• Agreement “in principle” reportedly struck between Orange and Romania’s government to take over Telekom Romania’s fixed-line business.
  • Mobile arm still up for sale, as DT still struggles to find full escape velocity from underperforming market.

DT half-way out of Romania (maybe)

DT half-way out of Romania (maybe)

Source: Franck V / Unsplash

Deutsche Telekom’s (DT) longstanding efforts to exit problem‑market Romania reportedly made some progress (Deutsche Telekomwatch, #87 and passim).

According to Hotnews, a local media outlet, DT is on the verge of relinquishing its interest in Telekom Romania Communications (previously Romtelecom) — held via Greece’s OTE Group — which operates the fixed-line business of Telekom Romania (TR).

Local rival Orange Romania, according to unnamed Hotnews sources, has signed an “agreement in principle” with Romania’s Ministry of Transport and Communications to take on TR’s fixed-line business. Under the reported arrangement, a new entity will be created in which the Romanian state holds a 20% stake. Orange, presumably, snags the remainder.

On paper the deal looks strategically attractive for Orange, allowing the operator to complement mobile services with fixed-line offerings. It should also help Orange compete better with Vodafone Romania, which, after taking over cableco UPC Romania in 2019, as part of wider buyout of Liberty Global’s cable assets in Europe, is better positioned as a ‘converged’ player. When the agreement might be formally signed off is not yet clear, however. Financial details were also kept under wraps.

OTE declined to comment on the report but issued a statement confirming it was continuing to investigate “strategic options” for both Telekom Romania and its arms-length mobile business Telekom Romania Mobile Communications.

“Regarding recent press reports about an agreement between Orange and the Romanian Ministry of Transport and Communications to take over Telekom Romania’s fixed line operations, OTE is not in position to comment on potential agreements between other companies and state entities about the Romanian state’s participation in Telekom Romania.”

— OTE.

Job only half done

Assuming the deal for Telekom Romania Communications goes through, DT is not out of the Romanian woods. The Group still has an indirect stake, via a convoluted ownership structure, in TRMC — which is 70%-owned by OTE and 30% by TR.

Previously known as Cosmote, TRMC has reportedly had various suitors, including a Russian investment fund, but the bookies’ firm favourite still remains Digi (also known as RCS&RDS), Romania’s biggest cable TV and fixed broadband provider.

One purported benefit of selling TR’s fixed and mobile assets separately is that it might appease national antitrust authorities, and the European Commission (EC) would then see no need to get involved.

This happy DT scenario seems unlikely to local paper Ziarul Financiar, however, which earlier claimed that if any TR divestments were agreed with local players, then a lengthy wait was likely — until at least early‑2021 — while the EC inevitably waded in and completed a review (Deutsche Telekomwatch, #80 and #90).