ECONOMY

Moody?s cuts OTE rating on concerns about economy

Ratings agency Moody?s downgraded OTE telecom, Greece?s largest phone company, on Tuesday on concerns that the country?s shrinking economy will harm its profit figures in the next few years.

Moody?s cut OTE?s long-term rating to Baa3 from Baa2, and the rating remains on review for further downgrade.

“Today?s rating action was triggered by Moody?s recent downgrade to B1 from Ba1 of Greece,» said Moody?s analyst Carlos Winzer in a statement.

A rapid deterioration of consumer spending in Greece, where the economy is set to shrink another 3 percent this year, ?will continue to affect OTE?s performance in the medium term,? he said.

Deutsche Telekom, Europe?s largest telecommunications company, owns a 30 percent stake in OTE with the Greek state holding another twenty percent.

Shares in OTE, which has a market value of some 3.9 billion euros, were down 2.57 percent at 7.97 euros in mid session trade on the Athens bourse on Tuesday. The broader market was 3.2 percent in the red.

Further government spending cuts and revenue measures, due to be announced by the end of this month, could have an additional effect on OTE, Winzer said.

?There remains a significant degree of uncertainty regarding the macroeconomic environment in Greece,? Moody?s said.

OTE, which reported a 91.7 million euro loss in the last quarter of 2010, said last month that it is targetting annual savings worth 32 million euros in 2011 by cutting operating costs in a bid to help offset slowing revenues arising from the recession.

Standard