OTE enters the black after staff purge

29 Nov 2006

Hellenic Telecommunications Organisation (OTE), Greece’s incumbent fixed line telco, has posted a third-quarter profit after cutting more than a third of jobs at its domestic wireline division. Net income for the three months to the end of September reached EUR223.6 million (USD295 million), compared with a loss of EUR493.2 million a year earlier, the company said in a statement. The figure beat the EUR126.3 million median estimate in a Bloomberg analyst survey. OTE spent around EUR1 billion in 2005 to reduce the workforce at the Greek fixed line unit by a third. Group revenues increased by 5.6% year-on-year to EUR1.48 billion, helped by a good performance at mobile unit Cosmote, which has around ten million subscribers across five Balkan states, and increasing take-up of broadband connections in Greece to make up for lower takings from traditional telephony.

A total of 5,400 workers have left OTE since the beginning of 2005. Profit in the most recent quarter was helped by a reversal of a EUR50 million chunk of the EUR939.6 million charge for its retirement plan. Quarterly EBITDA was EUR678.1 million versus a year-earlier loss, and the EBITDA margin was 45.7%, according to Bloomberg calculations. Without the reversal of the retirement cost charge, the margin was 42.3%, the company said. By the end of 2006 OTE will have a domestic fixed line workforce of less than 12,000. The job cuts will reduce wage costs at the Greek unit by as much as 8% annually until 2008, whilst fixed voice revenues are expected to fall by as much as 2.5% per annum during the same period.

Greece, Cosmote