31st May 2006 11:25
Hellenic Telecomms Organization S A31 May 2006 OTE GROUP REPORTS 2006 FIRST QUARTER RESULTS UNDER IFRS (UNAUDITED) • Q1 operating revenues up 6.5% on stable Greek fixed-line, good performance of mobile • Greek fixed-line Voluntary Retirement Plan proceeding ATHENS, Greece - May 30, 2006 - Hellenic Telecommunications Organization SA(ASE: HTO, NYSE: OTE), the Greek full-service telecommunications provider, todayannounced consolidated unaudited results (prepared under IFRS) for the quarterended March 31, 2006. CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005 IN ACCORDANCE WITH IFRS • million except per share data Q1 06 Q1 05 % Change Revenues 1,386.7 1,301.5 6.5% Operating Income 228.2 154.7 47.5% Pre-tax Income 203.4 176.9 15.0% Net Income 109.7 79.3 38.3% Operating Income before Depreciation &Amortization* 512.5 444.2 15.4% Operating Income before Depreciation &Amortization 37.0% 34.1% 2.9 ppas % of Operating Revenues*Basic EPS (•) 0.2238 0.1618 38.3% Cashflow from Operations 372.8 308.3 20.9% CAPEX as % of Revenues 12.2% 9.5% 2.7 pp* See notes on p. 10 Commenting on the quarter, Mr. Panagis Vourloumis, Chairman and CEO, noted:"In the first quarter of 2006, we have continued to work on stabilizing thecontribution of our mature businesses and boosting the performance offaster-growing activities. Greek fixed-line operations posted roughly unchangedrevenues and made steady progress in controlling their cost base, a process thatshould gradually gain momentum throughout this year as the implementation of ourVoluntary Retirement Plan reaches full speed. Mobile operations in Greece andour other Southeast European markets are all posting improved results, and therelaunch of Cosmote Romania is encouraging. RomTelecom is achievingprofitability improvements despite a declining top line, underscoring theeffectiveness of its management's efforts. We recently announced a move thatshould strengthen our distribution in all activities and in all regions. All inall, this was a satisfactory quarter conforming to our business planassumptions." Financial HighlightsRevenuesOTE Group Revenues increased by 6.5% in the three months ended March 31, 2006.The increase reflects higher revenues mainly from mobile telephony, ADSL andmonthly rentals, as well as revenues from the development of an e-governmentproject for the Greek State. Operating ExpensesTotal Operating Expenses excluding depreciation and amortization amounted to •874.2 million, 1.2% higher than the first quarter 2005 results. Payroll and Employee BenefitsPayroll and Employee Benefits decreased by 8.4% to • 318.6 million in the firstquarter of 2006, compared to the first quarter of 2005. This drop is largely dueto the reduction of payroll and employee benefits costs at RomTelecom. Other Operating ExpensesOther Operating Expenses increased by 4.2% to €268.4 million. The increase islargely attributable to higher costs in fast-growing mobile operations, morethan offsetting the drop in Other Operating Expenses in Greek Fixed-Lineoperations. Operating income before depreciation and amortizationIn the first quarter of 2006, OTE reported consolidated Operating Income beforedepreciation and amortization of • 512.5 million, an increase of 15.4% from theprior year's quarter. The underlying increase in margin stands at 2.9 pp. Theimprovement primarily reflects higher operating income in Greek fixed-line - dueto the absence of Voluntary Retirement costs in the quarter - and at RomTelecom. Other income / (expense)In the quarter, OTE Group recorded Net Other Expense of • 24.8 million, ascompared to Net Other Income of • 22.2 million in the comparable period of 2005.The difference primarily reflects lower foreign exchange gains, as well as lowerinvestment income and gains on investments. Net incomeIn the quarter OTE Group posted Net Income of • 109.7 million, up 38.3% comparedto the first quarter of 2005. The increase, achieved despite a • 47.0 millionswing in Other income / (expense) reflects the improvement in operatingperformance. Cash flowCash provided by operating activities amounted to • 372.8 million for the threemonths ended March 31, 2006. The 21% improvement is due to higher profitabilityand improved working capital discipline. Capital ExpenditureCapital expenditure in the first quarter of 2006 totaled • 168.5 million. DebtAt March 31, 2006, the OTE Group gross debt was • 3,413.0 million, a drop of0.8% compared to December 31, 2005, while net debt totaled €1,702.4 million,down 11.7% from 2005 year end. The total amount of OTE debt outstanding breaksdown as follows: • million Mar 31 2006 Dec 31 2005 % Change Short-Term: -Bank loans 13.1 14.3 -8.4%Medium & Long-term: -Bonds 2,599.5 2,598.0 0.1% -Bank loans 763.7 794.2 -3.8% -Other loans 36.7 33.4 9.9% Total Indebtedness 3,413.0 3,439.9 -0.8% Cash and