OTE group profit plunges 56.6 pct in first quarter

OTE Telecom’s first-quarter results, released yesterday, were even worse than expected, with group net profit falling 56.6 percent, to 49.1 million euros, according to US GAAP standards. OTE released two sets of figures, one according to Greek accounting standards as set in a 1920 law and one in US GAAP. By next year, all companies listed on the Athens Stock Exchange are supposed to have adopted the International Accounting Standards (IAS), although some of them are calling for a delay. According to Greek standards, OTE group’s net pretax profit fell 44.2 percent, to 93.3 million euros. Using US GAAP, group earnings before interest, tax, depreciation and amortization (EBITDA) fell 5.5 percent to 414 million euros, while group revenues rose 11.7 percent to 1.23 billion euros. Using Greek standards, EBITDA rose 1.5 percent to 473.9 million euros and revenue rose 12 percent to 1.23 billion euros. In the parent company alone, first-quarter revenue fell 12 percent to 697.4 million euros, EBITDA dropped 24.9 percent to 227.4 million, and net pretax profit was down 72.9 percent at 31.8 million euros. The above figures derive from the use of Greek accounting standards. The management attributed this fall to continued competition from other fixed-line telephony providers and the decision by the National Telecommunications and Post Commission (EETT), the market regulator, to cut the connection and line leasing fees imposed by OTE on its competitors. «The first-quarter results of the OTE group reflect constant pressure on fixed-line telephony,» said newly appointed Chairman and CEO Panayis Vourloumis. OTE’s share of the fixed-line market, in which it once was a monopoly, is 87 percent. «Even though I have been with OTE less than a month, on the basis of information I have got I believe that OTE has the know-how, the forces and the resources to reverse this situation. Of course, this is not an easy task. My immediate priorities are to strictly control costs, to resolve matters arising from low-yield activities in Greece and abroad, to simplify internal procedures and to forge a new relationship with the market regulator,» Vourloumis added. Despite the disappointing result, OTE’s shares recovered from early losses to close 4.82 percent higher at 10.44 euros, outperforming the broader market, which gained 1.31 percent. Traders said investors had already priced in a sharp drop in OTE’s profits and saw the stock as a bargain.

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