Chris Dziadul Reports: Orange expands in Romania

Orange’s upcoming acquisition of Telekom Romania’s fixed-line business is a highly important development.

Its announcement earlier this week comes three months after local publications reported that Orange Romania had signed a preliminary agreement with the Romanian Ministry of Transport and Communications to take over the fixed-line business and create a new entity in which the Romanian state would hold a 20% stake. It was also suggested in the reports that Telekom Romania’s mobile operation Cosmote could in due course be sold to Digi Communications.

The news that Greece’s OTE planned to sell its stake in Telekom Romania – it owns 54% of Romtelecom and 70% of Cosmote – was first reported early last year and by summer 2019 the telco was already inviting bids. However, the process moved slowly over the next few months despite OTE’s parent Deutsche Telekom apparently seeking a quick exit from the Romanian market. It then more or less ground to halt during the first few months of the Covid-19 pandemic but has now reached a conclusion of sorts.

Indeed, the deal will see Orange buy 54% of the OTE’s Romanian fixed-line business (formerly known as Romtelecom, now Telekom Romania Communications -TKR) for €268 million, with the Romanian state retaining the remaining 46%. Cosmote will nevertheless still remain with its current ownership structure until a buyer is found for OTE’s stake and it could indeed be Digi Communications.

As things stand, Orange’s acquisition of TKR will significantly strengthen its position in what is a highly competitive market and in which it, Digi and Vodafone are the leading players. Already Romania’s largest mobile operator, it will soon also find itself owning a complementary company with fixed infrastructure providing services to some five million customers. This will undoubtedly help accelerate its convergent operator strategy in the country and bring pressure to bear on its rivals.

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