Greece's OTE 4Q Losses Widened on Cost of Retirement Plan

By Alkman Granitsas

ATHENS-Greek telephone operator Hellenic Telecommunications Organization SA (HTO.AT, DT), Greece's incumbent phone company, Thursday said its losses widened in the fourth quarter after taking nearly a quarter of a billion euro charge to pay for its latest voluntary retirement scheme, a core part of its ongoing cost-cutting efforts.

In a statement, the company--also known as OTE--said that net losses in the three months to end-December 2013, had risen to 188.7 million euros ($259.2 million) from a net loss of EUR57.7 million a year earlier. Revenue was marginally higher at EUR1.045 billion-versus EUR1.044 billion-with the overall results weighed down by an estimated EUR240 million charge for the retirement plan.

"For the OTE Group, 2013 was a year of significant achievements, enabling us to look at the future with confidence despite the difficult conditions we face in all our markets," said Chief Executive Michael Tsamaz. "Our early retirement plans were adopted by over 1,800 OTE employees in Greece, bringing total departures in our Greek and Romanian fixed-line operations to nearly 8,000 since the end of 2009, durably reducing our cost base and enhancing our competitiveness." Mr. Tsamaz pointed to the slight increase in revenue--the first quarterly increase in five years-as a sign of the company's improved operating performance.

Once Greece's state-owned telephone monopoly, OTE continues to dominate the country's local telecom market and is a leading player in southeast Europe, but is now 40% owned by German telco giant Deutsche Telecom AG (DTE.XE). The German company, which released its own consolidated earnings earlier Thursday, has recently indicated it is interested in acquiring the roughly 10% stake in OTE still owned by the Greek government.

Since 2008, DT has spent about EUR4 billion building up its position in OTE, paying top dollar--close to 30 euros a share--with its first purchases in the Greek carrier. Since then, OTE's shares have tumbled in line with Greece's broader stock market, trading at only a fraction of their former price.

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