Telecom merger in the making: Romtelecom & Cosmote new CEO Beckers says process in early stage, with local Govt. and OTE in talks

The much awaited merger on the Romanian telecom market, between operators Romtelecom and Cosmote is just in its beginnings and it is premature to talk about redundancies or any other cost cutting measures, said the CEO of the two companies Nikolai Beckers, in his first meeting with the Romanian media earlier on Wednesday (June 5). Beckers, who has been in similar complex merger situations during his career, said the shareholders in the two companies – the Greek group OTE and the Romanian state are currently in talks, with both sides having reasonable objectives, but that it is the beginning of a process to create a merger plan. Beckers, who came from the helm of Deutsche Telekom's T-Systems in France two months ago to lead Romtelecom and Cosmote through this merger, said the planned move makes sense economically. “On paper, the two companies could continue to provide complementary services, but from the customer's point of view, convergent services and one entity are needed,” Beckers explained. The process will take some time, and even if the Government also has a political aim, that can fit nicely within the economical aim, and the CEO hopes the process will go faster and give clarity to the situation. On a telecom market that is more competitive than many others and with a pricing level already in the bottom range, the strategy which was correct two or three years ago would need to be taken one step further, and this is one of Becker's aims during this mandate. “I always like to take the best of both worlds,” said the CEO when talking about the upcoming process. Already trying to fit into the 'new world', and already speaking some Romanian, the German CEO said naming a joint CEO and other key positions for both companies was the correct start for a merger. Judging by the number of people both Romtelecom and Cosmote employ in Romania – 11,000, this is the biggest company Beckers has ever run, but judging by turnover, he has been at the helm of similar companies in the past, as in Western Europe high turnovers tend to come with smaller numbers of employees. Optimistically facing the complex situation ahead, which will most likely create the largest player on the telecom market in Romania, Beckers says he likes the management by walking style, and that often he walks in and attends meetings of various departments, where he only sits and listen, just to learn how things work. “I can promise you one thing: I am here to turn these two good businesses into a great one and so far, after two months in Romania, the people I met make me confident that this is an achievable goal,” he concludes. Romtelecom, majority owned by Greek group OTE and with the Romanian state as minority shareholder with 46 percent, saw its revenues down by 9.2 percent in Romania in the first quarter of the year, to some EUR 145.5 million, while its EBITDA profit was also down by 5.7 percent, to some EUR 38.1 million. According to majority shareholder OTE, the drop on the landline telephony segment and a drop in 24 percent from revenues on the interconnection segment caused the decline in revenues. Cosmote, also owned by OTE, in turn owned by Deutsche Telekom, ended 2012 with decreases across revenues but with higher profits in Romania, the country which became the top performer among parent company OTE's markets. The lower revenues were in line with its entire international mobile telephony business. In fact, the revenues drop in Romania was among the smallest, of 1.2 percent year-on-year, to EUR 464.8 million end – 2012. On the profit side, Romania too was the overachiever in the group of four countries where OTE runs mobile telephony businesses. The pro forma EBITDA – the profit before taxes – was 19.4 percent higher year-on-year, to some EUR 119 million.