1st Jun 2007 08:55
Hellenic Telecomms Organization S A01 June 2007 OTE GROUP REPORTS 2007 FIRST QUARTER RESULTS UNDER IFRS • Comparable Group revenues up 3.7% on stable fixed-line in Greece and Romania, solid international mobile performance; reported revenues up 8.8% reflecting consolidation of Germanos, disposal of ArmenTel • Greek fixed-line staff cost containment effort continues: payroll down 17%; new €22mn provision for employee departure in Q1 • Stable pro forma OIBDA margin above 37% despite ArmenTel disposal and Germanos acquisition • Group Net Income up 28% to €141mn, due to improved operational performance, lower tax rates ATHENS, Greece - May 30, 2007 - Hellenic Telecommunications Organization SA(ASE: HTO, NYSE: OTE), the Greek full-service telecommunications provider, todayannounced unaudited consolidated results (prepared under IFRS) for the quarterended March 31, 2007. CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006, IN ACCORDANCE WITH IFRS (• mn except Q1'07 Q1'06 % Changeper share data) Revenues 1,508.6 1,386.7 8.8%Operating Income 260.3 228.2 14.1%Pre-tax Income 241.2 203.4 18.6%Net Income 140.9 109.7 28.4%Basic EPS (•) 0.2875 0.2238 28.4%Operating Income before Depreciation & 539.6 512.5 5.3%AmortizationPro Forma* Operating Income before Depreciationand 561.7 512.5 9.6%Amortizationas % of Operating revenues 37.2% 37.0% 0.2ppCashflow from Operations 320.6 372.8 -14.0%CAPEX as % of Revenues 14.8% 12.2% 2.6pp * Excluding impact of OTE S.A. employee exit program (€22.1mn charge in Q1'07) Commenting on the quarter, Panagis Vourloumis, Chairman and CEO, noted:"Group EPS was up over 28% in the first quarter of the year. In Greek fixedline, the cost-cutting of the past two years is yielding results and broadbandtake-up remains strong, but our efforts are partly offset by asharper-than-expected acceleration in unbundling. Profitability from mobiletelephony is unchanged in Greece, but up in Bulgaria and Albania. With the helpof the Germanos retail chain, Cosmote Romania is gaining market share quickerthan expected, while RomTelecom's churn remains high. All considered, OTE Grouphas started the year on a positive note, but it is still too early to call thisa trend." Financial Highlights RevenuesOTE Group Revenues for the three months ended March 31, 2007 increased by 8.8%,compared to the respective period of 2006. In addition to solid organic growth,primarily generated by monthly rentals, ADSL and international mobile telephony,the increase in revenues reflects the consolidation of Germanos, acquired byCosmote in October 2006, as well as the de-consolidation of ArmenTel in November2006. Excluding the impact of Germanos and ArmenTel, as well as €25.9mn one-offrevenues from an e-government project in Q1'06, comparable Group revenues roseby 3.7% in Q1'07. Total Operating ExpensesTotal Operating Expenses excluding depreciation and amortization and VRP-relatedcosts increased by 8.3% in Q1'07 to €946.9mn, as lower payroll and employeebenefits were more than offset in the quarter by higher cost oftelecommunications equipment, largely reflecting sales of handsets andaccessories through the Germanos network. Payroll and Employee BenefitsPayroll and Employee Benefits decreased by 5.3% to €301.7mn in Q1'07, primarilyreflecting the benefits of the OTE fixed-line Voluntary Retirement Plan. Other Operating Expenses Other Operating Expenses were up by 8.4% to €291mn, mainly reflecting higherexpenses in the Group's rapidly growing activities and newly consolidatedoperations. Operating Income before Depreciation and Amortization Excluding €22.1mn in provisions related to a new employee exit program,Operating Income before Depreciation and Amortization (OIBDA) totaled €561.7mnin Q1'07, as compared to €512.5mn in Q1'06. On that basis, the Group posted apro forma OIBDA