By Alkman Granitsas
ATHENS--Greece's dominant phone company, Hellenic
Telecommunications Organization SA (OTE), reported a mixed set of
results Thursday-largely in-line with market expectations-as
resilience in its fixed line operations offset weakness in its
mobile telphone markets.
For the three months through September, the company said net
profit was 69.1 million euros, down from EUR252.6 million a year
ago when the results were boosted by the sale of OTE's Bulgarian
operations. Overall, group revenue fell 5.0% on year to EUR987.6
million, but operating income-as measured by earnings before
interest, taxes, depreciation and amortization-was flat, down just
0.4% at EUR367.4 million.
"Our revenue performance this quarter reflects the continuing
stabilization of our Greek operations, with fixed line operations
delivering solid results in broadband and television services, and
resilient service revenues in mobile," said Michael Tsamaz,
chairman and chief executive. "This partially offset lower revenues
in our international mobile operations, impacted by [mobile
termination rate] cuts and intense competition."
The company, Greece's one-time state-owned monopoly phone
company but now a unit of Deutsche Telekom AG, has faced slowing
revenue due to Greece's protracted economic crisis as well as
weakening demand in its key markets in southeast Europe. At the
same time, it has also had to contend with stiff competition in its
core Greek mobile market from its two domestic rivals-Vodafone
Greece and Wind Hellas.
In response to those challenges, the company has been moving to
cut costs, shedding staff through a series of voluntary retirement
programs, and has also been reducing its debt. At the end of its
third quarter, OTE's net debt stood at EUR1.43 billion, down 14%
from a year earlier. At the same time, the company has also been
moving to expand its service offerings by expanding its television
services and rolling out improved broadband packages. OTE recently
made a bid for rival Greek satellite television company, Nova.
The results were generally in-line with market expectations,
with most analysts focusing on the underlying trends in the
separate fixed and mobile divisions as a gauge of future
performance.
"Our competitive edge comes from offering our customers an
unparalleled experience. To this end we continue investing
substantial amounts to sustain the fastest and most reliable
network and enrich our TV proposition content," said Mr. Mr.
Tsamaz. "At the same time, we further improved our financial
structure, one of the strongest in our peer group. In conditions
that remain persistently challenging, we are confident we will meet
our EUR500 million free cash flow year-end target and continue to
deliver strong profitability and cash flow in the last quarter of
2014 and next year."
Write to Alkman Granitsas at Alkman Granitsas@wsj.com
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