Egyptian billionaire and Orascom Chairman Naguib Sawiris boosted his reach on Tuesday with a deal to buy out Tellas, Greece s second-largest phone company.
Greek power utility Public Power Corp. (PPC), which owns 50 percent minus one share of Tellas, accepted a 175 million euro ($239.8 million) offer from Sawiris s Weather Investments unit for its stake in Tellas.
Weather Investments earlier this year bought Greece s third-largest mobile phone operator, Wind Hellas. Sawiris has said he plans to combine Wind and Tellas and then expand their fixed line and broadband services.
For Sawiris this provides great synergies, said HSBC Pantelakis analyst Vangelis Karanikas. He ll come out aggressive.
Weather Investments also owns Italy s Wind Telecom and Egypt s Orascom Telecom, the largest mobile phone company in the Middle East and North Africa.
Merging Wind Hellas with Tellas would also mean a direct challenge to Greece s dominant telecom company OTE as a one-stop-shop for services ranging from voice to mobile and the internet.
Sawiris wants to fully exploit the options now available to him, Karanikas said. This will increase competition for OTE, but consolidation is positive for the telecoms market.
PPC has been keen to sell its stake in Tellas to concentrate on its core energy business, but had baulked at previous offers by Sawiris which it considered too low.
Earlier this month Sawiris indicated that he would be willing to abandon his bid for Tellas if an agreement was not reached soon.
This is positive for PPC and a good return on its investment in Tellas, Karanikas said. It invested about 65 million euros in the company, which means a capital gain of about 110 million.
PPC will continue to lease its network to Tellas, while Tellas will also continue to provide telecom services to PPC under the agreement.
Sawiris said earlier this month he was eyeing expanding his interests in Greece beyond the telecoms sector to areas such as media and banking.
PPC stock trades at 70 times 2007 estimated earnings, a strong premium to European peers which trade at about 22 multiples, on optimism that Greece may lift pricing controls which limit the rates PPC can charge its customers.
Its shares have gained about 17 percent since the beginning of the year, outperforming the Athens General Index which has gained about 10 percent in the same period. Reuters
