ECONOMY

OTE calls for cost cuts in downturn

OTE telecom, 30 percent-owned by Deutsche Telekom, reported a 23.5 percent drop in third-quarter net profits and plans to proceed with further cost-cutting measures in view of another difficult quarter ahead. OTE, which has a market value of 2.84 billion euros, said that net income fell to 126.3 million euros, coming in slightly better than analysts’ expectations. Accelerated deterioration of income from its fixed-line segment, falling Greek mobile telephony revenues and a weaker performance by its Romanian subsidiary weighed on group revenues, which fell 7.8 percent year-on-year to 1.39 billion euros. OTE, Greece’s largest telecom company, which is also present in Bulgaria, Albania and Serbia, said that it expects the downtrend to continue in the final quarter of 2010. «Management will pursue and intensify efforts aimed at containing revenue erosion, reducing costs and preserving cash,» OTE said in a statement. OTE CEO and Chairman Michael Tsamaz, who took over at the helm of the company earlier this week, said that much needs to be done to reform the organization and «complete its transformation into a market-driven competitor with a rational cost structure.» Among the key challenges faced by Tsamaz, who was previously head of OTE’s Greek mobile phone unit, is negotiating with unions further staff cuts in its fixed-line domestic segment, according to analysts. Vassilis Raptis, analyst at Proton Securities, said that he expects the tough operating environment in Greece and Romania to put further pressure on OTE figures «in the coming quarters.» Shares in OTE advanced 1.40 percent to 5.80 euros on the Athens bourse yesterday, versus a 1.27 percent drop on the broader market.