ATHENS - Greece said on Thursday it would sell a further 5 percent stake in OTE, southeast Europe's biggest telephone company, to Deutsche Telekom, raising 674 million euros ($941 million) to help cut the country's debt.
The finance minister announced to (Deutsche Telekom chief executive Rene) Obermann the Greek government's intention ... to sell a 5 percent stake of OTE shares to Deutsche Telekom, the finance ministry said in a statement.
Deutsche Telekom acquired a 25 percent stake in OTE in 2008 to expand its footprint in the Balkans. Greece, which holds a 25 percent stake in OTE, had an option to sell a further 5 percent to the German company this year.
The additional 5 percent stake will be sold at 27.5 euros a share, above OTE's closing price of 11.77 euros on Wednesday, Greek Finance Minister Yannis Papathanassiou said after meeting Obermann.
Given Greece's financial difficulties and the premium to OTE's current share price, the put option was a huge opportunity for the government and it's not a surprise they exercised it, said Dimitris Birbos, an analyst at Marfin Analysis.
Birbos added, however, that the sale may create political risk for OTE. Greek opposition and OTE workers have already said they will resist the deal.
We radically oppose the sale and we are convening to decide on labour action, OTE labour union's spokesman, Theodoros Pitsikoulis, told Reuters.
The government, which clings to a one-seat majority in parliament, suffered its first electoral defeat in nine years in the June 7 European elections.
Greece, whose deficit is the European Union's second-largest in terms of GDP, and is rising, has a target to raise about 1 billion euros from the sale of state assets this year.
The Greek government's stake will fall to 20 percent after the transaction. The government will not lose any rights to have a say in the company's management, Papathanassiou said.
Under the 2008 deal between Greece and Deutsche Telekom, Greece has another option to sell a further 10 percent of OTE to Deutsche Telekom by December 2011. ($1=0.7165 euro)
(Additional reporting by Tatiana Fragou; Editing by Ingrid Melander and Simon Jessop)