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How Deutsche Telekom is raising its stake in OTE to majority for free

At the annual general meeting of OTE on May 25, a decision will be taken to delist an additional 5,617,282 shares it owns. This will result in the Germans' stake climbing to 49.85%, and being only about 1,436,186 shares far from controlling 50.01% of the company.

Through OTE's share purchase programme and stock cancellations, Deutsche Telekom has been quietly and inexpensively strengthening its stake from 45% to 49.2% in the last two years. At the annual general meeting of OTE on May 25, a decision will be taken to delist an additional 5,617,282 shares it owns. This will result in the Germans' stake climbing to 49.85%, and being only about 1,436,186 shares far from controlling 50.01% of the organization.

Since 2018, the Germans have consistently controlled 220,567,675 shares of OTE out of a total of 490,150,389. From 2020 until today, 42,049,781 own shares have been acquired and delisted with OTE's cash and another 5,617,282 shares will soon be delisted. That is 47,667,063 million shares in total, resulting in the total number of OTE's shares falling to 442,483,326 shares and Deutsche Telekom's share to climbing to 49.85%.

If an additional 1,436,186 own shares of OTE are acquired and delisted, Deutsche Telekom will manage - without spending anything - to acquire 50.01% of the organization that has a market capitalization of 8 billion euros, without having the obligation to submit a public offer.

In January 2022, the organization's share purchase programme was renewed for another two years. Through the organization’s cash flow, the management succeeded in satisfying shareholders by distributing high dividends, which have been increased by the purchase and delisting of own shares. This is how all the shareholders win, but more so Deutsche Telekom, which will become the absolute master of the organization.

Besides, the remuneration policy of the shareholders provides for 50% of the available amount to be given as a dividend and the remaining 50% to be used for the purchase and delisting of own shares. This year, too, 500 million euros will be made available, of which 250 million euros for a dividend, while already 250 million were used for purchases of own shares. It is estimated that the total cost of the purchase programme and following the delisting of OTE's own shares in the last two years will exceed 650 million euros.

High cash flow

In the first quarter 2022, cash flow amounted to 221.8 million, an increase of 90.4% compared to the first quarter of 2021.

Turnover increased by 4.7% to 825 million euros, adjusted EBITDA by 8% to 325 million euros, and net profit by 27.6% to 129 million euros. The group's adjusted net debt at 31 March 2022 was 615.7 million euros, down 33.5% from 31 March 2021. The group's adjusted net debt corresponds to 0.5 times the annual adjusted EBIDTA of the organization.

During the management's teleconference with analysts, it became known that a new voluntary exit programme has been running since April at a cost of 35 million euros, and with an annual benefit for the organization of 14 million euros. Landline connections on a year-on-year basis increased by 21,281, broadband connections by 92,861, fiber optic connections by 203,133 and mobile connections by 291,433.

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