Cash equivalents 1,710.6 1,512.2 13.1% Net Debt 1,702.4 1,927.7 -11.7% 1. OTE Fixed-Line TRAFFIC STATISTICSMinutes, millions Q1 2006 Q1 2005 % Change Local 3,109.6 3,170.1 -1.9%National Long - Distance 449.4 467.1 -3.8%International Long - Distance 73.9 84.9 -13.0%Fixed-to-Mobile 415.9 407.3 2.1%Special Calls 50.5 52.1 -3.1%Total Voice traffic 4,099.3 4,181.5 -2.0%Internet 2,562.3 3,344.8 -23.4% OTE estimates that its share of the Greek fixed-line market, as measured inoutgoing voice call minutes (excluding internet), was approximately 73% in March2006, unchanged from the previous quarter. • million Q1 06 Q1 05 % Change Revenues 684.7 662.8 3.3%- Basic Monthly Rentals 169.3 167.3 1.2%- Fixed to fixed calls 137.0 139.1 -1.5%- Fixed to mobile calls 79.8 77.1 3.5%- International 42.5 55.0 -22.7%- Other 256.1 224.3 14.2%Operating Income 48.9 20.6 137.4%Operating income before depreciation andamortization 183.6 157.0 16.9%Operating income before depreciation andamortization as % of Operating revenues 26.8% 23.7% 3.1ppDepreciation & Amortization 134.7 136.4 -1.2% In the first quarter of 2006, total fixed-line revenues increased by 3.3% to •684.7 million. Revenues in the first quarter include €25.9 million in sales oftelecommunications equipment related to the implementation of an e-governmentproject commissioned by the Greek State, offset for the same amount under costof telecommunications equipment. Excluding this item, first quarter operatingrevenues were roughly unchanged from the comparable 2005 level. This stabilityreflects higher revenues from monthly rentals, fixed-to-mobile calls and ADSL,nearly offsetting the drop in international telephony. Revenues from basicmonthly rental rose by 1.2% in the quarter and should continue to rise followinga further tariff increase in April 2006. As of the end of March 2006, there was a total of over 4.8 million PSTN lines inservice, down by approximately 2.6% from the prior year level. ISDN lines (64K)rose by approximately 84,000 units to a total of nearly 1.4 million. OTE continued to actively promote and adapt attractive pricing packages, adoptedby a growing number of customers and contributing to the relative stability ofits market share. OTE also benefited from a return to more balanced win-backpolicies approved by the Regulator. The severe drop in revenues frominternational traffic reflects conditions in the market as a whole, as a growingshare of international calls is captured by VoIP and discount prepaid cards. At the end of March 2006, OTE had over 213,000 ADSL customers, with the totalmarket amounting to approximately 220,000 customers. This compares to 154,000and 161,000 respectively, at the end of December 2005. Installed capacity isgrowing at a rapid pace in order to enable OTE to meet continuing strong marketdemand for broadband services. Total operating expenses, amounted to €635.8 million, down 1% from the firstquarter 2005 level. Excluding the cost of telecommunications equipment relatedto the e-government project, total operating expenses dropped by nearly 5%.However, this drop is largely due to the absence of Voluntary Retirement costsin the quarter. Payroll and employee benefits declined by only 1.1% to • 215.2million, as implementation of the latest stage of the company's VoluntaryRetirement Plan, which lead to the departure of 5,500 employees by October ofthis year, did not begin in earnest until after the close of the quarter. Other operating expenses declined by over 7% in the quarter, largely driven by afurther drop in provision for doubtful accounts and good control over all nonrevenue-related costs. Sharper declines in other operating expenses are expectedto be achieved as the pace of implementation of the Voluntary Retirement Planaccelerates. Operating Income before depreciation and amortization as a percentage ofoperating revenues rose by 3.1 points to 26.8% compared to the first quarter of2005. Excluding revenues and costs related to the e-government project in thefirst quarter of 2006 and Voluntary Retirement costs in the first quarter of2005, Operating Income before depreciation and amortization as a percentage ofoperating revenues was virtually unchanged in the quarter. An analysis of the OTE Fixed-line Other Operating Expenses follows: • million Q1 06 Q1 05 % ChangeRepairs, maintenance, Cost of materials 17.6 19.7 -10.7%Provision for doubtful accounts 15.7 20.0 -21.5%Advertising 7.8 9.1 -14.3%Taxes other than income taxes 2.7 2.0 35.0%Other 70.3 72.1 -2.5%-Third party fees 26.2 29.4 -10.9%-Travel costs 1.3 1.3 --Audiotex 2.5 5.1 -51.0%-Other 40.3 36.3 11.0% TOTAL 114.1 122.9 -7.2% 2. Cosmote SUMMARY CONSOLIDATED RESULTS FOR THE FIRST QUARTER OF 2006 IN ACCORDANCE WITH IFRS (UNAUDITED)• million Cosmote Greece AMC GloBul CosmoFon Cosmote Consolidated Romania Q1-06 Q1-05 % Change Revenues 375.6 