ECONOMY

ITT firms improve their outlook

Greek information technology and telecommunications (ITT) companies appear cautiously optimistic about their future, the Foundation for Economic and Industrial Research (IOBE) noted in a study made public yesterday. The study added, however, that for the ITT sector to achieve its potential, the overall economic environment must improve and projects subsidized through the Community Support Framework – especially via the Information Society Operational Program – must materialize faster. IOBE pointed out that the ITT industry has faced a steady deterioration of financial results after 2000, due to decreased demand, as well as as a result of the rise and fall of share prices of companies traded on the Athens Stock Exchange. The boom period of 1999-2000 supported profits, but these turned into losses when the stock market began to fall. It was at that time that many of the industry’s investment decisions began to prove mistaken and the situation worsened as demand fell. According to the financial results of 334 information technology companies, their turnover fell 3 percent in 2000, net earnings fell by 60 percent and about 30 percent of companies in the sector became unprofitable. The telecommunications market is in better shape, a fact mainly owed to mobile telephony. Financial results of 109 telecommunications companies show a steady improvement in their turnover during the period 1998-2002, despite a small decline in profits in 2002. Smaller companies exhibited a steady improvement of growth fundamentals. A number of players in the market ended up with losses and reduced turnover, yet, many of them, having written down initial investments, mainly in loss-making fixed networks, are now presenting improved financial results. Recovery trend The IOBE study notes a trend toward recovery, characteristic of the international ITT markets, beginning in 2003. An improvement in demand, concerning products and services of the two sectors, is projected for the Greek market. Private investment in the ITT sector is expected to rise, due to the modernization needs of Greek companies. Yet, the improvement will depend upon the macroeconomic environment remaining favorable, leading to rising demand. The number of ITT applications is rising, especially by large firms, reaching levels common in other European countries. At the same time, the younger generations utilize more ITT applications, at quick rates. Projects funded through the Information Society Operational Program are of great importance for the development of the industry, especially as they spur secondary demand, leading ITT companies to acquire further know-how. Public investment leading to the availability of services online creates not only direct demand, but secondary as well, with multiple benefits. It is thus that the development of the industry is expected to have duration, with constantly rising demand. Very small companies in the industry – those employing less than 10 people – are facing the most serious problems, while mid-sized companies, with 11 to 50 employees, seem much better placed than even the large companies with more than 50 employees. This latter category includes many of the large, loss-making players in the market. Market research has shown that the public sector and private firms comprise the vast customer basis for the ITT companies. Banks, tourism and the health services sector, are important niche markets, while employment by ITT companies is expected to rise.