ECONOMY

OTE sees bleak prospects if ways are not mended

OTE Telecom’s declining profitability may take on serious dimensions but is reversible and this requires urgent measures, the utility’s new chief executive officer said yesterday. «The decline in profits is mainly due to losses in fixed-line services, due to the intense competition in this market segment, but also because of the fact that the government treats OTE as a public department,» Panagis Vourloumis told OTE’s annual general assembly. The government retains a 33.7 percent interest in OTE, Greece’s biggest company and for a long time a monopoly. Vourloumis noted that 2003 profits were down 17.3 percent in relation to 2002, when they were also lower than in 2001. The trend continued in the first quarter of 2004, when income fell 56.6 percent year-on-year as costs grew and revenues fell from the fixed-line segment due to rate cuts and competition. «I expect to see the same trend for the rest of the year,» Vourloumis said. He urged the government to let the utility operate according to free-market rules, and said close collaboration between management and staff was required «to free the strength which the group possesses.» He added that OTE needs to rationalize its administrative structure, keep a closer watch on subsidiaries and rid itself of inefficient activities. He cited OTE’s participation in the Hellas SAT telecommunications satellite consortium with Cypriot interests as an example of such an activity. The venture cost 170 million euros and has operating costs of 10 million a year. «If the situation does not improve within a year, OTE will try to rid itself of Hellas SAT,» Vourloumis said. In response to questions, Vourloumis said OTE does not plan to increase its interest in its mobile market leader CosmOTE, or sell its mobile units in Bulgaria and the Former Yugoslav Republic of Macedonia, which will continue to be managed by CosmOTE. «Particular attention will be paid to Romania,» he said, where OTE owns a majority in the country’s main fixed-line operator, Romtelecom. Shareholders approved a proposal to trim the board of directors from 15 to 11, and for the duration of their terms to depend on the number of votes they receive. Separately, a public prosecutor filed charges against OTE’s former CEO Lefteris Antonakopoulos after a preliminary investigation into a Kathimerini report that 19 senior managers had received large bonuses before the March 7 general election.