margin of 37.2% in the quarter, up from 37.0% in Q1'06. TheGroup therefore achieved a slight increase in OIBDA margin compared to the sameperiod last year, notwithstanding the negative impact of the acquisition of thelow-margin Germanos business and of the disposal of the high-margin ArmenTeloperations. Net income In the quarter, OTE Group posted Net Income of €140.9mn, up 28.4% from €109.7mnin Q1'06, reflecting its solid operating performance, as well as the positiveimpact from lower statutory tax rates in Greece and Bulgaria. Cash flow Cash provided by operating activities stood at €320.6mn for the three monthsended March 31, 2007. The 14.0% drop in cash flow from operations partlyreflects Greek fixed-line redundancy payments of €60.2mn in the quarter. Inaddition, OTE incurred an outflow of €53.6 million, under Cash Flows fromInvesting Activities, related to the loan granted to the auxiliary pension fund. Capital Expenditure Capital expenditure in Q1'07 totaled €223.2mn, up 32.5% from Q1'06, mainlyreflecting higher investments at RomTelecom and in international mobiletelephony. Debt As of March 31, 2007, total OTE Group gross debt amounted to €4,070.6mn, adecrease of 11.3% compared to 2006 year end. Net debt totaled €2,346.5mn, down7.9% from 2006 year end. In the quarter, OTE carried out significant bondredemptions post the borrowing peak due to the Germanos acquisition. OTE debtoutstanding breaks down as follows: (• mn) Mar 31, 2007 Dec 31, 2006 % Change Short-Term:-Bank loans 7.7 25.2 -69.4%Medium & Long-term:-Bonds 3,355.1 3,844.3 -12.7%-Bank loans 707.8 721.0 -1.8%Total Indebtedness 4,070.6 4,590.5 -11.3%Cash and Cash equivalents 1,724.1 2,042.5 -15.6%Net Debt 2,346.5 2,548.0 -7.9% 1. OTE Fixed-Line TRAFFIC STATISTICS (Minutes, millions) Q1'07 Q1'06 % ChangeLocal 2,976.8 3,109.6 -4.3%National Long - Distance 432.1 449.4 -3.9%International Long - Distance 70.7 73.9 -4.3%Fixed-to-Mobile 440.3 415.9 5.9%Special Calls 49.4 50.5 -2.2%Total Voice traffic 3,969.2 4,099.3 -3.2%Subscription Dial-up Internet 1,511.9 2,562.3 -41.0% OTE estimates that its share of the Greek fixed-line market, as measured inoutgoing call minutes (excluding subscription dial-up internet), was roughlyunchanged in Q1'07. (• mn) Q1'07 Q1'06 % ChangeRevenues 660.9 684.7 -3.5%- Basic Monthly Rentals 171.0 169.3 1.0%- Fixed-to-fixed calls 130.5 137.0 -4.7%- Fixed-to-mobile calls 65.5 79.8 -17.9%- International 40.7 42.5 -4.2%- Other 253.2 256.1 -1.1%Operating Income 76.1 48.9 55.6%Operating income before depreciation and amortization 206.2 183.6 12.3%as % of Operating revenues 31.2% 26.8% 4.4ppVoluntary Retirement costs 22.1 0.0 -Pro Forma Operating income before depreciation andamortization 228.3 183.6 24.3%as % of Operating revenues 34.5% 26.8% 7.7ppDepreciation & Amortization 130.1 134.7 -3.4% In Q1'07, total fixed-line revenues decreased by 3.5%, compared to Q1'06,reaching €660.9mn. Revenues in the first quarter last year included €25.9mn insales of telecommunications equipment related to the implementation of ane-government project commissioned by the Greek State. This revenue was offsetfor the same amount under cost of telecommunications equipment. Excluding thisproject, Q1'07 fixed-line revenues were roughly unchanged from the comparable2006 level. This positive performance reflects higher revenues from monthlyrentals, ADSL services and leased lines, more than offsetting the drop infixed-to-mobile revenues, due to termination rate cuts, as well as the declinein fixed-to-fixed, international telephony and interconnection revenues. The increase in PSTN/ISDN basic monthly rental tariffs implemented in April 2006continues to have a positive impact on the respective revenue line, fullyoffsetting lost revenues from unbundled local loops. The contribution of ADSLrevenues exceeded 4% of total operating