Greek telco bids for Forthnet pay TV

Greek telecoms company OTE has made an offer of up to €300m (US$410m) for rival telco Forthnet’s Nova subscription TV service.

OTE yesterday confirmed it had submitted a non-binding offer of between €250m and €300m for the division, which boasts around 500,000 out of a total 760,000 pay TV subscribers in Greece.

The offer comes on a debt-free, cash-free basis and, if an agreement is reached, it will be subject to clearance by competition authorities.

Inside sources indicate that while Nova dominates Greek pay TV, it owes as much as €225m in loans. This means if Forthnet accepts OTE’s offer at €300m, it will only cash in €75m for the sale of its pay TV services.

According to OTE, the company is interested in Nova due to the significant growth potential of Greek pay TV services. Data suggests a steady increase of pay TV penetration in the Greek market, from 11% in 2011 to 18% last year and an estimated 20%-plus in 2014.

OTE intends to make pay TV more competitive in the Greek market and therefore further increase penetration levels to approach the European average. The company claimed the acquisition of Nova will benefit Greek customers.

As for Forthnet, selling its pay TV unit to OTE would mean the company will be able to get rid of its debt and focus on its internet and telephone services. However, it would certainly lose an important asset for attracting new clients and keeping its existing subscribers.

OTE offers broadband services, fixed and mobile telephony, high-speed data communications, leased lines services, and is also active in satellite communications, real-estate and professional training. However, it has focused recently on high-speed internet and pay TV services to counterbalance its declining telephone business.

Formerly a state-owned monopoly in telephony, OTE is now listed on the Athens and London Stock exchanges. Since July 2009 it has been 40% owned and managed by Deutsche Telekom. Barclays is OTE’s financial adviser on the deal with Forthnet.