Cosmote negotiates Zapp takeover

The company is interested in Zapp because of its 3G license. Telemobil is currently owned by Saudi Oger company, controlled by the family of former Lebanese Prime Minister Rafik Hariri.

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. “Due diligence operations are underway at Zapp. Cosmote representatives had access to Zapp’s data room until March 13, and a report is to be drafted this week,” sources said.

The deal, which could be finalized by the end of the month, would be one of the most significant moves on the local telecom market, after Cosmote acquired 70 percent of Cosmorom operator in 2005. Cosmorom belonged to the country’s largest landline operator, Romtelecom, controlled by Greek group OTE and German Deutsche Telekom, which also own Cosmote. The two giants likewise control one of the country’s largest GSM retailers, Germanos.

Mobile data services have become the focus of all telecom operators on the local market, given that the mobile phone penetration rate exceeds 120 percent in Romania, and the fierce competition on this segment is lowering operator profit margins.

Cosmote has the highest growth rate on the local market, with quarterly growth of revenues and clients at some 80 percent. However, about 82 percent of its clients are pre-paid services users, and the average revenue per user (ARPU) amounts to €5.2, half of the level registered by its main competitors, Orange and Vodafone.

Telemobil recently rebounded on the market with new offers for its services, after two years of blocked development due to differing views of former shareholders and major investments made by its new owners.

Saudi Oger has so far invested some €230 million in Zapp, which was supplemented by a €220 million loan from the China Development Bank.

After gaining full control of Zapp, Saudi Oger brought onboard Chris Bataillard, a former investment banker, who worked for JP Morgan and Goldman Sachs, to lead the company.

Bataillard recently said that the company is betting on significant growth in the number of its data service clients, due to an offer which includes a terminal suited for difficult economic conditions.