OTE sees early signs of market stabilisation; additional investment from parent DT in doubt

5 Aug 2011

Greek incumbent telco OTE, owner of the Cosmote mobile group, has reported that the pace of decline in its consolidated revenues slowed in the second quarter of 2011 to 7.6%, helped by what it identified as early signs of stabilisation in the deteriorating Greek mobile market. Revenues in April-June were EUR1.25 billion (USD1.78 billion) across the south east European group, whilst turnover for the first six months of the year was 10.1% less than in 2010, at EUR2.48 billion. Net income in 2Q11 was EUR62 million compared to a net loss of EUR61 million a year earlier. Mobile operations in Cosmote’s domestic market saw revenues shrink by 7.4% in 2Q11 (-13.2% in 6M11) while international mobile operations’ revenue fell by 5.1% and 6.0% respectively in the same periods. The operator’s mobile customers in Greece stood at 7.7 million at 30 June 2011, down by 9% year-on-year, though the drop was largely attributed to the compulsory registration of pre-paid users begun in late 2009. Mobile users across the group (including Romania, Albania and Bulgaria) fell by 6.1% to 20.3 million, mainly as a result of the drop in Greek numbers. OTE’s fixed line losses in Greece continued unabated, reflecting pressure on consumers and businesses to reduce spending; 107,000 PSTN/ISDN lines were disconnected in the three months ended June 2011, in line with the pace of line losses in previous quarters.

OTE’s 40% owner Deutsche Telekom (DT) indicated yesterday that it was by no means a sure thing that it would increase its stake further by buying an additional 6% stake which the Greek government is considering offering to the Germans. DT previously said it must hold talks over what it sees as an overly tough regulatory regime in the Greek telecoms market before it commits to further investment, whilst it also wants to see a relaxation of employee rules at OTE, besides separate concerns over the economic environment in the debt-ridden country. ‘We must verify if investments in Greece are worth it,’ a director at the German group, Thimoteus Hoettges, told a press conference, as reported by AFP. DT’s CEO Rene Obermann said he would examine any new share offer from Athens ‘very closely’ and ‘critically,’ and maintained that the Greek authorities had taken ‘incomprehensible’ decisions and were ‘hostile to any investment.’ Hoettges added that DT was facing problems related to Greek labour laws, in particular concerning obligations governing working hours and social conditions.

Greece, Cosmote, Cosmote (old), Deutsche Telekom (DT)