Mobile operator Cosmote Romania agreed the acquisition of smaller local rival Zapp Mobile for 207 million euro on June 30, after months of negotiations.

Cosmote bought Zapp, owned by Saudi Oger, for its 3G licence, but has no immediate plans to launch third-generation services. "After we close the deal, which we think will happen in October, we will have to analise the company's potential and strong points and only then will we decide whether to keep the Zapp brand, as well as how we will integrate the two companies," Cosmote Group chief executive Michael Tsamaz told Romanian daily Business Standard on July 2.

"We will not use the 3G licence before 2010 and only then can we talk about launching services based on it," Tsamaz said. Cosmote had no 3G licence prior to the deal, bidding for two 3G licences in 2006, but winning none.

Cosmote will pay 61 million euro in cash for Zapp, which saw its revenue drop by 30 per cent in 2008 to 61 million euro, and the rest will cover Zapp's debt. The acquisition will add about 350 000 new customers to Cosmote's 6.1 million. The operator has an estimated 20 per cent market share, but is only the third-largest in the country, behind the local units of Orange and Vodafone.

Zapp shareholders have been looking to sell for the past two years and have held negotiations with a number of potential suitors, Business Standard said. Talks with Cosmote started in February and due dilligence was completed by mid-March, but it took the two sides three more months to agree a price, the daily said.

The deal is subject to regulatory approval, with Orange Romania already cautioning that Greek telecoms group OTE was closing in on a dominant position on the telecommunications market. OTE owns Romtelecom, the former state fixed-line monopoly, and is also the majority shareholder in Cosmote.

OTE now owns the two CDMA licences issued in Romania - one through Romtelecom and one through Cosmote and Zapp - as well as a 3G licence. Regulators, quoted by Business Standard, said that it saw no problem with the Greek firm holding multiple licenses.