OTE Swings to Net Loss Hit By Greek Economy And Taxes

Telephone operator Hellenic Telecommunications Organization SA (OTE) swung to net loss Thursday due to a high extraordinary tax charge and weakening sales from a crisis-hit Greek economy, and said it doesn't see any change in the short-term.

"As we had anticipated, our top-line performance this quarter was significantly impacted by the tough economic and competitive conditions in all our markets, while our net result for the first half was annihilated by the dramatic increase in our taxes" said Chairman and Chief Executive Panagis Vourloumis in a statement.

For the three months to June 30, the company said it swung to a net loss of EUR60.8 million from a profit of EUR6.4 million for the second quarter last year. The bottom line was hit by a EUR169.4 million tax imposed by the Greek government. Stripping out the additional taxes, net profit would have been EUR55 million.

Revenue fell 8.3% to EUR1.35 billion from EUR1.48 billion for the second quarter last year as competition increased but spending was dampened by the recession and austerity measures in Greece.

The loss was much worse than analysts' expectations of EUR7.2 million, but revenue was just below expectations of EUR1.37 billion.

Reported Ebitda rose 24% to EUR463.2 million from EUR374.5 million in a year earlier. This is due to a charge of EUR153 million last year for a voluntary redundancy scheme. Analysts had expected Ebitda of EUR465 million.

CEO Vourloumis said that while he doesn't foresee any relief in the short term, the board is doing everything it can to preserve and strengthen OTE's future growth and profit potential.

OTE shares closed Wednesday down 0.6% at EUR6.50. In the past three months, the share price has fallen about 33%, underperforming the broader Athens market by about 13%. The company's shares trade at an adjusted price-to-earnings ratio of 6.5 times 2011 forecast earnings.

German telecoms giant Deutsche Telekom (DT) has a 30% stake in OTE after a series of deals with past Greek governments.

Company Web Site: www.ote.gr

By Nick Skrekas, Dow Jones Newswires; [phone]; [e-mail]