OTE’s group EBITDA up 6.2%, Greek figure down 5.5%

10 May 2012

Greek and southeast European telecoms group OTE has reported a 6.2% year-on-year improvement in consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) to EUR417.5 million (USD541.4 million) in the first quarter of 2012, as group turnover dropped by 3.6% to EUR1.18 billion, the slowest rate of decline in two years. Efforts to increase competitiveness underpinned its improved performance, the company said, pointing in particular to results in its mobile divisions. Efficiency drives are ongoing at OTE’s Greek operations, including employees taking wage cuts in return for keeping their jobs, while pleas from the telco to allow it to compete more keenly with less-regulated rivals were granted by Greek watchdog EETT this week, letting it reduce retail prices on certain products by a quarter. Net income in January-March 2012 jumped to EUR307 million, up from EUR30 million a year earlier, while if excluding one-off items including the recent sale of a 20% stake in Telekom Srbija, net profit climbed by 52% to EUR95.3 million.

Although Greece has recently agreed to a EUR130 billion aid package, this has meant further austerity measures, and the country’s economic situation continued to deteriorate in the first quarter of 2012, with GDP shrinking by around 9% year-on-year. In Greece and at OTE’s Romanian unit RomTelecom/Cosmote Romania in particular, the tough economic situation and the resulting intense competitive pressure caused an overall decline in the number of fixed and mobile network customers. OTE’s Greek fixed telephony lines in service declined by 11.6% year-on-year to 3.219 million, and fixed retail broadband lines dropped by 2.3% to 1.092 million, but Cosmote Greece mobile customers increased by 3.4% y-o-y to 7.862 million. However, the more lucrative post-paid Greek mobile segment saw a 0.4% decline in customers, while the total cellular base slipped slightly quarter-on-quarter, by 0.3% from 7.885 million at end-December 2011. In Romania, fixed telephony lines were down by 5.8% y-o-y to 2.428 million at 31 March 2012, and mobile customers declined by 3.5% to 6.407 million, but retail fixed broadband lines increased by 5.4% to 1.10 million.

Total Greek first-quarter revenues fell by 5.1% year-on-year to EUR819 million, as declining fixed network business – down by 8.7% year-on-year to EUR484 million – was only partially offset by a 0.5% increase in Q1 mobile revenue to EUR381 million, which was generated via higher year-on-year voice telephony turnover, despite the difficult economic environment and intense competition. Romanian combined fixed/mobile sales, on the other hand, inched up by 0.8% year-on-year to EUR264 million in 1Q12. Similarly, quarterly EBITDA in Greece fell by 5.5% y-o-y to EUR309 million, but in Romania EBITDA rose by 13.1% in the first three months of the year to EUR69 million.