ECONOMY

Mobile arm, cost cuts give hefty boost to OTE first-quarter results

Greece’s main telecoms group, OTE, reported a forecast-beating first-quarter net profit yesterday, boosted by its mobile arm and Balkan operations, while cost cuts at its core fixed-line unit took effect. Net profit rose 38.3 percent to 109.7 million euros ($140 million) versus an average forecast of 82.4 million euros in a Reuters poll of 17 analysts. «Results were strong, with domestic fixed-line operations stabilizing and cost-cutting measures starting to have an impact,» said analyst Costas Karagiorgos at EFG Eurobank Securities. Revenues at OTE’s core fixed-line unit rose 3.3 percent to 684.7 million euros, with operating income more than doubling to 48.9 million euros. OTE, which will shed a third of its 14,694 work force this year, said this would help cost-containment efforts. OTE said solid performances at 67 percent-owned Cosmote and its operations in the Balkans also boosted quarterly results. «Mobile operations in Greece and our other Southeast European markets are all posting improved results,» CEO Panagis Vourloumis said in a statement. Romanian carrier Romtelecom swung to an operating income of 26.4 million euros from a 9.5-million-euro loss a year earlier despite a 2.4 percent drop in revenues to 222.8 million euros. The operator reiterated its 2006 guidance issued in February, which forecast an average 4.2 percent annual rise in sales over the next three years. OTE, 38.6 percent state-owned, said first-quarter operating income before depreciation and amortization rose 15.4 percent to 512.5 million euros. Sales rose 6.5 percent to 1.39 billion euros. OTE trades at 16 times 2006 forecast earnings, making it more expensive than Spain’s Telefonica, which trades at 12 times and Telecom Italia at 13. «OTE offers a superior earnings per share (EPS) growth relative to the sector between 2005 and 2008, a 24 percent compound annual growth rate versus 7 percent,» said HSBC Pantelakis Securities analyst Vangelis Karanikas. (Reuters)