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OTE: fixed line revenues plunge sending Q4 profits down 74%

25 Feb 2005

Hellenic Telecommunications Organization (OTE), the dominant telecoms services provider in the Greek market, yesterday reported a 74.2% drop in net income to EUR20.2 million (USD26.7 million) for the three months to December 2004, thanks in part to a 10.1% fall in fixed line revenues over the quarter to EUR688.9 million. Total group operating revenues also dipped by 1.5% to EUR1.284 billion (USD1.69 billion) from EUR1.303 billion in Q3 2003, thanks to lower traffic and pricing, and the effects of regulator-imposed cuts in leased line tariffs during the course of 2004. Commenting on the results OTE’s chairman and chief executive officer Panagis Vourloumis said they were ‘characterised by a second consecutive quarterly operating loss in Greek fixed line operations, whose performance has now been on a steadily deteriorating trend for the past two years’. The number of main lines in service dipped by 2% in 2004 to just under 5.08 million and in response OTE’s management has implemented a restructuring programme to bring its fixed line payroll under control. On Wednesday the operator struck a deal with unions on a voluntary early retirement plan for 6,000 employees, with the first departures expected in the second half of this year.

On a more positive note, OTE’s other business units performed well in 2004 posting solid, if not exceptional, revenue growth and ‘satisfactory’ profit levels, raising confidence that the worst may be over for OTE. At the end of the year the telco had signed up 43,758 ADSL subscribers a 532% increase year-on-year, following a successful marketing campaign and concerted efforts to reduce installation times. The group’s mobile arm Cosmoté reported a 7.1% rise in Q4 revenues to EUR385.5 million buoyed by a higher airtime usage and a 6% rise in its subscriber base to 4.15 million. The group’s internet and IP services subsidiary OTEnet saw revenues falling by 12% to EUR18.8 million, despite boosting its subscriber base to 316,600 residential and 9,950 corporate customers.

Elsewhere, OTE’s 54.01% owned Romanian business RomTelecom posted quarterly revenues of EUR220.8 million (+6.9%) on the back of a 61% rise in interconnection traffic in Q4. The PTO ended the year with 4.337 million fixed lines in service, up 0.2% from 4.329 million a year ago. RomTelecom’s mobile unit CosmoRom continued to fare badly, however, reporting net losses of EUR15.7 million on turnover of EUR6.8 million. It proposes to re-launch operations under the management of Cosmoté, but ended 2004 with 87,497 customers, up from 84,483 in 2003. In Armenia, Armentel reported fourth quarter revenues of EUR23.5 million, and the group’s wholly owned Bulgarian venture GloBul contributed EUR53.1 million compared to EUR32.9 million for the same period in 2003. The impressive performance was driven by a 62% rise in subscribers to 1,624,569 and a better customer mix; contract subscribers reached 546,653 providing a pre-paid/contract mix of 66%/34%. Meanwhile, OTE’s Macedonian cellco ended 2004 with 233,500 subscribers having added more than 149,000 new net additions over the year.

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