ECONOMY

OTE confirms it will resume paying a dividend this year

BARCELONA – Greek telecoms operator OTE confirmed its plans to resume paying a dividend out of 2006 earnings and said its third-quarter core operating profit had risen slightly, its financial chief said yesterday. «The management thinks dividend payments should be resumed. It’s about time, and we have the financial ability to do so,» Chief Financial Officer Iordanis Aivazis said at a Morgan Stanley investor conference here. «We’re considering resuming dividend payments in 2007 on the back of 2006 financial results,» he said. The company had earlier said it «hoped» to pay a dividend in 2007. Ahead of its third-quarter earnings release, Aivazis said earnings before interest, tax, depreciation and amortization (EBITDA) for the group «will be slightly higher,» on the back of a strong performance of its majority owned Cosmote mobile telecoms business, as well as a «good performance» from the fixed-line business. «The trends of 2006 are continuing (in the third quarter). The intensity of competition was not there, and cost-cutting is starting to bear fruit,» he said. The fixed-line operations at the former monopoly are under pressure from mobile telephony and alternative carriers, and OTE is aiming to offset that by expanding in broadband Internet, though it is lagging far behind Western European peers. Aivazis admitted that Greece was «a slow starter» with broadband, but said «we might revise upward our targets for DSL (broadband).» He reiterated the company’s goals to have sold broadband to 1.1 million customers in 2008, or 11 percent of the population, from half a million customers by the end of 2006. Government sale After the Greek government picked two foreign investment banks and one Greek bank to advise on the sale of part of its stake in OTE to a strategic investor, according to a senior Finance Ministry official earlier this week, OTE also planned to appoint its own advisor, Aivazis said. The government wants to sell part of its 38 percent stake to a major European peer and hopes to conclude the sale by the first half of 2007. Bankers have told Reuters that Telekom Austria was eying a stake, and Greek media have said Spain’s Telefonica and Deutsche Telekom were interested. OTE declined to say who would be its ideal shareholder. «As to how, in what shape or partner, I don’t want to answer,» Aivazis said. The government said last week it planned to change the rules on hiring and firing at OTE to make the company more attractive to a foreign partner, which Aivazis said he would welcome. «If they legislate, that will be the acid test for the privatization and the go-ahead for the privatization,» he said. OTE had no plans to increase its 67 percent stake in mobile carrier Cosmote any further, Aivazis said, adding that the two-thirds majority gave it control under Greek law.