34.4 73.9 10.8 6.1 496.4 380.3 30.5% Operatingincomebeforedepreciationand 154.4 20.2 27.5 1.4 (12.3) 190.9 166.3 14.8%amortization Operatingincomebeforedepreciationandamortizationas % ofOperating 41.1% 58.9% 37.2% 12.8% N/A 38.5% 43.7%revenues Cosmote's revenue growth was driven by strong performance in all markets.International operations accounted for over 25% of revenues, a percentage whichis expected to continue increasing. In Greece, Cosmote revenues rose by 7.4%, boosted by strong growth intelecommunications revenues from higher usage and strong subscriber take up,continuing the trend of prior quarters. Cosmote pursued its successful promotionof bundled packages during the quarter, resulting in a 27.4% increase in monthlyfees on an annual basis. Blended AMOU continued to rise, to 140 minutes in thequarter, mainly driven by post-paid voice usage, and blended ARPU increased by1.4% to • 29. Cosmote had 4.8 million customers at the end of March 2006, anincrease of over 12% compared to March 2005, and retained its leadership of theGreek mobile market with a market share of approximately 37.3%.In Albania, AMC revenues rose by 7.6%, due to a sharp increase in subscriberfigures. AMC held a market share of approximately 51% at the end of 2006 andretained its high profitability level in a maturing market. In Bulgaria, Globul revenues were up 37% in the quarter, due to a significantincrease in the number of customers. Despite heightened competition followingthe entry of a third operator in the market, Globul continued to benefit fromits strong position and product quality leadership. Profitability continued togrow, with Operating income before depreciation and amortization up over 61%. In FYROM, CosmoFon pursued its rapid growth, with revenues up nearly 45%, andcontinued to increase its profitability, as Operating income before depreciationand amortization margin reached 12.8%. Finally, the relaunch of Cosmote Romania is proceeding according to plans, withthe total number of customers exceeding 275,000 at the end of March 2006, anincrease of nearly 227,000 in the quarter. Cosmote Romania is leveraging themarket's appetite for simple, customer-friendly mobile services with a flattariff policy, low monthly and airtime charges, and attractive promotions.Cosmote consolidated Operating income before depreciation and amortizationincreased by 14.8% from the first quarter of 2005 with all operations showingpositive growth, despite the consolidation of Cosmote Romania. The drop inOperating income before depreciation and amortization as % of Operating revenuesis mainly due to the consolidation of new growth assets at an early developmentphase.As a result of the growth of international assets, Operating income beforedepreciation and amortization of these operations accounted for approximately 19% of Group Operating income before depreciation and amortization as for thequarter, despite Cosmote Romania's negative Operating income before depreciationand amortization.Additional details are available in Cosmote's first quarter 2006 press releaseissued on May 23. 3. RomTelecom OTE, through its wholly owned subsidiary OTE International Investments Ltd,holds a 54.01% interest in RomTelecom S.A., the incumbent telecommunicationsoperator in Romania. RomTelecom's key financial figures are stated below: ROMTELECOM HIGHLIGHTS FIRST QUARTER ENDED MARCH 31, 2006 AND 2005 IN ACCORDANCE WITH IFRS • million Q1 06 Q1 05 % Change Revenues 222.8 228.2 -2.4%Operating Income before Depreciation &amortization 95.0 71.1 33.6%Operating Income before Depreciation &Amortization as % of Operating Revenues 42.6% 31.2% 11.4 ppOperating Income / (Loss) 26.4 (9.5) N/AIncrease/(Decrease) in Gross PP&E 27.7 16.3 69.9% Fixed Telephony, Lines 3,835,647 4,279,038 -10.4% Mar 31,06 Mar31,05Cash and cash equivalents 192.4 157.5 22.2%Short-term borrowings 0.0 0.0 -Long-term debt (126.1) (148.4) -15.0%Net Cash Position 66.3 9.1 +628.6% In the first quarter of 2006, RomTelecom's revenues were €222.8 million, down2.4% from the the same period last year. The decrease is attributable to thereduction in the number of subscriber lines, as well as lower wholesale andpayphones revenues. Revenues from monthly rental fees increased by 10%, following the tariffrebalancing that took place in February 2005. Data revenues grew significantlyduring the quarter of 2006, in line with the company's objective of growing itsmarket share in data services. Wholesale revenues decreased by 6.6% in the first quarter of 2006 as compared tothe same period of 2005, as a result of lower tariffs for incoming internationaltraffic, which were not offset by a 32% increase in total wholesale traffic.Retail traffic decreased during the quarter, in comparison to the first quarterof 2005, due to mobile substitution and higher competition from