ECONOMY

OTE chief airs handicaps that hold utility bound

OTE Telecom’s chief executive, Panagis Vourloumis, told the Athens Business Club 2004 late on Monday that the utility, 37.7 percent-owned by the State, was a «sick company» that had twice the number of workers it needed and had yet to start acting like a private enterprise. «The 17,000 OTE employees enjoy civil service status – cannot be removed, punished, rewarded, motivated,» he said, adding the company was forced to compete in a tough environment with twice the number of personnel it needs. The Athens Business Club is a group set up by the government to attract foreign direct investments. «The fact that he knows the problems is positive. The market is taking it positively ahead of restructuring moves,» said analyst Vassilis Kararizos at Marfin Analysis. Analysts have long argued OTE’s inability to shed more jobs was holding down its efficiency and keeping costs high. In May, Standard & Poor placed OTE’s «A» long-term corporate credit ratings on CreditWatch with negative implications, stressing its concern about the company’s costs. Unveiling a 56.6 percent drop in OTE’s first-quarter net profit in May, Vourloumis promised to rein in operating costs and to unveil a turnaround plan in the autumn. Vourloumis took over the helm at OTE in May, appointed by the new government. He stressed in his speech that OTE had «tremendous strengths.» But once the challenge of hosting the Olympics is over, the government should move boldly to create a legal environment in which the company could operate like a true private enterprise, he said. Analysts said tackling OTE’s problems will be a test of the new administration’s reform credentials. «The previous Socialist government would not allow it (OTE) to fire people as the company has one of the largest trade unions in Greece,» said telecoms analyst Philip Townsend at London-based Natexis Bleichroeder. This administration may also be concerned about allowing unpopular job cuts, he said. (Reuters)