ECONOMY

Greek OTE Q2 profit drops 40 pct y/y, but fixed-line operations improve

Greece’s biggest telecoms company OTE reported on Thursday a 40 percent annual profit drop in the second quarter, as it continues to suffer from tough regulation, sharp competition and severe austerity in its two main markets, Greece and Romania.

Net income stood at 57.2 million euros ($76.18 million) from 94.6 million in the same period last year, said OTE, a unit of Germany’s Deutsche Telekom. The figures exclude the results of Bulgarian unit Globul, which OTE sold earlier this year to Norway’s Telenor to reduce debt.

Sales dropped at an annual pace of 8.6 percent to 1.003 billion euros, weighed by austerity-pinched customers, who continue switching to cheaper rivals, and by lower call prices imposed by regulators.

But the company said it managed to post a 8.1 percent annual drop at its Greek fixed-line unit, its smallest revenue decline in three years, helped by payroll cuts of 18 percent. Greek fixed-line operations account for about a third of OTE’s total revenue and costs.

“Despite MTR (Mobile Termination Rate) cuts, intensifying competition in broadband and mobile, continued tough economic conditions and delays in obtaining regulatory clearance for competitive offers, we have experienced a lower rate of erosion and boosted our operating profitability,” OTE’s Chief Executive Officer Michael Tsamaz said.

The company maintained its outlook that revenues would remain “under pressure” in the coming quarters, weighed by regulatory MTR cuts, difficult economic conditions, sharp competition and higher taxation. [Reuters]