fixed-linealternative carriers. Operating income before depreciation and amortization as a percentage ofrevenues for the first quarter of 2006 improved significantly compared to thefirst quarter of 2005, due to a 19% decrease in operating expenses beforedepreciation and amortization. Personnel expenses decreased by 43%, as a resultof reduced redundancy payments for voluntary retirement, together with a 5%reduction in wages and salaries. Interconnection expenses rose by 8% due toincreased wholesale traffic. The company's marketing efforts, aimed at promotingits corporate image, and support newly launched products, contributed to a 8%increase in services expenses in the first quarter of 2006. During the quarter RomTelecom made a €18.8 million net profit, for a profitmargin of 8.4%, compared to 5.7% in the same period of 2005. At March 2006headcount stood at 13,093, the same level as in the end of 2005. The implementation of all key projects and initiatives scheduled for 2006 byRomTelecom is proceeding according to plan. The deployment of a new financiale-business system in all regional organizations and the Corporate Center wascompleted in March 2006, the modernization of the Access Network in all citiesand selective rural areas (ADSL and broadband services capabilities) iscontinuing, a new Human Resources and Payroll platform is expected to be fullydeployed by the end of June 2006. New product offerings, targeting businesscustomers, as well as loyalty schemes, addressing residential customers, arebeing launched. 4. OTEnet OTEnet, the Internet and IP services subsidiary of OTE, offers Internet access,IP telecom solutions, IT application development and hosting services usingInternet technologies. Revenues in the first quarter of 2006 were • 25.5 million, up 25.0% compared tothe first quarter of 2005, mainly as a result of the rapid growth in the numberof broadband subscribers, which more than doubled during the year. Operatingincome before depreciation and amortization was • 2.9 million, down 6.5%compared to the first quarter of 2005, reflecting a sharp increase in sales andmarketing aimed at promoting broadband penetration. As of March 31, 2006, OTEnet had over 437,400 active residential customers usingretail product and services and over 15,100 business customers, representingsignificant increases compared to the same period last year. 5. Other International Investments Armentel ArmenTel's Revenues for the first quarter of 2006 amounted to • 32.2 millioncompared to • 23.0 million in the first quarter of 2005. This 40.0% increase ismainly attributable to the 50.9 % increase in the number of mobile subscribers,which reached 328,678 at the end of the quarter. Operating income beforedepreciation and amortization reached • 19.6 million, or 60.9 % of operatingrevenues. Net income reached • 7.1 million. 6. Events of the quarter OTE ANNOUNCES HIGHLIGHTS OF THREE-YEAR BUSINESS PLAN On February 27, 2006, OTE presented highlights of its three-year Business Plan.The Plan focuses on returning the Group's fixed-line operations to healthyfinancial performance through initiatives aimed at containing revenue erosion,boosting customer loyalty and retention, and accelerating cost-cutting actions.While revenues of the Greek fixed-line activities are expected to decline byabout 1.5% to 2.5% per year over the plan period, payroll and benefits shoulddrop by about 7% to 8% per year, and total operating expenses by about 5% to 7%per year over the plan period. As a result, Greek fixed-line Operating Incomebefore Depreciation and Amortization margin (under IFRS) should improve from themid-twenties levels (excluding VRP costs) in 2005, to the mid-thirties levels in2008. OTE's Business Plan also confirmed the outlook of Cosmote and RomTelecom, itstwo leading business units, and announced the development of initiatives aimedat strengthening Group values across its organization. OTE ANNOUNCES THAT IT WILL NOT DISTRIBUTE A 2005 DIVIDEND On March 9, 2006, OTE announced that, pursuant to Greek Company Law, it will notdistribute any dividend for the year 2005. 7. Subsequent Events OTE EXAMINES OPTIONS FOR THE DISPOSAL OF ARMENTEL On April 3, 2006, OTE announced that after consultation with the Government ofArmenia, it has initiated the process of examining options for the disposal ofits 90% stake in ArmenTel, the incumbent operator in Armenia. OTE ANNOUNCES NEW TARIFF RATES FOR HIGH-SPEED LEASED LINES On April 5, 2006, OTE announced new reduced tariffs for high-speed leased linesfor alternative (ISP and fixed-line) carriers and the launch of a wholesalediscount package branded: 'High Speed Pack'. The target is to significantlyreduce the cost of high-speed data transfer, thus contributing to thedevelopment of broadband in Greece. OTE INCREASES ITS PARTICIPATION IN COSMOTE'S CAPITAL TO 67% In April 