ECONOMY

A bright day for OTE

Shares in Greek telecoms operator OTE leapt 6.85 percent yesterday after the company clinched a deal with its union that would trigger a restructuring. The country’s dominant telecoms provider also posted a rise in first-quarter core profit that met analysts’ expectations. Late on Wednesday, OTE had agreed on termination terms for future employees to help cut costs and shore up profits. The company is targeting about 6,000 voluntary redundancies – about a third of its work force – with annual savings from the plan estimated at 250 million euros ($314 million). «(OTE) shares were up due to the agreement on the employment status of newly hired employees and also due to good results,» said Proton Securities analyst Vassilis Kararizos. Chief Executive Panagis Vourloumis said that resolving the firm’s work force problems was crucial to a recovery after tough competition from smaller carriers eroded its market share. «We will not be able to show a durable reversal of past trends until we have solved our work force issues,» he said in a statement. OTE matched expectations with a 7.1 percent rise in first-quarter core profit, boosted by a strong performance at its mobile and Romanian operations. Earnings before interest, tax, depreciation and amortization (EBITDA) reached 443.6 million euros, beating an average forecast of 440 million in a Reuters poll of 14 analysts. Net profit rose by a stronger-than-expected 88.6 percent to 90.7 million euros, with sales up 6.1 percent to 1.298 billion euros. «The results are strong, OTE’s market share has stabilized and the pace of traffic erosion has slowed,» said Alpha Finance analyst Dimitrios Giannoulis. «The bottom line was boosted by one-off gains from foreign exchange gains and sales of satellite holdings.» OTE said revenues at its core fixed-line unit fell 1.2 percent to 664.9 million euros while operating profit declined 8.3 percent to 26.6 million euros. Its market share was unchanged at 84 percent. Mobile operator CosmOTE, 64.3 percent owned by OTE, had matched expectations a day earlier with a 9 percent rise in first-quarter net profit to 75 million euros, thanks to usage growth in the local market and Albania. Romtelecom, the Romanian fixed-line carrier majority-owned by OTE, recorded a 356 percent rise in first-quarter net profit to 46.1 million euros. OTE reported results under US GAAP. Cosmorom Vourloumis also told analysts OTE will most probably relaunch Cosmorom, the ailing mobile phone arm of Romanian fixed-line carrier Romtelecom in which it has a majority stake. «I think a decision is imminent and most probably it would be in the direction of relaunching the company,» he said. He declined to provide more details. Earlier, the Romanian government said it would announce today a decision to relaunch Cosmorom. On Wednesday, CosmOTE, the Greek majority-owned mobile subsidiary of OTE, said it was close to reaching a deal to help revive Cosmorom, which has less than 2 percent of the Romanian mobile market and owes about 190 million euros to suppliers. Analysts have said CosmOTE could contribute up to 200 million euros ($251.4 million) for Cosmorom’s relaunch. (Reuters)