revenues due to the ongoing strong ADSLtake-up. The decline in fixed-to-mobile call revenues is attributable to thereductions in termination rates implemented by the mobile operators in June 2006and January 2007, passed on by OTE to its clients, but also to the lower OTEretention fee effective December 2006. As of the end of March 2007, there were approximately 4.8 million PSTN lines inservice, down 1.9% from the prior year level. The number of ISDN lines (64K)rose by 2.1% to a total of nearly 1.4 million. The total number of lines droppedby 1.0%, slightly exceeding 6.1 million. At the end of March, the OTE Group had over 593,000 ADSL customers, as comparedto nearly 488,000 at the end of December 2006, with an unchanged split ofroughly two-thirds retail and one-third wholesale. The total Greek ADSL marketapproached 650,000 customers as of the end of Q1'07, compared to 512,000 at theend of December 2006. The drop in OTE's overall market share reflects the rapidgrowth of local loop unbundling (LLU). Excluding the €22.1mn provision related to OTE's new employee exit program,total operating expenses amounted to €562.7mn, down 11.5% from the Q1'06 level.Adjusting last year's total operating expenses for the €25.9mn cost associatedwith the implementation of the e-government project commissioned by the GreekState, total operating expenses net of provision for employee exit declined by7.7%. Payroll and employee benefits declined by 17.3% to €177.9mn, largelyreflecting the positive impact of the Voluntary Retirement Program. Other operating expenses increased by approximately 6.4% in the quarter to€121.4mn, largely driven by higher Services & Fees paid out to Group units suchas OTE Globe, and higher Advertising & Promotion costs. These expenses held backthe decline in Repairs & Maintenance and Cost of Materials. Provisions fordoubtful accounts continued to decline, reflecting OTE's ongoing billing andcollections improvements. Operating Income before Depreciation and Amortization (OIBDA) excluding theimpact of OTE's 2007 employee exit program rose by 24.3% compared to Q1'06 andreached €228.3mn. Pro forma OIBDA margin improved by 7.7 percentage points to34.5% of operating revenues, or by 6.7 points if the impact of the one-offe-government project on Q1'06 operating revenues and expenses is excluded. 2. Cosmote SUMMARY CONSOLIDATED RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2007, IN ACCORDANCE WITH IFRS(• mn) Cosmote Greece AMC GloBul CosmoFon Cosmote Germanos Consolidated Romania Group Q1'07 Q1'06 % ChangeRevenues 390.0 40.5 91.4 14.0 27.4 204.5 687.6 496.4 38.5%Operatingincomebeforedepreciationand 158.1 25.2 35.4 3.4 -10.5 8.2 215.2 190.9 12.7%amortizationas % ofOperatingrevenues 40.5% 62.3% 38.7% 24.5% n/a 4.0% 31.3% 38.5% In Q1'07, Cosmote revenues continued to be strong at the consolidated level,mainly driven by international operations. Excluding the contribution ofGermanos, international operations accounted for approximately 31% of thequarter's revenues, a ratio that is expected to increase further, reflecting thesuccessful expansion of Cosmote in Southeast Europe. In Greece, Cosmote revenues rose by 3.8% to €390.0mn, a slower pace of growthcompared to previous quarters, impacted by regulatory and seasonal challenges.Operating Income before Depreciation and Amortization (OIBDA) increased by 2.4%in the quarter, resulting in a margin of 40.5%. The negative regulatory effectwas approximately €13mn on revenues and €6mn on OIBDA. Blended AMOU further increased to 153 minutes in Q1'07, driven by both post- andpre-paid AMOU and 23% growth in voice traffic. Blended ARPU for the quarter fellto €26.6, as a result of lower termination rates and reduced pre-paid ARPU dueto price offerings. In Q1'07, the company achieved 210,998 new net additions,reaching a total customer base