Greece's biggest telecoms operator OTE reported a 16 percent drop in first-quarter net profit on Wednesday, as bailout measures hit demand for its mobile services, and said it saw more challenges this year.
OTE, which is 40 percent owned and managed by Germany's Deutsche Telekom, has seen smaller rivals grab market share in fixed-line services in recent years amid tough economic conditions.
A new high-speed VDSL broadband service and a fast-growing pay-TV business helped OTE win back customers and partly offset weaker revenue from its domestic mobile operations and from Romania, its biggest market outside Greece.
But under a third international bailout which Greece signed last summer, taxes have been raised and that is taking a toll on consumers' disposable income.
Greece is preparing to raise sales tax further and is also considering increasing a levy on mobile services and taxing pay-TV to boost its state coffers.
"We are fully aware of the headwinds in front of us for the balance of the year, particularly from the implementation of measures impacting the disposable income of our Greek customers and potentially the demand for our services," Chief Executive Officer Michael Tsamaz said in a statement.
He said OTE would continue investing in its networks and technology to mitigate the impact from the new measures.
First-quarter net profit fell to 33.9 million euros ($38.97 million) from 40.4 million a year earlier.
Stripping out one-off costs, earnings before interest, tax, depreciation and amortization (EBITDA) fell 5 percent to 309.3 million euros. Sales fell by 1.3 percent to 928.5 million euros, with revenue from Greek mobile operations down by 5.7 percent to 276.9 million euros.
OTE said capital spending would be around 550 million euros this year, while free cash flow is seen at about 500 million. [Reuters]