RomTelecom negotiates 200m-euro loan

National telecommunication operator RomTelecom is planning to contract a foreign loan worth 200m dollars, to fund investments in the telecom infrastructure development, banking market sources say.

The company is already discussing the terms and conditions with five large financial groups – Citigroup, Dresdner Kleinwort, J.P. Morgan Chase, HVB and Alpha Bank Greece.

The general manager of RomTelecom, James Hubley, would not comment on this information for the time being. RomTelecom needs investments to face the competition that has emerged on the fixed telephony market, which was deregulated one year ago. The telecom operator’s biggest problem is its mobile telephony division, Cosmorom, which is posting losses, needs investments, and owes more than 100 million dollars, whereas the shareholders’ decision on its future has been postponed indefinitely.

However, it is little likely that the 200 million dollars should be used by the company to help the mobile telephony division, since Greek group OTE, the main shareholder of RomTelecom (with a 54% stake), has officially said it will no longer grant financial support to Cosmorom.

Last year, RomTelecom applied a very tough restructuring programme, with 5,000 employees having been laid off (more than 13% of the total staff).

In the first nine months of 2003, although the company’s revenues dropped as compared to the previous year (because of the competition and the delayed switch to tariffs expressed in euros instead of ROL), net profit actually climbed 60% from the year-ago period.

Consequently, RomTelecom’s net profit amounted to 47.2 million euros in January-September 2003, with total revenues worth 590 million euros. During the same period, the company managed to operate a 47% debt cut, down to 217 million euros.

Full-year results for 2003 have not been released yet.
razvan.voican@zf.ro ; victor@zf.ro