2006, OTE purchased in the open market 9.5 million shares of itssubsidiary Cosmote SA, increasing its interest from 64.1% to 67.0%. OTE now ownsa total of 223,572,294 shares out of 333,688,110 outstanding Cosmote shares. COSMOTE ANNOUNCES INTENTION TO ACQUIRE GERMANOS SA On May 9, 2006, OTE's mobile telephone subsidiary, Cosmote, announced that it has reached an agreement regarding the purchase of a 42% interest in GermanosS.A., subject to regulatory approval. Cosmote intends to launch a public tenderoffer for the remaining shares of Germanos S.A. Germanos is one of the most successful telecommunications retailers in Greeceand Southeast Europe. Its acquisition will enable Cosmote to substantiallyincrease its retail presence in Greece, Bulgaria, Romania and FYROM. 8. Outlook OTE reiterates its 2006 full-year guidance issued on February 27, 2006 with thepress release discussing the Group's 2005 full-year results. For 2006, OTE expects a slight decline in operating revenues in its Greekfixed-line activities, while operating profitability should improve quarterafter quarter mainly due to the progressive implementation of its earlyretirement program. At Cosmote, revenues should increase significantly,reflecting the growth of international operations, while Operating Income beforeDepreciation and Amortization margin will be held back by high development costsin fast-growing activities and the cost of relaunching Cosmote Romania. Finally,assuming no adverse regulatory decisions, RomTelecom should post a furtherimprovement in Operating Income before Depreciation and Amortization margin onroughly stable revenues, reflecting competition in the Romanian market andcontinuing control over the company's cost base. About OTEOTE Group is Greece's leading telecommunications organization and one of thepre-eminent players in Southeastern Europe, providing top-quality products andservices to its customers. Apart from serving as a full service telecommunications group in the Greektelecoms market, OTE Group has also expanded during the last decade itsgeographical footprint throughout South East Europe, acquiring stakes in theincumbent telecommunications companies of Romania, Serbia and Armenia, andestablishing mobile operations in Albania, Bulgaria, the Former YugoslavRepublic of Macedonia and most recently in Romania. At present, companies inwhich OTE Group has an equity interest employ over 35,000 people in sevencountries, and our portfolio of solutions ranges from fixed and mobile telephonyto Internet applications, satellite, maritime communications and consultancyservices. Listed on the Athens Stock Exchange, the company trades under the ticker HTO aswell as on the New York Stock Exchange under the ticker OTE. In the U.S., OTE'sAmerican Depository Receipts (ADR's) represents 1/2 ordinary share. Additional Information is also available on http://www.ote.gr. Contacts: OTE: Dimitris Tzelepis - Head of Investor Relations, OTE Group Tel: +30 210 611 1574 E-mail: [email protected] Daria Kozanoglou - IR Communications Officer, Tel: +30 210 611 1121 E-mail: [email protected] Christina Hadjigeorgiou-Financial Analyst, Tel: +30 210 611 1428 E-mail: [email protected] Marilee Diamanti-Investor Relations Coordinator, Tel: +30 210 611 5070 E-mail: [email protected] Forward-looking statementAny statements contained in this document that are not historical facts areforward-looking statements as defined in the U.S. Private Securities LitigationReform Act of 1995. All forward-looking statements are subject to various risksand uncertainties that could cause actual results to differ materially fromexpectations. The factors that could affect the Company's future financialresults are discussed more fully in the Company's filings with the U.S.Securities and Exchange Commission (the "SEC"), including the Company's AnnualReport on Form 20-F for 2004 filed with the SEC on June 30, 2005. OTE assumes noobligation to update information in this release. NOTES • In line with SEC recommendations on the use of non-GAAP financial measures, OTE has decided to replace the caption "EBITDA" used in prior filings by "Operating income before depreciation and amortization". This item is the sum of "Operating income" and "Depreciation and amortization". Similarly, the previously used "EBITDA margin" caption is henceforth replaced by "Operating income before depreciation and amortization as a percentage (%) of Operating Revenues". Exhibits to follow: I. Condensed Consolidated Balance Sheets as of March 31, 2006 and December 31, 2005 (Under IFRS) II. Condensed Consolidated Income Statements for the three months ended March 31, 2006 and 2005 (Under IFRS) III. Analysis of Group Other Operating Expenses for the three months ended March 31, 2006 and 2005 (Under IFRS) IV. Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2006 and 2005 (Under IFRS) V. Group Revenues for the three months ended March 31, 2006 and 2005 (Under IFRS) VI. Segment Reporting based on the Company's legal structure VII. International Assets VIII. OTEnet IX. Operational Highlights EXHIBIT I - BALANCE SHEET HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2006 AND DECEMBER 31, 2005 (Amounts in millions of Euro) Mar 2006 Dec 2005 --------- ---------ASSETS Non - current assets:Telecommunication property, plant andequipment 6,687.2 6,739.6Goodwill 72.4 72.4Telecommunication licenses 388.1 393.0Investments 158.9 159.3Advances to pension funds 171.8 180.7Deferred taxes 267.4 257.7Other non-current assets 139.3 126.6 ------- -------Total non - current assets 7,885.1 7,929.3 ------- ------- Current assets:Materials and supplies 137.0 130.3Accounts receivable 1,077.2 1,066.7Other current assets 421.9 411.1Cash and cash equivalents 1,710.6 1,512.2 ------- -------Total current assets 3,346.7 3,120.3 ------- ------- TOTAL ASSETS 11,231.8 11,049.6 ======= ======= EQUITY AND LIABILITIES Equity attributable to equity holders ofthe parent:Share capital 1,172.5 1,172.5Paid-in surplus 486.6 486.6Treasury stock (5.9) (5.9)Legal reserve 256.7 256.7Retained earnings 1,567.0 1,401.6 -------- -------- 3,476.9 3,311.5Minority interest 1,284.1 1,201.9 -------- -------- Total equity 4,761.0 4,513.4 -------- -------- Non - current liabilities:Long-term debt 2,605.3 3,104.3Reserve for staff retirement indemnities 173.8 172.7Reserve for voluntary retirement program 607.4 603.8Reserve for Youth Account 284.1 284.0Other non - current liabilities 146.6 139.9 -------- --------Total non - current liabilities 3,817.2 4,304.7 -------- -------- Current liabilities:Accounts payable 668.6 720.6Short-term borrowings 13.1 14.3Current maturities of long-term debt 794.6 321.3Income taxes payable 138.2 81.9Deferred revenue 141.9 179.1Reserve for voluntary retirement program 408.0 434.9Dividends payable 5.2 5.2Other current liabilities 484.0 474.2 -------- --------Total current liabilities 2,653.6 2,231.5 -------- -------- TOTAL EQUITY AND LIABILITIES 11,231.8 11,049.6 ======== ======== Movement in Shareholders' equity -------------------------------- 2006 ---------- Unaudited Shareholders' equity, January 1 4,513.4 ----------Profit for the period 141.9Net income recognized directly in equity 105.7 ---------- 247.6 ---------- ==========Shareholders' equity, March 31 4,761.0 ========== EXHIBIT II - STATEMENTS OF OPERATIONS HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Condensed Consolidated Income Statement Prepared under IFRS for the three months ended March 31, 2006 and 2005 (• million) Q1 06 Q1 05 % Unaudited Unaudited ChangeRevenues:Domestic Telephony 572.6 569.7 0.5%International Telephony 83.4 96.8 -13.8%Mobile Telephony 449.3 389.1 15.5%Other 281.4 245.9 14.4%Total Revenues 1,386.7 1,301.5 6.5% ======== ======== Operating Expenses:Payroll and employee benefits (318.6) (347.7) -8.4%Voluntary retirement costs 0.0 (27.0) N/ACharges from international operators (47.2) (41.5) 13.7%Charges from domestic telephony operators (174.9) (145.6) 20.1%Depreciation and amortization (284.3) (289.5) -1.8%Cost of telecommunications equipment (65.1) (37.9) 71.8%Other operating expenses (268.4) (257.6) 4.2%Total Operating Expenses (1,158.5) (1,146.8) 1.0% ======== ======== Operating Income 228.2 154.7 47.5%Other income / (expense):Interest income 10.3 11.8 -12.7%Interest expense (42.3) (39.3) 7.6%FX gain/(loss), net 1.4 25.5 -94.5%Financial net (30.6) (2.0) 1430.0%Investment income/(loss)/Gain on sale ofinvestment 5.8 19.2 -69.8%Dividends 0.0 5.0 -100.0% --------- ---------Total Other income / (expense) (24.8) 22.2 -211.7% ========= ========= Profit before income taxes 203.4 176.9 15.0% ========== ========== Income taxes (61.5) (60.5) 1.7% ---------- ---------- Profit for the period 141.9 116.4 21.9% Attributable to:Equity holders of the parent 109.7 79.3 38.3%Minority interest 32.2 37.1 -13.2% ---------- ---------- 141.9 116.4 21.9% EXHIBIT III - GROUP OTHER OPERATING EXPENSE ANALYSIS An analysis of Group Other Operating expenses follows: • million Q1 06 Q1 05 % ChangeCommission to dealers 43.7 35.9 21.7%Repairs, maintenance, cost of materials 51.3 44.5 15.3%Provision for doubtful accounts 21.2 25.9 -18.1%Advertising 31.0 22.8 36.0%Taxes other than income taxes 11.5 10.1 13.9%Other 109.7 118.4 -7.3% TOTAL 268.4 257.6 4.2% EXHIBIT IV - STATEMENT OF CASH FLOWS HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Condensed Consolidated Statement of Cash Flows Prepared under IFRS for the three months ended March 31, 2006 and 2005 (• million) Q1 06 Q1 05Cash Flows from Operating Activities: Profit before taxes 203.4 176.9Adjustments to reconcile to net cash provided by operatingactivities: Depreciation and amortization 284.3 289.5 Provisions 51.7 49.0 