OTE feels the heat from its competitors

OTE, the telecoms operator, appeared to be feeling the heat from its competitors, judging from its nine-month results released yesterday. The company, which lost its monopoly two years ago, said consolidated net profits in the January to September period plunged by 11.5 percent to 397.7 million euros. Earnings per share showed a similar steep drop, down by 11.4 percent to 0.81 euros. Group earnings before interest, tax, depreciation and amortization edged up by 2.5 percent to 1,299 million euros but the EBITDA margin fell by 2.1 percentage points to 40.4 percent. The figures were calculated according to US GAAP. Third-quarter results also reflected the income slump. Consolidated net profits fell by 3.8 percent to 148.5 million euros, with earnings per share declining by 3.7 percent to 0.3 euros. OTE appeared to be losing market share in both domestic and international telephony, as a host of ambitious alternative carriers launched aggressive tariffs to gain a share of the pie. Revenues from domestic telephony services fell by 1.5 percent to 1.58 billion euros in the nine-month period, against a 4.7 percent drop in international telephony turnover to 273 million euros. Total revenues only managed a 7.7 percent increase to 3.2 billion euros, thanks to a 48 percent rise in CosmOTE turnover. A sharp jump in operating expenses (13.8 percent) was related to wage increases, while a voluntary retirement program also dented net profits. On the positive side, the company’s focus on Internet and data services showed it was on the right track. Internet service provider OTEnet underscored its dominance of the market with a 40 percent jump in revenues and a near-fivefold increase in EBITDA. Revenues from ISDN services soared by 44 percent. OTE’s fixed telephony subsidiaries in Romania, Armenia, and Serbia posted profit increases. Romtelecom lifted net profits to 29.5 million euros from 8.6 million euros. On Tuesday, OTE said it needed to resolve regulatory issues before it could proceed with a $274 million injection into the Romanian operator in return for an additional 19 percent stake. OTE’s shares lost 0.19 percent to close at 10.60 euros yesterday.

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