Hellenic Telecoms Reports Mixed Third-Quarter Results

   By Alkman Granitsas 
 

ATHENS--Greece's dominant phone company, Hellenic Telecommunications Organization SA (OTE), reported a mixed set of results Thursday-largely in-line with market expectations-as resilience in its fixed line operations offset weakness in its mobile telphone markets.

For the three months through September, the company said net profit was 69.1 million euros, down from EUR252.6 million a year ago when the results were boosted by the sale of OTE's Bulgarian operations. Overall, group revenue fell 5.0% on year to EUR987.6 million, but operating income-as measured by earnings before interest, taxes, depreciation and amortization-was flat, down just 0.4% at EUR367.4 million.

"Our revenue performance this quarter reflects the continuing stabilization of our Greek operations, with fixed line operations delivering solid results in broadband and television services, and resilient service revenues in mobile," said Michael Tsamaz, chairman and chief executive. "This partially offset lower revenues in our international mobile operations, impacted by [mobile termination rate] cuts and intense competition."

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.

In response to those challenges, the company has been moving to cut costs, shedding staff through a series of voluntary retirement programs, and has also been reducing its debt. At the end of its third quarter, OTE's net debt stood at EUR1.43 billion, down 14% from a year earlier. At the same time, the company has also been moving to expand its service offerings by expanding its television services and rolling out improved broadband packages. OTE recently made a bid for rival Greek satellite television company, Nova.

The results were generally in-line with market expectations, with most analysts focusing on the underlying trends in the separate fixed and mobile divisions as a gauge of future performance.

"Our competitive edge comes from offering our customers an unparalleled experience. To this end we continue investing substantial amounts to sustain the fastest and most reliable network and enrich our TV proposition content," said Mr. Mr. Tsamaz. "At the same time, we further improved our financial structure, one of the strongest in our peer group. In conditions that remain persistently challenging, we are confident we will meet our EUR500 million free cash flow year-end target and continue to deliver strong profitability and cash flow in the last quarter of 2014 and next year."

Write to Alkman Granitsas at Alkman [e-mail]

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