Rate of decline slowing at OTE

10 Nov 2011

Hellenic Telecommunications Organisation (OTE), the incumbent Greek full-service telecoms provider, has announced consolidated results for the third quarter and nine months ended 30 September 2011. Looking at year-on-year trends in the quarter, group revenues dropped by 5.8% to EUR1.313 billion (USD1.801 billion), EBITDA fell by 6.2% to EUR464 million, operating income (EBIT) declined by 9.6% to EUR207 million and net income shrank by 17.3% to EUR104 million. CAPEX spending across the group increased slightly year-on-year, by 1% to EUR171 million in July-September 2011.

Although heavily burdened by the tough economic conditions in Greece and its other south-east European markets, OTE pointed to improvements in what it called a ‘resilient’ set of results, including a slowdown in the rate of group revenue decline (evidenced by the 8.7% revenue drop in the first nine months of 2011 compared to 5.8% in Q3), and also an operating cost reduction across all group operations (seen in the difference between a 23.1% decline in EBIT in 9M11 compared to the 9.6% fall in Q3). Assisting the expense-cutting programme, OTE also announced it had reached an agreement for payroll cost reduction in its Greek fixed line business during the quarter, measures which 40% controlling shareholder Deutsche Telekom has been pressing hard for, potentially as a pre-requisite for the German group to up its stake to 50% by buying the Greek government’s final remaining shares in the national telco.

Greek fixed line operations saw revenues fall by 10.3% year-on-year in 3Q11 (-12.9% in 9M). Revenues at Cosmote’s Greek business fell by 4.4% (significantly less than the 10.2% drop over nine months), and international Cosmote operations shrank in sales terms by 1.7% and 4.5% in Q3 and 9M11 respectively. OTE’s statement commented: ‘The sharp slowdown in revenue decline this quarter reflects the gradual stabilisation of market conditions in Greek mobile operations as well as slightly improving trends in the Greek fixed line business, despite the unfavourable economic and consumer spending conditions along with an adverse regulatory and competitive situation. Outside of Greece, both the Romanian and Bulgarian mobile operations returned to year-over-year revenue growth.’