Greece’s OTE, the biggest telecoms company in southeast Europe, reported an unexpected loss for the fourth quarter due to an impairment at its Romanian fixed-line unit RomTelecom.
The debt-laden former Greek monopoly, now 40-percent owned and managed by Germany’s Deutsche Telekom, said it planned to pay no dividend this year and that it expected its 2012 revenues to fall as much as they did in 2011, when sales dropped by 8.1 percent.
Greece and Romania, OTE’s two biggest markets, are pursuing austerity programs to shore up public finances which have hurt consumer spending on telecommunications services.
The company made a net loss stood of 77.1 million euros ($102 million) due to a 253.2 million euro impairment charge on RomTelecom. This compares to a net loss of 91.7 million euro loss in the same period last year, when the company had again booked impairment charges, partly on RomTelecom.
Sales dropped 6.3 percent to 1.246 billion euros, slightly below an average 1.249 billion euro sales forecast in a Reuters poll of analysts. Earnings before interest, tax, depreciation and amortisation stood at 408.3 million euros, also below analysts’ 418.6 million euro forecast
However, the company’s Chief Executive Michael Tsamaz, who was appointed by Deutsche Telekom to cut OTE’s excessive costs, saw a silver lining in the figures.
“In the fourth quarter, for the first time since 2009, our pro forma (adjusted) EBITDA margin was up year-on-year,» he said in a statement.
Cutting costs is crucial to halt a profit slide but it will also help the company reduce its regulated prices.
On Wednesday, Greece’s telecoms regulator allowed price reductions that will make OTE more competitive after the company reached a deal with its workers in September to cut wages without layoffs.
OTE earlier this year also sold its 20 percent stake in Serbian telecoms operator Telekom Srbija for almost 400 million euros. OTE is under heavy pressure from Deutsche Telekom to sell off assets to reduce its debt, after corporate borrowing costs soared in Greece in the wake of the country’s sovereign debt crisis. [Reuters]