OTE net income, revenues up; RomTelecom sees profit

30 Aug 2007

Greek incumbent telco OTE has reported its consolidated second quarter results, including net profit that rose by 21.9% year-on-year to EUR136.6 million (USD186 million), on revenues that climbed 8.3% to EUR1.55 billion. OIBDA for the three months ended 30 June 2007 was EUR544.3 million, up 5.2% on the same quarter last year. OTE owns majority stakes in the fixed line incumbents of Romania and Serbia, RomTelecom and Telekom Srbija, as well as OTEnet, the leading Greek ISP, and mobile operations via subsidiary Cosmote in its domestic market, Albania, Bulgaria, Macedonia (FYROM) and Romania. Group CAPEX in 2Q reached EUR244.1 million, up 5.7% from the year-ago period, mainly attributable to Greek fixed line and broadband operations, and RomTelecom. Full-year CAPEX is expected to exceed EUR1 billion, but OTE says it might not reach the level announced in its three-year business plan (EUR1.24 billion). As of 30 June 2007, total gross debt amounted to EUR4.06 billion, a decrease of 11.5% from the beginning of 2006, whilst net debt totalled EUR2.32 billion, down 8.9% from the 2006 year-end figure.

As of the end of June 2007, OTE had 4.7 million Greek PSTN lines in service, down 2.5% year-on-year, whilst its number of ISDN lines rose by 0.4% to nearly 1.4 million. At the end of the quarter OTE reported that it had approximately 675,000 wholesale and retail ADSL lines in service, up from nearly 593,000 at the end of March 2007, with retail customers accounting for over two-thirds of the total. The telco calculated that the total Greek ADSL market reached 787,000 customers as of the end of 2Q07, compared to 646,000 at the end of March. A drop in OTE’s overall broadband market share reflects the growth of local loop unbundling, with unbundled local loops reaching 112,356 at end-June, according to OTE, up from 10,899 a year ago. Due to the rapid development and promotion of broadband services by OTE and alternative providers, the company now estimates that the total Greek ADSL market should exceed 1.05 million users by year-end, with the number of direct and indirect OTE customers passing the 800,000 mark.

OTE has a 54.01% stake in RomTelecom, fully consolidated in the group. Net income at the Romanian incumbent went from a negative EUR4.2 million in the second quarter of 2006 to a EUR1.4 million profit in the period under review, mainly as a result of increased financial gains, as well as a reduction in RomTelecom’s share of Cosmote Romania’s loss (from EUR7.3 million in 2Q06 to EUR1.6 million in 2Q07). In the second quarter of 2007, RomTelecom’s revenues were unchanged compared to the second quarter of 2006, standing at EUR217.3 million. A reduction in traditional telephony revenues due to the decline in subscriber lines and retail traffic, together with lower wholesale and payphone revenues, was offset by the growth of new revenue streams such as broadband, business data and TV services. RomTelecom’s ADSL customer base reached 176,000 at the end of the second quarter, a net addition of 39,000 in three months, and up from around 50,000 a year earlier. The combination of mobile substitution with increased competition from fixed line alternatives led to a year-on-year decline of 18.1% in its total fixed lines, whilst usage was also affected, with local traffic decreasing by 29% in twelve months.