Martić sees salvation for Optima Telekom only in partnership with HT

The owner and CEO of Optima Telekom, Matija Martić, sees no other way to save his company than for Hrvatski Telekom to take over its management. This arises from the new Plan for Financial and Operational Restructuring of Optima Telekom, which was published today on the Zagreb Stock Exchange website.

According to this plan, it is proposed that the largest creditors of Optima Telekom, namely Zagrebačka banka and Hrvatski Telekom, secure a strategic partnership between HT and Optima Telekom in which HT would take over the management of Optima. 

Optima explains in the plan that it has ‘identified HT as the only reasonably relevant potential strategic partner among significant creditors under the current circumstances. Given HT’s technological and business foundation, expertise, and experience in the telecommunications business, Optima expects that the strategic partnership could provide significant benefits from the synergies achieved in such a relationship. Such a strategic partnership could enable Optima Telekom to achieve significant synergies in terms of cost and generating the necessary cash amounts, which would allow for debt repayment, maintenance, and development of Optima Telekom in the market of integrated telecommunications services in the Republic of Croatia. Considering the stake that HT can acquire by converting its claims into the equity capital of OT, OT proposes the establishment of a strategic partnership that implies the expectation that ZABA (as the largest creditor and, according to the proposal, the future largest individual shareholder) will accept the transfer of its future management rights to HT. This would give HT a dominant influence and control over Optima Telekom.’

The first prerequisite for this, of course, is that Zagrebačka banka and Hrvatski Telekom, as the largest creditors of Optima Telekom, agree to such a proposal, whose total debt as of December 31, 2012, amounted to 1.1 billion kuna. Since about half of that amount relates to the two largest creditors, it can be assumed that both Zagrebačka banka and Hrvatski Telekom are backed into a corner, meaning they have no other choice but to agree to Martić’s restructuring plan to avoid being left empty-handed.

The second prerequisite is that Martić’s plan is acceptable to the Competition Protection Agency, considering that it would involve a strategic partnership between the leading telecommunications service provider in the Croatian market and another alternative telecom operator. If the AZTN will only look at the quantitative indicators of such concentration, there could be a problem, as the strategic partnership with Optima Telekom would certainly strengthen HT’s dominant position in the market. However, if the AZTN bases its assessment of the permissibility of such concentration on a broader market approach, with some restrictions and conditions, it could allow it.

Indeed, it is certain that without a strategic partner, Optima Telekom, with its over-indebtedness, illiquidity, and insolvency, cannot survive. In that case, Optima’s bankruptcy would be inevitable. What the AZTN will have to consider is the fact that Martić has unsuccessfully sought a strategic partner for Optima Telekom before, meaning that there simply is no other available strategic partner for Optima that would enable it to quickly and successfully restructure other than Hrvatski Telekom.

Secondly, in the event of Optima Telekom’s bankruptcy, its approximately 230,000 users would be forced to change operators, which means that most of them would anyway lean towards Hrvatski Telekom. Furthermore, the disappearance of such an operator from the market as Optima Telekom would leave much more negative consequences in terms of market competition than if HT took over its management. Not to mention the trust of users in alternative operators.