ECONOMY

OTE telecom disappoints with growing losses (Update)

OTE telecom, 30 percent owned by Deutsche Telekom, reported on Friday a growing loss in the last quarter of 2010, and said that it remain focused on cost cutting efforts in a bid to offset unfavourable economic conditions.

The country?s largest telecom company, OTE, reported a 91.7 million euro loss, versus a 29 million euros loss in the same period a year earlier, hit by pension costs and the writedown of its Romanian assets.

Analysts were looking for a profit figure of around 13 to 14 million euros.

?In 2010, facing unprecedented obstacles, OTE Group managed to contain the drop in its operating profitability and cash flow, using every lever under our control,? Michael Tsamaz, OTE CEO, said in a statement.

A 130-million euro charge from its 2005-2006 voluntary retirement scheme weighed on profit along with a 244.5 million euro impairment charge on its Romanian subsidiary, Romtelecom.

Plunging consumption in two of its key markets, Greece and Romania, dragged revenues 12.4 percent lower to 1.33 billion euros for the quarter with fixed line and mobile telephony income both declining. OTE, which has a market value of some 3.5 billion euros, is also present in Albania, Serbia and Bulgaria.

Shares fell just over two percent to 7.04 euros in mid session trade on the Athens bourse after the results were released, versus a 1.4 percent dip in the broader market.

Putting one-off items aside, Proton Bank said in a note that OTE?s operating performance ?was slightly better than expected, given that cost cutting and restructuring is the key theme for the company?s performance going forward.?

Looking ahead, OTE expects revenues to continue being affected in 2011 by unfavorable economic conditions in all its markets, adding that ?it will intensify efforts aimed at containing revenue erosion, preserving its profitability and cash flow generation.?