Hellenic Telecommunications Organization (OTE) announced that its net income amounted to EUR 39.6mn in 2010, while net income was EUR 410.9mn in 2009. Additionally, operating income was EUR 384.9mn in 2010 from EUR 1,043mn in 2009.
The challenging economic situation and deteriorating consumer environment, across all countries in which it operates, continued to impact the activities of the OTE Group, which experienced a revenue decline of 12.4% in Q4’10. On a comparable basis (i.e. excluding Q4’10 revenues of Zapp in Romania), Group revenues were down by 12.8% compared to Q4’09. Affected by a GDP contraction of 6.6% on an annualized basis, in the fourth quarter, the Group’s revenues in Greece declined sharply, both in fixed-line and in mobile telephony, while in Romania fixed-line revenues also recorded a double-digit drop. International mobile revenues proved somewhat more resilient.
Total Operating Expenses, excluding depreciation, amortization & impairment, as well as charges related to voluntary retirement programs, amounted to EUR886.4mn in Q4’10, decreasing by 12.4% from the comparable 2009 quarter, in line with the decrease in revenue. The decrease reflects lower charges from domestic telephony operators, lower costs of telecommunications equipment as well considerable cost-containment efforts in all operations, leading to lower personnel and other expenses.
An additional charge of EUR129.8mn related to OTE’s 2005-06 Voluntary Retirement Scheme was mandated by the Greek government and taken in Q4’10; OTE is challenging this decision. Depreciation and amortization (including impairment) posted a sharp increase primarily reflecting an impairment charge of EUR244.5mn at RomTelecom with respect to the recoverable values of its property, plant and equipment. The total effect of this impairment on OTE Group net results, after write-offs taken at OTE Group level in prior years, as well as taxes and minorities, amounted to EUR77.6mn.
The Group posted a net loss of EUR91.7mn for the quarter, reflecting the two abovementioned extraordinary charges, partly offset by a EUR30.1mn reversal related to the special contribution tax, following clarifications by the Greek Ministry of Finance that the tax on dividend income received from the profits of subsidiaries on which a special contribution has already been charged, should be refunded.
Capital expenditures decreased by 27.4% in Q4’10 compared to Q4’09, to EUR183.8mn, mainly due to lower investments in fixed-line operations in Romania and mobile operations in Greece. Total CAPEX as a percentage of Group revenues in Q4’10 was 13.8%, as compared to 16.7% in Q4’09. Capital expenditures in Greek fixed-line, Romanian fixed-line, and mobile operations amounted to EUR74.3mn, EUR24.5mn and EUR72.2mn, respectively.
During the quarter the Group generated EUR432.2mn in operating cash flow, the best performance in eight consecutive quarters, reflecting positive working capital movements, lower interest and income taxes paid.
Commenting on OTE’s performance in the fourth quarter and full year, Michael Tsamaz, Chairman & CEO, said: “In 2010, facing unprecedented obstacles, OTE Group managed to contain the drop in its operating profitability and cash flow, using every lever under our control. Net income, however, was impacted by asset write-downs and additional early retirement costs.”
Mr. Tsamaz added: “In 2011, we will make every effort to enable OTE to slow down the pace of revenue and profitability decline and make progress towards achieving our longer-term objective of creating durable shareholder value. We will use our proven experience to start the transformation of OTE into an efficient company. I have initiated the restructuring of the first level of management in an effort to create a new winning team for both OTE and Cosmote. Our main aims will be customer experience, integrated and innovative products and services, and redesigning our processes. Although this is going to be a very difficult task considering the internal and external environment, I am confident that we will succeed in making OTE a high performing company.”
The challenging economic situation and deteriorating consumer environment, across all countries in which it operates, continued to impact the activities of the OTE Group, which experienced a revenue decline of 12.4% in Q4’10. On a comparable basis (i.e. excluding Q4’10 revenues of Zapp in Romania), Group revenues were down by 12.8% compared to Q4’09. Affected by a GDP contraction of 6.6% on an annualized basis, in the fourth quarter, the Group’s revenues in Greece declined sharply, both in fixed-line and in mobile telephony, while in Romania fixed-line revenues also recorded a double-digit drop. International mobile revenues proved somewhat more resilient.
Total Operating Expenses, excluding depreciation, amortization & impairment, as well as charges related to voluntary retirement programs, amounted to EUR886.4mn in Q4’10, decreasing by 12.4% from the comparable 2009 quarter, in line with the decrease in revenue. The decrease reflects lower charges from domestic telephony operators, lower costs of telecommunications equipment as well considerable cost-containment efforts in all operations, leading to lower personnel and other expenses.
An additional charge of EUR129.8mn related to OTE’s 2005-06 Voluntary Retirement Scheme was mandated by the Greek government and taken in Q4’10; OTE is challenging this decision. Depreciation and amortization (including impairment) posted a sharp increase primarily reflecting an impairment charge of EUR244.5mn at RomTelecom with respect to the recoverable values of its property, plant and equipment. The total effect of this impairment on OTE Group net results, after write-offs taken at OTE Group level in prior years, as well as taxes and minorities, amounted to EUR77.6mn.
The Group posted a net loss of EUR91.7mn for the quarter, reflecting the two abovementioned extraordinary charges, partly offset by a EUR30.1mn reversal related to the special contribution tax, following clarifications by the Greek Ministry of Finance that the tax on dividend income received from the profits of subsidiaries on which a special contribution has already been charged, should be refunded.
Capital expenditures decreased by 27.4% in Q4’10 compared to Q4’09, to EUR183.8mn, mainly due to lower investments in fixed-line operations in Romania and mobile operations in Greece. Total CAPEX as a percentage of Group revenues in Q4’10 was 13.8%, as compared to 16.7% in Q4’09. Capital expenditures in Greek fixed-line, Romanian fixed-line, and mobile operations amounted to EUR74.3mn, EUR24.5mn and EUR72.2mn, respectively.
During the quarter the Group generated EUR432.2mn in operating cash flow, the best performance in eight consecutive quarters, reflecting positive working capital movements, lower interest and income taxes paid.
Commenting on OTE’s performance in the fourth quarter and full year, Michael Tsamaz, Chairman & CEO, said: “In 2010, facing unprecedented obstacles, OTE Group managed to contain the drop in its operating profitability and cash flow, using every lever under our control. Net income, however, was impacted by asset write-downs and additional early retirement costs.”
Mr. Tsamaz added: “In 2011, we will make every effort to enable OTE to slow down the pace of revenue and profitability decline and make progress towards achieving our longer-term objective of creating durable shareholder value. We will use our proven experience to start the transformation of OTE into an efficient company. I have initiated the restructuring of the first level of management in an effort to create a new winning team for both OTE and Cosmote. Our main aims will be customer experience, integrated and innovative products and services, and redesigning our processes. Although this is going to be a very difficult task considering the internal and external environment, I am confident that we will succeed in making OTE a high performing company.”