of over 5.4 million, and maintained its leadingposition in the Greek mobile market. In Albania, AMC's revenues increased by 18.0% to €40.5mn in Q1'07, while OIBDArose by 24.8% and reached a margin of 62.3%. In the quarter, blended AMOU was 58minutes and blended ARPU stood at €14. Subscriber growth continued as a resultof successful commercial initiatives introduced earlier in 2006, and AMC'scustomer base exceeded one million at the end of March 2007, a gain of 23.8%from the prior-year level. In Bulgaria, GloBul maintained its strong financial performance in Q1'07. Thecompany delivered a 23.8% revenue increase compared to Q1'06, reaching €91.4mn.OIBDA reached €35.4mn, 28.9% higher than in Q1'06, for a margin of approximately38.7%. The company achieved 130,984 net new additions and its total customerbase exceeded 3.4 million. Blended AMOU for the quarter was 83 minutes, 22.1%higher than in 2006, while blended ARPU stood at €9. In FYROM, CosmoFon's revenues rose by 28.9% in Q1'07 reaching €14.0mn, mainlydriven by a strong subscriber take-up. OIBDA reached a margin of 24.5% in thequarter. Blended AMOU in the quarter stood at 73 minutes, while blended ARPUincreased to €10. In Romania, Cosmote Romania continued its strong subscriber take-up and itscustomer base reached a total of nearly 1.86 million customers with more than633,000 net additions during the quarter. The majority of customers remainprepaid, while around 12% of new additions were post-paid. Blended ARPU for theperiod stood at €5.8. Revenues reached €27.4mn, continuing their rapid growthquarter after quarter.Cosmote continued to achieve strong customer growth and profitabilityimprovement in Albania, Bulgaria, FYROM and Romania. Consolidated revenues forQ1'07 stood at €687.6mn, a 38.5% increase over Q1'06, partly reflecting theconsolidation of Germanos since Q4'06. OIBDA as a percentage of Operatingrevenues declined from 38.5% in Q1'06 to 31.3% in Q1'07, mainly reflectinglosses at the Romanian operation and the newly consolidated Germanos operation. Additional details are available in Cosmote's Q1'07 press release issued on May24, 2007. 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 STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006IN ACCORDANCE WITH IFRS (UNAUDITED) (• mn) Q1'07 Q1'06 % ChangeRevenues 222.1 222.9 -0.4%Operating Income before Depreciation &Amortization 90.7 95.0 -4.5%Operating Income before Depreciation &Amortization as % of Operating Revenue 40.8% 42.6% -1.8ppOperating Income 26.6 26.4 0.8%Net Income 19.8 18.8 5.3%Net Income as % of Operating Revenue 8.9% 8.4% 0.5pp Fixed Telephony, Lines 3,222,488 3,835,647 -16.0% Mar 31, 2007 Dec 31, 2006Cash and cash equivalents 159.7 155.6 2.6%Long term debt (96.1) (105.1) -8.6%Net Cash Position 63.6 50.5 25.9% In Q1'07, RomTelecom's revenues were €222.1mn, roughly unchanged from the prioryear level. Lower revenues from traditional telephony services, reflecting thedrop in the number of subscriber lines and retail traffic as well as reducedwholesale and payphone revenues, were offset by the increase in monthly rentalsalong with the growth of new revenue streams such as data and TV services. The combination of mobile substitution and higher competition from fixed-linealternative carriers affected the number of lines, which decreased by 16%compared to Q1'06, and the volume of local traffic, down 27%. Interconnection revenues declined by 9% in Q1'07, despite the 14% increase inwholesale traffic, as a result of intense competition from alternative andmobile operators using RomTelecom's network at significantly reduced rates, asmandated by the Regulator. Data services (ADSL, VPN, other broadband services) recorded significant growthin the quarter, more than quadrupling compared to Q1'06, in line with thecompany's objective to increase its non-voice