Less than a month before losing its monopoly on the Romanian telecom market and after having stirred tempestuous negotiations on its shareholding structure, RomTelecom is causing weekly surprises. And they are very likely to continue. Several days ago, Greek shareholder OTE said it had halted all money wires to Bucharest and refused to go public with its plans for RomTelecom until "certain issues" were cleared up. OTE yesterday took the telecom market by surprise again, as it operated a top management change at RomTelecom.
The new head of RomTelecom is George Scarpelis, vice-president of Greek telecommunications group OTE. The announcement was made by Scarpelis himself, in a brief statement to Reuters. He said he would only run RomTelecom temporarily, as OTE will appoint a new general manager to replace Panagiotis Kargados, "who asked to be relieved of his duties."
VP Scarpelis explained the change of management was meant to secure "more efficient control" of the capital increase at RomTelecom, which will see the Greeks getting 54% of the company.
This is the second time the general manager of RomTelecom has been replaced by OTE, after the Greeks took over 35% in the Romanian telecom operator. Kargados' predecessor, Vasilios Tsakoniatis, was replaced for having applied the wrong strategy and for having invested more than he should have, according to the official statements at that time.
The former general manager of RomTelecom issued no-nonsense statements ever since he took over this position last summer. Shortly after his appointment, Kargados told Ziarul Financiar that, in the three years since OTE had bought into RomTelecom, two billion dollars had been invested in the company "in not quite the right direction," so that payments to suppliers were halted at some point in time. Later on, during negotiations between the Romanian and the Greek parties, Kargados spoke about a possible bankruptcy of RomTelecom, in the absence of financing sources. In the first nine months of this year, the company saw its net profit increase by 243% ($29.5 million) as compared to the year-ago period.
Panagiotis Kargados remained silent yesterday. Communications minister Dan Nica told Ziarul Financiar that the ministry "continues to support the restructuring and reorganisation initiatives at RomTelecom, able to secure the best conditions and the efficient operation of this company."
The official explanations for this change are brief and fail to clear things up. However, the reasons can be guessed and they revolve around two elements: disputes over the interconnection tariffs and the possible tensions caused by the Parliament debates on the draft law stipulating that OTE should come to own 54% of RomTelecom by a capital increase.
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