OTE says regulator’s hostility is misplaced

Panagis Vourloumis, the president and CEO of OTE telecoms – Greece’s main fixed-line operator – fears the Hellenic Telecommunication and Post Commission (EETT), the industry regulator, does not have good intentions. He says its recent decision to fine OTE 20.1 million is simply «monstrous» and part of a plan to break it in two. «Sure, we will take our case to Justice and are certain to win it,» he says. Vourloumis argues that even if OTE had done wrong, the fine, amounting to more than 1 percent of its earnings, tax, interest and amortization (EBITDA), would have been scandalous. He rejects EETT’s main charge, that OTE is trying to compress its competitors’ profit margins in order to ultimately drive them out of the market. He insists that OTE provides broadband services with profit margins that are among the highest in the European Union. He also describes as false the claim of Tellas, OTE’s main alternative operator, that the average profit margin between the retail and wholesale price of broadband services in the EU is 37.5 percent. «OTE sells with a 20 percent profit margin, one of the highest in Europe,» he argues, adding that all operators in Greece today, including OTE, are losing out as broadband rates have fallen to particularly low levels. «It is a systematic drive to destroy OTE… The regulator wants OTE into two parts: the wholesale and retail.» Such a development would raise a credibility issue which would cost OTE dearly, as the company is already listed on bourses abroad and the government recently sold another 15 percent stake to institutional investors. Finally, Vourloumis says that OTE has still not received the sum of 390 million euros which the European Commission approved as state participation in the company’s early retirement program. Also, EETT will have to decide which leg, the wholesale or the retail, will shoulder OTE’s share of the cost of the program. The issue is urgent, he says, as the costs, according to international accounting standards, will have to be accounted for within 2006 fiscal year. The uncertainty regarding early elections is adding to the problem. «I think the election issue must close as soon as possible so that the government can deal with EETT’s decisions,» says Vourloumis.