services market share. The totalnumber of billed ADSL customers reached 137,000 at the end of Q1'07, an increaseof 110,000 compared to one year earlier. The recently launched satellite TV service proved to be a success, winning over163,000 TV customers four months after launch. Operating expenses excluding depreciation and amortization for Q1'07 increasedby 2.8% to €131.4mn, mainly reflecting higher redundancy and payroll expenses,increased Cost of Goods Sold (as a result of higher CPE sales), and increasedcosts for promoting newly launched services. Operating Income before Depreciation & Amortization in Q1'07 decreased by 4.5%compared to Q1'06, while net income increased by 5.3%, from €18.8mn in Q1'06 to€19.8mn in Q1'07 due to lower taxes. Headcount remained stable in Q1'07 compared to the end of 2006, reaching 12,257employees. Implementation of several projects and initiatives is proceeding according toRomTelecom's plan: O Successful launch of satellite television services at the end of November2006 contributes to the repositioning of RomTelecom as a full telecom and mediaservices provider; O Implementation of the Next Generation Network (NGN) continues,complemented by the Access Network modernization in all cities and selectiverural areas to allow the provision of broadband services; O New product offerings are targeting business customers and loyaltyschemes address residential clients' needs. 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 Q1'07 were €27.8mn, up 9.0% from Q1'06,reflecting the growth of broadband connections. 5. Events of the quarter OTE DEVELOPS WiMAX NETWORK On January 17, 2007, OTE entered the field of wireless broadband access viaWiMAX. WiMAX technology allows access to broadband services without the need ofwired telecommunication networks. The first two WiMAX base stations in Athensare already operated on a pilot basis, and OTE is further developing the WiMAXnetwork at selected points in the Athens metropolitan area and elsewhere. APPOINTMENT OF PRIVATIZATION ADVISOROn January 29, 2007, OTE announced the appointment of Merrill LynchInternational as its exclusive Advisor with regards to the sale of part of theHellenic Republic's 38.7% stake in OTE. The process was initiated by theHellenic Republic in late 2006. APPOINTMENT OF NEW ROMTELECOM CEOOn February 1, 2007, OTE announced the appointment of Georgios Ioannidis asChief Executive Officer of RomTelecom, in replacement of James Hubley, who heldthe position since March 2003. Mr. Ioannidis previously held the positions ofCEO of OTEnet and Chief Technology Officer of OTE SA. APPOINTMENT OF NEW MANAGEMENT IN OTE AND OTENETOn February 9, 2007, OTE announced the appointment of Maria Efthimerou as ChiefTechnology Officer of OTE SA, in replacement of Georgios Ioannidis, who held theposition since September 2004. Panos Sarantopoulos was appointed as Deputy ChiefTechnology Officer of OTE SA.Ilias Drakopoulos, formerly General Manager of OTEnet, was appointed CEO. PENALTY IMPOSED TO OTE BY THE NATIONAL REGULATORY AUTHORITY (EETT)On February 14, 2007, a penalty of €3mn was imposed to OTE by EETT for failureto comply with the previous regulation regarding the carrier pre-selectionservice. The specific regulation is no longer applicable since a new regulatoryregime was enacted on January 17, 2006. OTE believes that the decision of theGreek telecommunications regulator is unfair and intends to take legal actionagainst it. EMPLOYEE EXIT PROGRAMOn February 28, 2007, OTE announced an agreement with the unions regarding anemployee exit program, under which certain employees with one to five remainingyears of service will get exit bonuses in order to depart during 2007.Approximately 450 OTE employees are eligible for this program. SQUEEZE-OUT OF REMAINING GERMANOS SHARESOn March 9, 2007, Cosmote announced that its request, submitted on February 23,to squeeze out the remaining shares of Germanos, accounting for 0.6% of theshare capital, had been approved by the Hellenic Capital Market Commission. TheGermanos shares were delisted from the Athens Stock Exchange effective March 29,2007. 