ECONOMY

OTE to spend 46.9 million on reducing payroll

Telecoms operator OTE said it expects to take a 46.9-million-euro charge in the second quarter of the year related to a voluntary retirement scheme but will reap substantial savings in the long-term as a result of the lower headcount. The company told analysts and investors yesterday that it has offered more than 700 employees the option to retire early, with the move expected to burden second quarter results by a hefty 46.9 million euros. This would be offset by net savings of some 80 million euros over the next four years, it said. It plans to further reduce the headcount utilising «measures available within the current legal and regulatory framework». OTE’s workforce at the end of March numbered 18,300, down 5 percent from the same period in 2001. The company confirmed its forecasts for consolidated revenues and EBITDA margin this year – expected to increase by 5-6 percent and 40-41 percent respectively – despite the hefty provision for early retirements and this month’s revised fixed-to-mobile tariffs. Investments for 2003 are expected to fall to 500 million euros from 685 million euros this year, reflecting OTE’s decision to improve its existing Balkan business rather than embark on an acquisition spree. OTE chief executive Lefteris Antonakopoulos has stressed the company’s strategy will focus on mobile operations in the Balkans. OTE has mobile activities in Romania, Bulgaria, Albania, Serbia, FYROM and Armenia. OTE yesterday also said it had resolved its dispute with the Romanian government over its plans for Romtelecom, the incumbent fixed-line operator. The shareholders are fully committed to developing Romtelecom and have «approved the company’s business plan and a framework to secure the necessary funding requirements,» including a share capital increase, OTE said in an announcement. OTE, with a 35-percent stake and management control, has been eager to jack up its holding to above 50 percent in return for a 230-million-euro injection. It also proposed taking a 200-million-euro bank loan in order to restructure Romtelecom. The fixed-line operator’s principal asset is its mobile subsidiary CosmoRom, in which OTE owns 16 percent of voting shares. Romtelecom is due to lose its monopoly of the fixed-telephony market next year. Last year, it saw its EBITDA margin fall to 22 percent from 28 percent, principally due to start-up costs related to CosmoRom. It posted a first quarter net loss of 17 million euros. OTE’s plans, however, were rejected by the Romanian government, holder of a 65-percent stake, which feared losing control. Under the agreement with Romania, the share capital increase will be carried out by the end of August. Other measures are also expected to be implemented soon. OTE did not give details. The Greek government last month reduced its stake in OTE to 34 percent, selling an 8-percent share via an accelerated placement.