Investments and financial income/loss (17.6) (36.0) Amortization of advances to pension funds 8.8 8.8 Interest expense 42.3 39.3 Adjustments for working capital movements related tooperating activities Decrease (increase) in materials and supplies (6.7) 1.6 Decrease/(increase) in accounts receivable (13.4) (48.4) Decrease in liabilities (123.0) (86.5) Minus: Interest paid (42.1) (74.3) Income taxes paid (14.9) (11.6) ======= ======Net Cashprovided byOperatingActivities 372.8 308.3 -------- ------- Cash Flows from Investing Activities: Acquisition of subsidiary or associate, net of cash - (56.3) acquired Loans granted - 9.7 Purchase of property, plant and equipment or intangible (168.5) (124.0) assets Proceeds from sale of investment - 26.7 Interest received 9.0 9.3 Dividends received - 5.0 ======== =======Net Cash usedin InvestingActivities (159.5) (129.6) --------- -------- Cash Flows from Financing Activities: Proceeds from minority shareholders for issuance of 12.0 12.8 subsidiary's share capital Proceeds from long-term debt and short-term borrowings - 21.6 Repayment of long-term debt and short-term borrowings (26.9) - Dividends paid - (123.9) ========= ========Net Cashprovided byFinancingActivities (14.9) (89.5) ---------- --------- NetIncrease/(Decrease) in Cashand CashEquivalents 198.4 89.2Cash and Cashequivalents atbeginning ofperiod 1,512.2 870.3 ---------- ---------Cash and CashEquivalents atend of period 1,710.6 959.5 ========== ========= EXHIBIT V - GROUP REVENUES HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Consolidated Revenues prepared under IFRS for the three months ended March 31, 2006 and 2005 (• million) Q1 06 Q1 05 ChangeDomestic Telephony:Basic monthly rentals 241.0 232.3 3.7%Local and long distance calls-Fixed to fixed 193.8 202.4 -4.2%-Fixed to mobile 116.0 114.8 1.0% ------- ------- 309.8 317.2 -2.3% ======= =======Other 21.8 20.2 7.9% ------- -------Total Domestic Telephony 572.6 569.7 0.5% ======= ======= International Telephony:International traffic 32.0 38.2 -16.2%Payments from International mobile operators 7.8 9.7 -19.6% ------- ------- 39.8 47.9 -16.9% ======= =======Payments from International operators 43.6 48.9 -10.8% ------- -------Total International Telephony 83.4 96.8 -13.8% ======= ======= Mobile Telephony: 449.3 389.1 15.5% ======= ======= Other Revenues:Prepaid cards 20.6 30.5 -32.5%Directories 14.6 13.8 5.8%Leased lines and data communications 54.8 54.2 1.1%ISDN, connection & monthly charges 39.4 33.3 18.3%Sales of telecommunication equipment 54.3 24.8 119.0%Internet services-ADSL 25.0 18.3 36.6%ATM 7.9 6.8 16.2%Services rendered 14.4 12.1 19.0%Interconnection charges 31.3 26.7 17.2%Miscellaneous 19.1 25.4 -24.8%Total Other Revenues 281.4 245.9 14.4% ======= ======= ======= =======Total Revenues 1,386.7 1,301.5 6.5% ======= ======= EXHIBIT VI - SEGMENT REPORTING (Q1 2006) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Segment Reporting Prepared under IFRS, for the three months ended March 31, 2006 (In millions of Euro) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 403.8 152.6 16.5 572.9InternationalTelephony 42.5 32.2 10.1 84.8Mobiletelephony 479.5 10.7 490.2Other 238.4 16.9 38.0 80.0 373.3Total Revenues 684.7 496.4 222.8 117.3 1,521.2 (134.5) 1,386.7 ------- -------- --------- ------- -------- --------- ---------- IntersegmentRevenues (51.1) (39.5) (4.0) (39.9) (134.5) Revenue fromExternalCustomers 633.6 456.9 218.8 77.4 1,386.7 1,386.7 ------- -------- --------- ------- -------- --------- ---------- OperatingExpenses:Payroll andemployeebenefits (215.2) (31.4) (50.1) (21.5) (318.2) -0.4 (318.6)Charges frominternationaloperators (30.0) (7.6) (6.6) (3.6) (47.8) 0.6 (47.2)Charges fromdomestictelephonyoperators (93.1) (92.7) (24.4) (1.9) (212.1) 37.2 (174.9)Depreciationandamortization (134.7) (73.7) (59.5) (17.2) (285.1) 0.8 (284.3)Cost oftelecommunications equipment (48.7) (16.6) (2.8) (0.8) (68.9) 3.8 (65.1)Otheroperatingexpenses (114.1) (157.1) (43.9) (47.0) (362.1) 93.7 (268.4)TotalOperatingExpenses (635.8) (379.1) (187.3) (92.0) (1,294.2) 135.7 (1,158.5) ------- -------- --------- ------- -------- --------- ---------- ------- -------- --------- ------- -------- --------- ----------OperatingIncome 48.9 117.3 35.5 25.3 227.0 1.2 228.2 ------- -------- --------- ------- -------- --------- ---------- Operatingincome beforedepreciationandamortization 183.6 191.0 95.0 42.5 512.1 0.4 512.5------------- ------- -------- --------- ------- -------- --------- ----------Operatingincome beforedepreciationandamortizationas % ofOperatingrevenues 26.8% 38.5% 42.6% 36.2% 33.7% -0.3% 37.0% EXHIBIT VI - SEGMENT REPORTING (Q1 2005) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Segment Reporting Prepared under IFRS, for the three months ended March 31, 2005 (In millions of Euro) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 