June 22, 2011
Prime Minister George Papandreou vowed in 2009 to scrap an agreement to sell a stake in Greece’s biggest phone company in a bid to get elected.
This month, forced to raise cash, Greece triggered an option to sell 10 percent of Hellenic Telecommunications Organization SA (HTO), known as OTE, to Deutsche Telekom AG. (DTE) The price: less than one-third of what Europe’s largest phone company paid for shares when it last bought OTE stock in 2009.
That deal underlines the challenge facing European countries such as Greece and Ireland, awash in debt, that are hoping to raise as much as 71.5 billion euros ($103 billion) in the continent’s largest yard sale of state assets in more than a decade. The push may founder as investors seek better returns in Asia and lower prices than governments are willing to accept, bankers and investors say. The threat of Greek default or euro breakup is scaring buyers and depressing prices, they say.
“Forced sales in a downturn are unlikely to achieve good terms,” said William Megginson, a finance professor at the University of Oklahoma, who advised the Italian government on privatizations from 2002 through 2007. “Sovereign wealth funds invest where their money is safe, and Europeans love China. It’s very hard to see how Greece can raise such an amount.”
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