TELECOMMUNICATIONS: END OF PUBLIC MONOPOLY IN ROMANIA.

Summary: The acquisition of a 35% stake in Romtelecom by the Greek operator OTE on November 12, has drawn a line under the public monopoly on fixed telephony in Romania and points towards an improvement in services in one of the country's most backward sectors. Described by the Government as the "deal of the year", the transaction will earn the Romanian authorities 675 million dollars, half of which will be diverted to the State budget, with the other half reinvested in the modernisation of Romtelecom.

The Romanian Government may secure up to a further USD400 million if Romtelecom profits over three to five years exceed OTE's initial forecasts. The denationalisation of Romtelecom will continue with the staged sale of share packages representing 20% of capital. Under the terms of the contract, OTE has pledged to install 1.4 million new fixed telephone lines by the year 2000 raising the number of lines from 16 to 22 per 100 inhabitants. In terms of penetration, Romania is currently one of the least developed countries in Europe with only 3.7 million telephone subscribers from a population of 23 million. In order to achieve its target, OTE has joined forces with the American operator GTE, which is to second some thirty employees to management posts in Romtelecom. Demand...