401.0 157.4 11.6 570.0InternationalTelephony 55.0 35.0 7.6 97.6MobileTelephony 368.4 3.0 61.4 432.8Other 206.8 11.9 32.9 80.2 331.8Total Revenues 662.8 380.3 228.3 160.8 1,432.2 (130.7) 1,301.5 ------- -------- --------- ------- -------- --------- ---------- IntersegmentRevenues (46.1) (43.9) (0.7) (40.0) (130.7) Revenue fromExternalCustomers 616.7 336.4 227.6 120.8 1,301.5 1,301.5 ------- -------- --------- ------- -------- --------- ---------- OperatingExpenses:Payroll andemployeebenefits (217.6) (21.7) (88.0) (20.6) (347.9) 0.2 (347.7)Voluntaryretirementcost (27.0) (27.0) (27.0)Charges frominternationaloperators (33.0) (6.0) (7.8) (3.2) (50.0) 8.5 (41.5)Charges fromdomestictelephonyoperators (82.3) (68.4) (20.8) (12.7) (184.2) 38.6 (145.6)Depreciationandamortization (136.4) (50.8) (71.5) (34.7) (293.4) 3.9 (289.5)Cost oftelecommunications equipment (23.0) (10.8) (2.7) (1.4) (37.9) (37.9)Otheroperatingexpenses (122.9) (107.2) (37.9) (71.5) (339.5) 81.9 (257.6)TotalOperatingExpenses (642.2) (264.9) (228.7) (144.1) (1,279.9) 133.1 (1,146.8) ------- -------- --------- ------- -------- --------- ---------- ------- -------- --------- ------- -------- --------- ----------OperatingIncome 20.6 115.4 (0.4) 16.7 152.3 2.4 154.7 ------- -------- --------- ------- -------- --------- ---------- Operatingincome beforedepreciationandamortization 157.0 166.2 71.1 51.4 445.7 (1.5) 444.2------------- ------- -------- --------- ------- -------- --------- ----------Operatingincome beforedepreciationandamortizationas % ofOperatingrevenues 23.7% 43.7% 31.1% 32.0% 31.1% 1.1% 34.1% EXHIBIT VII - INTERNATIONAL ASSETS RomTelecom OTE has a 54.01% stake in RomTelecom, which is fully consolidated. ROMTELECOM INCOME STATEMENT For the three months ended March 31 2005, and 2006, in accordance with IFRS (• thousand) Q1 2006 Q1 2005 % (Unaudited) (Unaudited) ChangeBasic monthly rentals 68,380 62,635 9.2%Domestic Telephony calls 84,204 94,768 -11.1% --------- ---------Domestic Telephony 152,584 157,403 -3.1%International Telephony 32,224 34,962 -7.8%Mobile Telephony - 3,022 N/AOther Revenues 38,042 32,813 15.9% --------- ---------Total Operating Revenues 222,850 228,200 -2.3% Personnel (inc Voluntary Redundancy) (50,094) (87,971) -43.1%Other operating expenses (77,755) (69,056) 12.6%Depreciation and Amortization (68,605) (80,653) -14.9% --------- ---------Total Operating expenses (196,454) (237,680) -17.3% Operating income 26,396 (9,480) -378.4% Financial, net (1,989) 25,437 -107.8% Income before provision for income taxes 24,407 15,957 53.0% Provision for Income taxes (5,632) (2,876) 95.8% --------- ---------Net income 18,775 13,081 43.5% ========= ========= Armentel OTE has a 90% stake in ArmenTel, which is fully consolidated. ArmenTel's keyfinancial figures are stated below:ARMENTELHighlights prepared under IFRS for the three months ended March 31, 2006 and 2005(Unaudited) • Millions Q1 06 Q1 05 % ChangeRevenues 32.2 23.0 40.0%Operating Income before Depreciation &amortization 19.6 13.2 48.5%Operating Income before Depreciation &Amortization as % of Operating Revenues 60.9% 57.4% 3.5 ppOperating Income 12.2 6.3 93.7%Net Income/(Loss) 7.1 5.2 36.5%Net Income/(Loss) Margin 22.0% 22.6% -0.6 ppIncrease/(Decrease) in Gross PP&E 1.4 5.5 -74.5% Fixed Telephony, Lines 593,954 585,368 1.5%Mobile Telephony, Total customers 328,678 217,817 50.9% EXHIBIT VIII - OTEnet OTE has a 94.6% stake in OTEnet, which is fully consolidated. OTEnet's keyfinancial figures are stated below: OTEnetHighlights prepared under IFRS for the three months ended March 31, 2006 and 2005(Unaudited) • Millions Q1 06 Q1 05 % ChangeRevenues 25.5 20.4 25.0%Operating Profit 1.3 1.5 -13.3%Operating Income before Depreciation & amortization 2.9 3.1 -6.5%Operating Income before Depreciation & Amortizationas % of Operating Revenues 11.4% 15.2% -3.8 ppDepreciation & Amortization 1.6 1.6 0.0% EXHIBIT IX -OPERATIONAL HIGHLIGHTS ----------------------------- Operational Highlights for the quarters ended March 31, 2006 and 2005 -----------------------------OTE Q1 06 Q1 05 % ChangePSTN lines 4,849,542 4,978,186 -2.6%ISDN, 64kb equiv. lines 1,359,016 1,274,818 6.6%Total lines 6,208,558 6,253,004 -0.7% ADSL subscribers 227,214 67,328 237.5% COSMOTE (Greece)Pre-paid sub. 3,004,168 2,570,073 16.9%Contract sub. 1,746,102 1,660,875 5.1%Total subscribers 4,750,270 4,230,948 12.3% AMCTotal subscribers 827,524 700,047 18.2% GLOBULTotal subscribers 2,561,210 1,775,337 44.3% COSMOFONTotal subscribers 413,962 282,117 46.7% OTE netDial up clients 437,400 339,050 29.0%Business customers 15,100 11,300 33.6% Employees:-OTE 14,694 16,215 -9.4%-COSMOTE 2,130 2,051 3.9%-RomTelecom 13,093 15,447 -15.2%----------- -------- -------- -------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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