State formula preserves its rights in OTE

The government has decided on a formula for the further privatization of OTE in a way that will preserve the state’s rights in Greece’s main telecommunications provider.

The Finance Ministry has opted to transfer its 5 percent stake in OTE to state privatization fund TAIPED, with the fund holding on to 1 percent and the remaining 4 percent going to the Social Security Foundation (IKA). That way it will meet the demands of the country’s creditors without compromising the state’s shareholding rights. It is thought that the creditors have quietly consented to the Greek government’s plan for now.

It is noted that the state will still have full voting rights for the shares that go to IKA. Furthermore, reliable sources say that the solution of the 5 percent transfer was chosen by the ministry’s legal team, which suggested that by holding onto up to this stake the Greek side can retain the rights provided by the agreement between the Greek state and main shareholder Deutsche Telekom.

The 2008 deal offers special rights to the Greek state, such as a higher number of seats on the board despite its relatively low participation in OTE’s share capital. The deal also grants the Greek side veto rights.