6. subsequent events THIRD EXTRAORDINARY SHAREHOLDERS MEETINGOn April 3, 2007, OTE held its Repeated EGM, where 51.5% of its shareholderswere present. The EGM's agenda was approved, i.e. the revision of certainarticles concerning the composition of the Board, the Greek State'sparticipation in the Company, the establishment of a stock option plan and othermatters. "OTE ON THE BROADBAND" ROADSHOWOn April 19, 2007, for the second consecutive year, OTE launched its "OTE on theBroadband" 18-city roadshow, aiming to acquaint the public with the advantagesof broadband services and bring Greek broadband penetration closer to the levelof its European peers. OTE CONSIDERS THE SALE OF ITS DIRECTORIES BUSINESSOn April 30, 2007, OTE announced that it had hired UBS to examine thefeasibility of a sale of Infote, its directories subsidiary. OTE ANNOUNCES HIGHER ADSL SPEED AND LOWER TARIFFSOn May 9, 2007, OTE launched two new ADSL products, with speeds of 4 and 8 Mbps.It also announced reductions on monthly ADSL tariffs, ranging from 0.7% to25.6%, effective from May 16, 2007. EUROPEAN COMMISSION APPROVES GREEK STATE AID TO OTE'S VRSOn May 10, 2007, the European Commission announced that it had concluded thatthe Greek government's planned contribution to OTE's Voluntary Retirement Scheme(VRS) was compatible with EC Treaty state aid rules. Management expects thepotential impact of this decision on OTE's financial statements to be positive,but its extent will depend on the timing and procedures adopted by the Greekgovernment to implement this decision. ROMTELECOM LAUNCHES CUSTOMER 1st PROJECTOn May 28, 2007, RomTelecom announced the launch of its Customer 1st project, asuite of attractive packages enabling customers to take advantage of theconsiderable investments the company has carried out in the modernization of itsnetwork over the past years. The cornerstone of this new offering is the ComfortUnlimited package, offering unlimited domestic calls as well as substantialdiscounts on calls to mobile and international numbers. The new tariffs alsocomprise significant reductions on ADSL services. With this highly competitiveoffering, RomTelecom expects to significantly reduce the market share erosion ithas suffered in recent quarters. IORDANIS AIVAZIS APPOINTED CHIEF OPERATING OFFICEROn May 29, 2007, OTE announced that Mr. Iordanis Aivazis, in addition to hisresponsibilities as Group CFO, will assume the newly created position of ChiefOperating Officer of OTE S.A. 7. Outlook In Q1'07, the operating performance of the OTE Group was consistent with theguidance set out in its 2007-09 business plan. In Greek fixed-line operations,revenue-enhancing initiatives and further benefits from cost-reductions shouldenable OTE to mitigate the impact of intensifying competition, continuing thesatisfactory performance of the first quarter. At Cosmote, strong growth ofinternational revenues should offset the slower pace of growth in the moremature Greek market, while the integration of Germanos is well on track.Finally, data and video services should help RomTelecom contain the rapiderosion of traditional voice services. 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 and Serbia, and establishingmobile operations in Albania, Bulgaria, the Former Yugoslav Republic ofMacedonia and most recently in Romania. At present, companies in which OTE Grouphas an equity interest employ over 30,000 people in six countries, and ourportfolio of solutions ranges from fixed and mobile telephony to Internetapplications, satellite, maritime communications and consultancy services.