State-controlled Italian telecommunications company Stet Spa and Greece state-owned Hellenic Telecommunication Organization SA (OTE) have as expected taken a stake in Serbian telecommunications company Telekom Srbija. The two companies will jointly hold 49% of the company. With its close proximity to both Italy and Greece both companies have long been keen to extend their reach into the Balkan market. Under the agreement, Stet will buy a 29% stake in Serbia Telekom for DM893m, with 191 million to be paid by year-end and the rest at closing. OTE will acquire a 20% stake for DM675m, paying 132 million by June 1998 and the remainder at closing. For Stet, the agreement marks its largest investment yet into eastern Europe following just a few weeks after it agreed to pay $700 for a 25% stake in Austria’s Mobilkom cellular phone company. Stet’s also owns 75% in the Greek mobile phone company TeleStet and a 49% stake in Ceske Radiocomunikace in the Czech Republic. Telekom Serbia has some 2 million clients, representing a 20% penetration of the country’s population. The company reported 1996 revenues of 600 billion lire ($353 million) and gross operating profit of 375 billion lire ($220 million). The deal also enables Stet to operate fixed and mobile telephony over the next eight years. According to Serbian PTT, Telekom Serbia has been granted the right to exploit fixed and mobile telephony for the next 20 years. The Serbian post and telecommunication company PTT, which will receive the new money invested and says it will use the funds to improve the postal system and make it profitable. The Serbian government remains the major shareholder in Telekom Srbija with a 51% stake.
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