Greece's OTE to Reinstate Dividend After Four Year Freeze--CEO

By Alkman Granitsas

ATHENS--Greek telephone operator Hellenic Telecoms (HTO.AT) said Thursday it would reinstate dividend payments to shareholders for the first time in four years amid signs that some of its core operations were steadying after years of decline.

In its fourth quarter earnings statement, the company, also known by its Greek acronym OTE, said it had swung to a net profit of 73.2 million euros ($83 million) compared with EUR188.7 million loss a year earlier. Pre-tax profits--as measured by earnings before interest, taxes, depreciation and amortization--were also higher, more than doubling in the October to December quarter to EUR344.4 million.

Revenue, however, was lower, falling to EUR1.01 billion in the quarter, down 2.8% from EUR1.04 billion a year earlier.

Faced with stiff competition and Greece's protracted recession, OTE has seen revenues in both its domestic fixed-line and mobile operations decline for years. In response, it has enriched its product offering with high-speed Internet and pay-TV offerings that have helped stem some of that decline.

The Greek fixed-line operations reported their first positive quarter in seven years, according to Chairman and Chief Executive Officer Michael Tsamaz. Were it not for weak mobile revenues--particularly from the company's Romanian subsidiary--overall group revenue would have been flat.

Years of cost cutting, including several waves of early retirement schemes to shed staff, have also helped.

"With a leaner organization and a healthier financial structure, our profitability improved sharply, at both Ebitda and bottom-line levels," said Mr. Tsamaz. "Based on the improved performance across the board, we have decided to resume payment of an annual dividend after a four-year hiatus."

OTE is a unit of Germany telephone giant Deutsche Telekom (DTE.XE) that owns a controlling stake in the company. Earlier Thursday, DT reported net losses of EUR110 million in the fourth quarter-down sharply from a year earlier--thanks to a strong U.S. performance and stable growth in Germany.

Write to Alkman Granitsas at [e-mail]