Greece's biggest telecoms operator, reported a continued improvement in the business in the second quarter as demand for high speed broadband services grow at home and despite a weak market in Romania, but cautioned that tax increases in June would affect its markets.
OTE, 40 percent owned and managed by Germany's Deutsche Telekom, said it made a net profit of 33.6 million euros ($37.5 million) in the three months compared with a loss of 3.6 million euros in the same period last year.
OTE has lost market share to smaller rivals in recent years but a new high-speed VDSL broadband service and a fast-growing pay-TV business helped the group win back fixed line customers and partly offset a drop in revenues for its domestic mobile service and Romanian operation, its biggest market outside Greece.
"Continuing demand for fast broadband connections, reliable mobile data and exciting TV programming fuelled home market revenues and EBITDA. In Romania, an intense competitive environment is hindering the recovery of our operations," Chief Executive Michael Tsamaz said.
Stripping out one-off costs, second-quarter earnings before interest, tax, depreciation and amortisation fell 2.4 percent to 310.9 million euros.
Overall group sales were flat at 954.7 million euros, with revenue from Greek mobile operations down 4.8 percent at 291.2 million euros.
However, the government raised its value-added tax rate, increased a levy on mobile services and imposed a tax on pay-TV in June in an effort to raise more revenue and OTE said the tax increases were expected to hit demand for its services, particularly pay TV.
It also said it was taking steps to improve the business in Romania, where second-quarter operating profits fell 24.5 percent to 37 million euros, but did not give any details.