ECONOMY

OTE reportedly suffers losses over 9-month period

OTE Telecom, once the most profitable Greek company, is expected to show a loss of over 80 million euros in its nine-month results to be presented today. According to sources, the group’s consolidated results will also show a loss close to 10 million euros, despite the increased profitability of mobile telecommunications subsidiary CosmOTE. OTE’s foreign investments, most of them made since 1996, are a sore point, since they, along with increasing domestic fixed-line competition, have damaged the company’s bottom line. In the past eight years, OTE has invested about 1.7 billion euros in Bulgaria, Romania, the Former Yugoslav Republic of Macedonia (FYROM), Serbia, Ukraine, Jordan and Yemen. Of that amount, it has written off 505 million euros, or about 30 percent. Slightly more half of that amount (257 million) has been written off in OTE’s foray into Romania, chiefly because of its disastrous investment in mobile telephony company CosmoRom. The latter, a subsidiary of Romania’s fixed-line monopoly, Romtelecom, where OTE holds 54.01 percent of the shares, never managed to capture a significant market share in the country, badly trailing behind its three competitors. OTE has also written off 164 million euros from its Serbian investment, where it has acquired 20 percent of Telekom Srbija, as well as 59 million from its investment in Armenia, where it holds 90 percent of fixed-line monopoly Armentel. Armentel Yesterday, OTE’s board of directors announced an agreement with the Armenian government ending a longstanding dispute which threatened OTE’s investment there. Under the terms of the agreement, Armentel will enjoy a monopoly over voice telephony until 2013, when a second mobile telephony license will be granted. It will also have exclusive rights over Voice over Internet Protocol (VoIP) and its future mobile competitor will not be allowed to build its own backbone network and will be oblige to route its clients’ international calls through Armentel’s network. For its part, OTE undertakes to digitalize Armenia’s telephone network by 2006, but only if Armentel’s revenues allow it. «Armentel will operate within a just regulatory framework, which will allow the provision of high-quality services based on new technologies,» said a joint statement by OTE, Armentel and Armenia’s government. Also yesterday, OTE’s board authorized Chairman and CEO Panayis Vourloumis to sign the articles of association with Telekom Srbija, which give OTE the right to appoint the chief financial officer and deputy chief executive of the company. The articles must be approved by the Serbian government. Though an appointee of the present government, Vourloumis has come under attack from OTE’s pro-government unionists for continuing the previous management’s policies. His critics also claim he has not severed ties with telecommunications equipment maker Intracom. They say OTE’s costly forays abroad were made to satisfy Intracom’s, not its own, needs.