 2013, he has returned to Telekom, holding the positions of Network Director, Technology Factory Director at T-Mobile Polska and Chief Executive Technology and Information Officer at Crnogorski Telekom. Since 2017 he is part of the Telekom Romania team, holding the position of Chief Technology and Information Officer.