OTE Completes Armentel Purchase

ATHENS (Reuters)–Greek telecom OTE completed the acquisition of 90 percent of Armentel–Armenia’s national telecom firm–for $142.5 million–it said in a statement on Wednesday. The remaining 10 percent will be retained by the Armenian State.

"The price for the acquisition of 90 percent of the equity of Armentel was $142.5 million–with assumed borrowings at closing of $46.7 million," it said.

The Leventis Group of Cyprus is also expected to acquire a 10 percent stake in Armentel from OTE along with the European Bank for Reconstruction and Development (EBRD)–which has also expressed interest in Armentel.

"It is possible that minority participation may be sold to other parties–although OTE intends to retain majority control of Armentel," OTE said.

Armentel is to benefit from a license for the exclusive provision of a wide variety of fixed and mobile telecommunication services for a period of 15 years. OTE expects Armentel to invest $300 million to develop the country’s system over 10 years.

With a population of 3.7 million–Armenia has 585,000 telephone lines in service–74 lines per Armentel employee.

The ratio is seen reaching 150 by the year 2008 with digitalization rising to 47 percent from a current three percent.

"Armentel’s 1998 revenues are expected to be over $60 million with an EBITDA margin of around 50 percent. Armentel started to offer GSM mobile telephony in 1997 and the number of subscribers is expected to increase rapidly," OTE said.

The acquisition of a controlling interest in Armentel is part of OTE’s strategic focus in the Balkans and the Black Sea region where it is involved in submarine cable and terrestrial extensions through Georgia and Armenia.

OTE–with 5.5 million lines and 23,700 employees–also has a 20 percent stake in Telekom Srbjia.

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