Hellenic Telecoms Profit Down as Mobile Revenue Declines

By Stelios Bouras

ATHENS--Greece's dominant phone company, Hellenic Telecommunications Organization SA (OTE), reported Wednesday a sharp drop in first-quarter earnings, as mobile revenue in Greece fell and operations in Albania and Bulgaria remained under pressure.

The company said net profit was 40.4 million euros ($45.3 million), down from EUR55.8 million a year ago. Revenue for the same period eased 2.4% year-on-year to EUR940.8 million.

Adjusting for charges stemming from its voluntary retirement scheme and an extra tax charge, net income was off 6.3% on the year at EUR53.9 million.

In a statement, OTE Chief Executive and Chairman and Michael Tsamaz said fixed line revenue in Greece rose in the three month period, the drop in Greek mobile revenue slowed, while cuts to termination rates hurt OTE's units in Romania and Albania.

"Our cost discipline, strong operating profitability and cash flow generation enabled us to sustain considerable investments in our networks and service offering during the quarter while preserving a particularly healthy financial structure. We expect these trends to continue throughout the year," said Mr Tsamaz.

The company, Greece's one-time state-owned monopoly phone company but now a unit of Deutsche Telekom AG, has faced slowing revenue due to Greece's protracted economic crisis as well as weakening demand in its key markets in southeast Europe. At the same time, it has also had to contend with stiff competition in its core Greek mobile market from its two domestic rivals-Vodafone Greece and Wind Hellas.

Write to Stelios Bouras at Stelios [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires