Greek asset sale begins with OTE

26th May 2011, Comments 0 comments

Greece on Thursday began a massive asset sale to reduce its rampant debt, with the government calling Germany's Deutsche Telekom to talks over the state's remaining stake in Balkans telecom giant OTE.

Finance Minister George Papaconstantinou sent a letter to the board of Deutsche Telekom to "begin the procedure" after the cabinet approved on Monday the further privatisation of OTE, the minister's office said.

The move comes with other European states breathing down Greece's neck to speed up privatisation and reforms after Athens secured an unprecedented bailout loan from the EU, the IMF and the European Central Bank last year.

The cash-strapped Greek government this week said it will reduce its 16-percent stake in OTE by next month, amid plans to raise 50 billion euros ($70 billion) from state asset sales to reduce the country's mountain of debt.

The semi-state Athens News Agency (ANA) reported Thursday that tenders on a host of other state properties for full or partial sale -- including the ports of Piraeus and Thessaloniki and Hellenic Postbank, one of the country's best-capitalised lenders -- would be launched in coming months.

Germany's Deutsche Telekom currently controls 30 percent of OTE, the largest telecom operator in the Balkans that employs some 30,000 people in Albania, Bulgaria, Romania and Serbia.

The government is holding crunch talks with the EU, the International Monetary Fund and the European Central Bank on the privatisation programme and economic reforms whose outcome will determine Greece's continued solvency.

Greece's eurozone peers have made the privatisation programme a condition of more assistance down the line.

"Greece has to take new commitments. Greece has to enlarge the ambition of its privatisation programme," leading eurozone policy-maker and Luxembourg Prime Minister Jean-Claude Juncker said on Tuesday.

Athens was last year granted a 110-billion-euro loan from the three organisations and has warned it will go bankrupt without a 12-billion-euro instalment due this month.

But the IMF has made it clear that it will not release new funds for Greece without a comprehensive European support package to cover future years, the Greek finance minister said this week.

The privatisation drive has sparked social tension in Greece with unions gearing up for a general strike, the third this year against austerity.

The government on Monday said it would activate a "put option" -- a contract to sell an asset by a specific date -- on a 10-percent stake in OTE and would also consider selling the remaining six percent at an unspecified date.

OTE this month reported a net profit of 30.2 million euros ($42.5 million) in the first quarter of the year, a fall of 54.1 percent from 2010.

In February, OTE announced cost cuts worth some 32 million euros but managed to raise 500 million euros in a three-year bond sale two months later.

© 2011 AFP

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