Cosmote and Zapp agree on €200 mln takeover price

Greek Cosmote Group, which is negotiating the takeover of Zapp mobile services network, agreed with the latter's owner, Saudi Oger group, the financial terms of the transaction and major commercial aspects, according to sources close to the discussions for Business Standard.

Cosmote owns the third-largest mobile services operator on the local market. Zapp is owned by Saudi Oger through the Telemobil company. Saudi Oger is controlled by the family of former Lebanese Prime Minister Rafik Hariri. Sources said that the parties agreed on the most important feature, the price. The Greek group is to pay "a little above €200 million" for the local operator, the fifth-largest on the local market. The price can be adjusted depending on financial indicators evolution until the sale is greenlighted by the Competition Council and the National Authority for Communications Administration and Regulation. The company is interested in Zapp because of its 3G license, which can provide Cosmote access to the mobile internet market, the business with the fastest growth in the telecom field, given that profit margins from voice services are dropping. The General Manager of Cosmote Romania, Stefanos Theocharopoulos, indicated last year that one of his term's priorities is to find a solution to allow the operator to provide mobile data services, given the Greek operator is the only one on the local market without a 3G license.

Both market leaders, Orange Romania and Vodafone Romania, and the fourth-largest operator, RCS&RDS, have such a licenses and are providing mobile data services. Sources added that the deal of total takeover of Zapp could be inked next month. The money will be sent by Cosmote in the bank accounts of Saudi Oger after the sale approvals are issued. Part of the funds will be used to reimburse a loan taken last year by Zapp from the China Development Bank. The loan totaled €220 million, but the money were also used for the Zapp subsidiary in Portugal. Cosmote and Telemobil representatives did not comment on the issue before closing the print edition. Negotiations started in early March. The deal is to be completely finalized by the end of the year, according to estimates made by sources on the mergers and acquisitions market. Cosmote has the highest growth rate on the local market, with quarterly growth of revenues and clients at some 80 percent.

Business Standard