OTE group revenues up 9.7%; profits down on one-off charges, FX losses

29 Nov 2007

Greek telco OTE’s consolidated group revenues for the three months ended 30 September 2007 reached EUR1.627 billion (USD2.406 billion), an increase of 9.7% compared to the third quarter of 2006. The quarterly results reflected the continued net positive impact of the group’s acquisition of Balkan mobile phone retail chain Germanos and the deconsolidation of Armenian telco ArmenTel’s in 4Q06. OTE Group reported three-month net income of EUR155.5 million, down from EUR223.6 million in 3Q06, when net income had benefited from a EUR49.8 million reversal of voluntary retirement charges. In addition, forex losses of EUR22 million were recorded in 3Q07, related to changes in the value of the Romanian currency, affecting 54%-owned subsidiary RomTelecom (results reported in separate story). Group CAPEX in the third quarter totalled EUR230.8 million, up 24.2% year-on-year, mainly driven by domestic fixed line investments as well as investments mobile division Cosmote (reported separately earlier this month).

In 3Q07, OTE’s total Greek fixed line revenues amounted to EUR668.1 million. The rate of revenue erosion in the quarter (-1.7%) was significantly slower than in the two preceding quarters, and, despite a decrease in leased line and pre-paid card revenues, ‘other’ sales rose by 1.3%, mainly due to strong revenues from ADSL, interconnection and ‘services’. The 3.4% drop in PSTN lines in 3Q07 primarily reflects the impact of local loop unbundling (LLU), as well as a pick up in fixed-to-mobile substitution stimulated by aggressive competitive offers. During the period, the number of ISDN lines fell by 0.8%. As of the end of September 2007, the number of PSTN lines exceeded 4.6 million, while ISDN lines stood at nearly 1.4 million. The total number of lines dropped by 2.8%, reaching six million, or by approximately 78,000 lines compared to 2Q07. The number of OTE’s retail and wholesale ADSL customers continued to increase at a rapid pace, exceeding 756,000 at the end of September, a jump of approximately 82,000 in three months. With strong growth in LLU activity now driving the growth of the market, OTE now expects the number of unbundled lines in the country to exceed 300,000 by the end of December, ahead of earlier projections.

In related news, sources close to OTE say that the former monopoly is considering splitting its retail and wholesale operations in 2008, in compliance with EU directives. According to the same sources, OTE officials have been in constant dialogue with the European Commission on the matter during the past three months.

Greece, Cosmote