OTE reports 18pct rise in 9-month EBITDA, mostly thanks to CosmOTE

Telecom operator Hellenic Telecommunications Organization (OTE) said yesterday that EBITDA (earnings before interest, tax, depreciation and amortization) in the first nine months of the year rose by 18 percent to 495 billion drachmas, with the EBITDA margin edging up to 48 percent, making it one of the highest among European telecom groups. OTE said that its mobile phone subsidiary CosmOTE’s continued success, the greater focus on new data services and tariff rebalancing were the main reasons behind the nine-month growth. The group reported a 13.5 percent rise in revenues to 1,029.8 billion drachmas and a 9.1-percent increase in pretax profits to 250.5 billion drachmas. Underlining its strategy of branching out into data services in preparation for the entry of new operators next year, OTE said that new services such as ISDN, data services, Internet and ATM showed a 29 percent rise in earnings. The group’s recent promotion concerning the benefits of an ISDN connection resulted in a 105-percent jump in basic rate subscribers and a 66-percent increase in prime rate users. The sector accounted for 9.5 percent of group revenues, up from 8.4 percent. Mobile phone subsidiary CosmOTE continued to be an engine of growth for the parent company as a 61-percent surge in nine-month revenues brought in earnings of 157.4 billion drachmas for the parent, up by 94.5 percent and constituting 15.3 percent of consolidated revenues against 8.9 percent previously. OTE said that two tariff rebalancing exercises this year resulted in a modest 7 percent increase in domestic telephony earnings, accounting for 53.2 percent of total revenues, down from 56.4 percent. The telecom operator is seeking to raise the costs of urban calls and reduce outstation calls, with the eventual goal of a single tariff for the country. OTE said that service costs related to a voluntary redundancy program, lower revenues from other mobile phone companies and higher equipment spending grew by 11.8 percent, down from 13.1 percent. International operations in Romania, Armenia and Serbia reported higher revenues, with the exception of newly acquired mobile phone venture GloBul in Bulgaria, which recorded a loss of 1.6 billion drachmas. The State is poised to offer a tranche of shares in OTE next year as part of its ongoing privatization drive. In a conference call with analysts yesterday afternoon, OTE chairman and managing director Nikos Manassis said OTE would be talking to Norway’s Telenor in December on whether it will buy out the Norwegian company’s 18 percent stake in OTE. We have agreed with Telenor to decide the issue by mid-December. We will announce decisions after that meeting, Manassis said. OTE, which already has a 59 percent stake in CosmOTE, confirmed in May it was discussing the possibility of raising its stake by buying Telenor’s 18 percent holding, but its board said it needed further evaluation of the price.

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