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 RelationsTel: +30 210 611 1574, Email: [email protected] Nektarios Papagiannakopoulos - Senior Financial AnalystTel. +30 210 611 7593, Email: [email protected] Daria Kozanoglou - Communications Officer, Investor RelationsTel: +30 210 611 1121, Email: [email protected] Marilee Diamanti - IR CoordinatorTel: +30 210 611 5070, Email: [email protected] Christina Hadjigeorgiou - Financial AnalystTel: +30 210 611 1428, Email: [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 2005 filed with the SEC on June 30, 2006. OTE assumes noobligation to update information in this release. Exhibits to follow: I. Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006 (Under IFRS) II. Condensed Consolidated Income Statements for the three months ended March 31, 2007 and 2006 (Under IFRS) III.Analysis of Group Other Operating Expenses for the three months ended March 31, 2007 and 2006 (Under IFRS) IV. Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2007 and 2006 (Under IFRS) V. Group Revenues for the three months ended March 31, 2007 and 2006 (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, 2007 AND DECEMBER 31, 2006 (• mn) Mar 2007 Dec 2006 --------- ---------ASSETS Non - current assets:Telecommunication property, plant andequipment 6,542.3 6,583.5Goodwill 539.5 540.8Telecommunication licenses 397.2 384.2Investments 158.7 158.7Advances to pension funds 214.1 188.1Deferred taxes 120.9 127.4Other non-current assets 691.7 709.7 -------- -------Total non - current assets 8,664.4 8,692.4 -------- ------- Current assets:Materials and supplies 207.9 205.4Accounts receivable 1,178.5 1,160.5Other current assets 489.0 447.8Cash and cash equivalents 1,724.1 2,042.5 -------- -------Total current assets 3,599.5 3,856.2 -------- ------- TOTAL ASSETS 12,263.9 12,548.6 ======== ======= EQUITY AND LIABILITIES Equity attributable to equity holders ofthe parent:Share capital 1,171.5 1,171.5Paid-in surplus 485.9 485.9Legal reserve 283.3 283.3Retained earnings 1,872.2 1,724.1 -------- -------- 3,812.9 3,664.8 -------- --------Minority interest 1,253.1 1,223.9 -------- -------- Total equity 5,066.0 4,888.7 -------- -------- Non - current liabilities:Long-term debt 4,031.3 4,037.3Reserve for staff retirement indemnities 202.8 198.5Reserve for voluntary retirement program 367.0 361.4Reserve for Youth Account 277.8 277.3Other non - current liabilities 265.7 126.9 -------- --------Total non - current liabilities 5,144.6 5,001.4 -------- -------- Current liabilities:Accounts payable 896.6 938.0Short-term borrowings 7.7 25.2Current maturities of long-term debt 31.6 528.0Income taxes payable 200.6 142.0Deferred revenue 149.4 196.2Dividends payable 3.7 3.7Reserve for voluntary retirement program 257.9 316.7Other current liabilities 505.8 508.7 -------- --------Total current liabilities 2,053.3 2,658.5 -------- -------- TOTAL EQUITY AND LIABILITIES 12,263.9 12,548.6 ======== ======== Movement in Shareholders' equity -------------------------------- ---------- --- 2007 ---------- Shareholders' equity, January 1 4,888.7 ----------Profit for the period 177.7Net income recognized directly in equity (0.4) ---------- 177.3 ---------- ==========Shareholders' equity, March 31 5,066.0 ========== EXHIBIT II - CONDENSED CONSOLIDATED INCOME STATEMENT HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months ended March 31, 2007 and 2006 (• mn) Q1'07 Q1'06 % Unaudited Unaudited ChangeRevenues:Domestic Telephony 526.8 572.6 -8.0%International Telephony 70.7 83.4 -15.2%Mobile Telephony 494.3 449.3 10.0%Other 416.8 281.4 48.1%Total Revenues 1,508.6 1,386.7 8.8% ======== ======== Operating Expenses:Payroll and employee benefits (301.7) (318.6) -5.3%Voluntary retirement costs (22.1) 0.0 - Payments to international (47.8) (47.2) 