Increased costs and falling fixed line sales hit OTE Q3 results

29 Nov 2004

Greek national PTO Hellenic Telecommunications Organisation (OTE) posted net profits of EUR19.3 million (USD25.5 million) for the three months to 30 September 2004, down 84.2% from EUR122 million a year ago, as the effects of rising operating costs and falling sales of fixed line services combined to impact its bottom line. Nonetheless, group operating revenues rose by 6.8% to EUR1.369 billion, thanks to positive performances from its domestic mobile operation Cosmote, and good results abroad from wireless operator Globul in Bulgaria and Romanian incumbent RomTelecom. In a mixed bag of results OTE reported that Cosmote contributed turnover of EUR449 million, up 20.4% year-on-year, thanks to an increase in interconnection revenues and higher sales of handsets and services. Cosmote’s traffic volumes were also up in the first nine months of the year by approximately 32%, offsetting the adverse effects of tariff cuts in 2003 and the introduction of bundled packages.

RomTelecom, in which OTE owns a 54.01% stake, posted revenues of EUR217.5 million in the three-month period, up 8.2% from EUR201.1 million in 2003, despite the impact of a EUR8.9 million negative currency effect attributed to denomination of tariffs in local currency rather than the Euro. The telco claimed 4.332 million fixed lines in service at the end of September, up from 4.302 million at the start of the year. In addition, it also had 87,261 mobile subscribers of which 56,971 were pre-paid. OTE’s wholly owned Bulgarian wireless venture Cosmo Bulgaria Mobile (Globul) posted sales of EUR51 million, compared to EUR27 million a year ago, thanks to a 78.8% year-on-year increase in its customer base to 1.442 million.

OTE plans to seek 6,000 voluntary redundancies from its 16,000-strong workforce and streamline its fixed line operation to improve cost efficiencies. It added that it was proposing to cancel the 2004 dividend to shareholders.

Greece, Cosmote