OTE submits offer to Forthnet for its Nova pay-TV platform

By Vangelis Mandravelis

OTE, Greece’s dominant telecoms company, announced on Tuesday it has submitted a non-binding proposal to alternative fixed-line operator Forthnet for the acquisition of its market-leading pay-TV platform Nova for 250-300 million euros.

The level of the offer, according to OTE, is on a debt-free, cash-free basis – i.e. automatically adjusted to Nova’s cash reserves and loan obligations – and in the case that an agreement is reached it will depend on the approval of the responsible authorities.

OTE’s offer raises Nova’s buyout price as it is seen to include a premium of 25 percent on the current valuation level. If one also considers the fact that Wind Hellas had submitted a 200-million-euro offer for Forthnet’s telecom activities a year ago, the total package of the listed company adds up to half a billion euros.

This makes it particularly attractive both for the bankers who will to a great extent safeguard the repayment of the loans issued to the company and for the shareholders that will receive a major windfall. It will of course fall short of the original investment by main shareholder Emirates International Telecommunications, which spent some 250 million euros building its 44 percent stake in Forthnet.

Market experts say there are more episodes to come in this drama as the non-binding offer allows both sides significant leeway. OTE rivals Vodafone and Wind Hellas also control 40 percent of Forthnet between them and sources from the two companies said on Tuesday that their strategy remains intact – i.e. to acquire the whole of Forthnet, but with an emphasis on Nova. Without the pay-TV platform Forthnet’s value would be significantly reduced, they added.