ECONOMY

OTE loses market share

OTE Telecom announced yesterday it expected first-quarter core profit from its main fixed-line business to dip year-on-year as higher mobile use and inroads by rivals bite. «The company is taking action both to defend its market share and to accelerate its cost reduction programs and therefore expects its full-year, fixed-line EBITDA (earnings before interest, tax, depreciation and amortization) to be slightly below the 2002 level,» OTE said in a statement. In 2002, core profits from fixed-line telephony made up 68 percent of OTE’s core profits at group level. OTE said it expected 850 local employees to leave by the end of the year, while another 180 will take scheduled retirement, in line with projections set out by the company in February. The cuts will help reduce costs, but not quickly enough to offset competitive pressures. The previous year some 700 employees were granted voluntary redundancy. OTE estimated it had lost 7 percent of its fixed-line market to rivals by the end of March, compared with an estimated 4 percent decline in market share at the end of 2002. OTE lost its fixed-line monopoly in January 2001. Greece now has about 12 alternative operators as well as four mobile companies, including OTE’s 59 percent-owned CosmOTE, the country’s largest by market share. The statement, issued ahead of meetings between OTE management and investors in Europe and the United States, comes after OTE shares plunged at the end of March to their lowest levels since OTE’s stock market debut in April 1996. The shares have been hit by concerns that OTE’s regional investments will not quickly offset a squeeze on its traditional phone business in Greece. At the end of February, OTE reported a bigger-than-expected drop in 2002 net profit, due in part to hefty write-downs of its regional investments. (Reuters)