Big turmoil in H1 Telekom - shareholders' fight and possible takeover of Optima Telekom

Big turmoil in H1 Telekom - shareholders' fight and possible takeover of Optima Telekom

H1 Telekom Shareholders' Assembly, which should take place next Wednesday, January 25, is the decisive factor for the reshuffling and the future of that alternative telecom operator. Namely, the word on the telecom market is, confirmed for by several completely independent sources, that the bankruptcy of H1 Telekom could happen on the very next day. However, there is a possibility of a big twist, that H1 Telekom takes over Optima Telekom. This possibility is offered by the proposal for the assembly that includes two rounds of recapitalization of H1 Telekom, backed by the company's founder Zoran Ćurković together with potential investors.

Shareholders' battle

It's obvious, the General Assembly, with its main topic being the merger with Optima Telekom, will be very turbulent for several reasons. First, because of the conflicting shareholder structure, as well as various political, legal and all other situations in H1 Telekom.

Let’s start from the beginning. Invitation to the shareholders' meeting brings as the key point a decision about the merger with Optima Telekom which, after the pre-bankruptcy settlement is managed by the strongest domestic telecom operator Hrvatski Telekom. For HT, this would be a great success because then it would have all alternative telecoms under its management, and would have to sell the merged H1 and Optima according to the request they submitted to the Competition Agency during the extended period.

However, there is another possibility, and it can be seen from the request for the amendment to the agenda of shareholders' meeting by Electromagic, which is backed by the founder of H1 Telekom Zoran Ćurković. It offers a turn-about, that H1 Telekom is first recapitalized with HRK 20 million to stabilize the business. After that, another HRK 70 million would be collected with which H1 would take over Optima.

As learns exclusively, behind everything, alongside Ćurković, is Elements Capital, which wants to continue investing in this region. H1 Telekom could turn from prey to the hunter and could take over Optima Telekom.

Assembly games

But, this will not be the only interesting event at the shareholders' assembly. The Management Board of Optima Telekom sent a letter stating the end to the litigations of H1 Telekom against HT, worth more than HRK 139.5 million, and also one much smaller dispute worth "only" 500 thousand kunas that HT has against H1 Telekom.

This decision is understandable, as mutual snitching of affiliates is thus avoided. It will be very interesting to see how the assembly will unravel because the conflict of shareholders at the highest level is in sight.

Also, it should be taken into consideration that in the first nine months of last year, H1 Telekom generated the total revenue at the level of HRK 124.4 million with a decrease compared to the previous year by 7.75 percent. The profit further plunged into the red and the loss at the end of September amounted to HRK 21.3 million, while in the same period a year earlier it was HRK 14.81 million. However, in the first nine months H1 managed to reduce its long-term liabilities to banks and affiliates by approximately HRK 14 million, while short-term liabilities increased to just over HRK 63 million, or about 16.5 million more than at the end of the first nine months of 2015.

Waiting for AZTN

AZTN's response a few days ago to the's inquiry about the situation with the assessment of concentration of Optima and H1 was that that on November 14, 2016 the agency informed the public that it initiated the second phase of the assessment procedure of the concentration of HT/Optima. The decision should be made within three months of the initiation of the second level proceedings. When additional analyses and expertise are needed, the Agency may extend the deadline for another three months, as pointed out by AZTN. They add that at this stage they cannot comment more than this. AZTN will inform the public as soon as the decision is passed.

*  Disclaimer: The author does not hold shares or stakes of H1 Telekom, Optima Telekom or Hrvatski Telekom, Dražen Tomić, Editor-in-Chief



AZTN: This concentration could significantly affect competition

The Competition Agency (AZTN) has initiated proceedings of assessment of the concentration of Optima Telekom, which operates within the HT Group, and H1 Telekom. The Agency received a complete application of the concentration on October 14, 2016. After that, it conducted a market test in the form of a public invitation to all interested parties for the delivery of opinions and comments on the implementation of the concentration, during which it received a number of observations.

Based on the evidence submitted with the application and other data and information available to it, the Agency assessed that the implementation of this concentration could result in a significant impact on competition in the relevant market for the provision of electronic communications services in fixed networks on Croatian territory, on wholesale and retail level.

Therefore, an in-depth legal and economic analysis needs to be conducted for the decision of AZTN and consequently, the Agency launched the second level proceedings for the assessment of the concentration.