Greece's biggest telecom OTE <OTEr.AT> appointed Michael Tsamaz, the head of its mobile phone unit, as new CEO on Friday, with a mission to cut costs and defend market share in a shrinking, austerity-hit market.
Greece and Deutsche Telekom <DTEGn.DE>, which together own 50 percent of OTE, agreed on Tsamaz as CEO and chairman of the company.
OTE posted a 61 million euros ($85 million) loss in the second quarter, hurt by falling phone use and a one-off austerity tax. [ID:nLDE6740FX]
"I am certain that Michael Tsamaz, as a common choice of the main shareholders of the organization, will successfully face the difficult tasks ahead and will guide OTE," Greek Finance Minister George Papaconstantinou said in a statement.
OTE's shares rose after the appointment, with analysts saying that Tsamaz is an insider with a good track record who could turn the company around. At 1158 GMT, shares were trading up 3.2 percent at 5.8 euros outperforming a 0.9 percent rise on the Athens benchmark index. <.ATG>
"This is positive news," said Dimitris Birbos, an analyst with IBG Securities.
"Tsamaz is an insider and knows the problems. Also, the two main shareholders' agreement on a single person as CEO and chief executive removes management risks," Birbos said.
Tsamaz replaces Panagis Vourloumis, who led the company for more than six years and said earlier this month he would leave after the new government signalled that he wanted him replaced.
Incoming Greek administrations usually change the management of state-influenced companies. Vourloumis was an appointee of the country's previous, conservative government, which was voted out of office last year.
Tsamaz, 50, joined OTE in 2001 after three years as general manager of commerce and administration at rival Vodafone Hellas <VOD.L>.
In 2007, he was appointed to lead OTE's mobile phone arm, Cosmote. Active in three Balkan countries outside Greece, Cosmote has been OTE's cash cow, offsetting a revenue fall in the traditional fixed-line segment.
Under Tsamaz's leadership, Cosmote defended its Greek market leadership against rivals Vodafone and Wind Hellas, which had to restructure its debt twice this year to survive.
But Greece's deepest recession in almost 40 years has eaten deeply into OTE's revenues, displeasing Deutsche Telekom, which has spent 3.8 billion euros over the past two years to build its 30 percent stake in the company.
In a speech earlier this week, Deutsche Telekom's chief for Europe, Guido Kerkhoff, said that OTE needed to cut its labour costs to become competitive.
"When I take a look at our investment, I must say I have mixed feelings," Kerkhoff said, adding that Deutsche had already written down 900 million euros off the money it spent on OTE.
"His considerable international experience and proven business skills have made him one of the leading executives in Greece… these are exactly the qualifications we were looking for in the right person to head OTE," Kerkhoff added.
Personnel costs at OTE's Greek fixed-line unit are at 37 percent of revenues, more than an average of about 20 percent at Deutsche's other comparable units in Europe, Kerkhoff said.
OTE's combative labour union OME-OTE vowed to fight any cost cuts. "Deutsche Telekom knew what it bought," it said in response to Kerkhoff's statements.
OME-OTE chairman Panagiotis Koutras told Reuters that the union welcomed the management change, but added that the company's priorities should be to ensure job security and crack down on wasteful spending.
The outgoing CEO, Vourloumis, restructured OTE to make it fit for the entry of Deutsche Telekom as a strategic investor.
Vourloumis bought out minority shareholders in Cosmote and acquired retail chain Germanos to increase the company's footprint in the Balkans.
