ECONOMY

OTE 9-month profit falls; plans toward more staff reduction

Telecom company OTE yesterday posted a smaller-than-expected 18.9 percent fall in third-quarter net profit on lower payroll costs. The operator said third-quarter net earnings fell to 120.5 million euros, while nine-month net profit was down 12 percent at 349.8 million euros as staff cuts paid off. Analysts polled by Reuters had forecast on average a 24 percent drop in third-quarter profit, while the nine-month figure was seen as down 15 percent. The results were based on US generally accepted accounting principles (GAAP). «OTE’s bottom line was boosted by lower payroll expenses and depreciation charges,» said analyst Costas Karitsos at Kappa Securities. OTE said in a statement, «Headcount reduction initiatives are starting to have a positive impact on payroll.» Chief Executive Lefteris Antonakopoulos told analysts at a conference call the group was working with trade unions on voluntary retirement incentives that would «enable the organization to be lighter by around 4,000 people.» Nine-month group revenues rose 12.9 percent to 3.63 billion euros, showing the impact of increased competition in the fixed-line business. «Revenue growth was lower than expected due to the deterioration in domestic fixed-line revenues,» said Karitsos. OTE, however, said it had succeeded in countering the competition. «In domestic fixed-line activities, we have been able to contain revenue erosion whenever we were allowed to compete effectively,» the company said. OTE said its market share by the end of the third quarter had fallen to 89 percent from 91 percent at the end of June, with the fixed-line market facing competition from fixed-to-mobile substitution. It had previously said it sees an 8-10 percent market share loss this year and 25 percent by 2005. OTE said it was ready to launch a new pricing policy as soon as it gets regulatory approval, which would enable it to compete more effectively. Antonakopoulos also expressed confidence in OTE clinching a deal with Telenor on the Norwegian operator’s 9 percent stake in CosmOTE, despite Telenor’s refusal of its bid earlier this month. He reiterated OTE’s decision not to inject more funds into Romanian mobile firm Cosmorom, owned by its majority-controlled Romtelecom, even as it speeded up efforts to cut its debts. OTE’s nine-month group earnings before interest, tax, depreciation and amortization (EBITDA) rose by 10.8 percent to 1.43 billion euros. Nine-month earnings per share were down 12.1 percent to 0.7135 euros year-on-year. OTE intends to maintain a high dividend policy, Antonakopoulos said. (Reuters)