1.3%operatorsPayments to domestic (153.5) (174.9) -12.2%telephony operatorsDepreciation and amortization (279.3) (284.3) -1.8%Cost of telecommunications (152.9) (65.1) 134.9%equipmentOther operating expenses (291.0) (268.4) 8.4% -------- --------Total Operating Expenses (1,248.3) (1,158.5) 7.8% ======== ======== Operating Income 260.3 228.2 14.1%Other income / (expense):Interest income 19.8 10.3 92.2%Interest expense (57.4) (42.3) 35.7%FX gain/(loss), net 5.8 1.4 -Financial net (31.8) (30.6) 3.9% -------- --------Investment income/(loss)/Gain 12.7 5.8 119.0%on sale of investment -------- --------Total Other income / (expense) (19.1) (24.8) -23.0% ======== ======== Profit before income taxes 241.2 203.4 18.6% ======== ======== Income taxes (63.5) (61.5) 3.3% -------- -------- Profit for the period 177.7 141.9 25.2% ======== ======== Attributable to:Equity holders of the 140.9 109.7 28.4%parentMinority interest 36.8 32.2 14.3% -------- -------- 177.7 141.9 25.2% ======== ======== EXHIBIT III - GROUP OTHER OPERATING EXPENSE ANALYSIS (• mn) Q1'07 Q1'06 % ChangeCommission to dealers 56.1 43.7 28.4%Repairs, maintenance, 46.7 51.3 -9.0%cost of materialsProvision for doubtful accounts 23.1 21.2 9.0%Advertising 42.5 31.0 37.1%Taxes other than income taxes 11.0 11.5 -4.3%Other 111.6 109.7 1.7% TOTAL 291.0 268.4 8.4% EXHIBIT IV - CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months ended March 31, 2007 and 2006 (• mn) Q1'07 Q1'06Cash Flows from Operating Activities: Profit before taxes 241.2 203.4Adjustments to reconcile to net cash provided by operatingactivities: Depreciation and amortization 279.3 284.3 Provisions for voluntary retirement 22.1 - Provisions 47.3 51.7 Investments and financial income/loss (38.3) (17.5) Amortization of advances to pension funds 8.8 8.8 Interest expense 57.4 42.3 Adjustments for working capital movements related tooperating activities Decrease/(increase) in materials and supplies (2.5) (6.7) Decrease/(increase) in accounts receivable (51.9) (13.5) (Decrease)/increase in liabilities (183.7) (123.0) Minus: Interest paid (46.3) (42.1) Income taxes paid (12.8) (14.9) ------- ------Net Cashprovided byOperatingActivities 320.6 372.8 ------- ------ Cash Flows from Investing Activities: Acquisition of subsidiary or associate, net of cash (19.3) - acquired Loans granted (53.6) - Purchase of property, plant and equipment or intangible (223.2) (168.5) assets Proceeds from sale of investment 6.3 - Other long-term liabilities 144.5 - Interest received 13.7 9.0 ------- ------Net Cash usedin InvestingActivities (131.6) (159.5) ------- ------ Cash Flows from Financing Activities: Proceeds from minority shareholders for issuance of 12.6 12.0 subsidiary's share capital Repayment of long-term debt and short-term borrowings (519.6) (26.9) Dividends paid (0.4) - ------- ------Net Cashprovided/(usedin) byFinancingActivities (507.4) (14.9) ------- ------ NetIncrease/(Decrease) in Cashand CashEquivalents (318.4) 198.4Cash and Cashequivalents atbeginning ofperiod 2,042.5 1,512.2 ------- ------Cash and CashEquivalents atend of period 1,724.1 1,710.6 ======= ======= EXHIBIT V - GROUP REVENUES HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months ended March 31, 2007 and 2006 (• mn) Q1'07 Q1'06 ChangeDomestic Telephony:Basic monthly rentals 254.1 241.0 5.4%Local and long distance calls-Fixed to fixed 157.3 193.8 -18.8%-Fixed to mobile 93.4 116.0 -19.5% ------ ----- 250.7 309.8 -19.1% ====== =====Other 22.0 21.8 0.9% ------ -----Total Domestic Telephony 526.8 572.6 -8.0% ====== ===== International Telephony:International traffic 27.4 32.0 -14.4% ------ -----Payments from International mobile operators 7.8 29.5% 10.1 ----- ----- 37.5 39.8 -5.8% ===== =====Payments from International operators 33.2 43.6 -23.9% ----- -----Total International Telephony 70.7 83.4 -15.2% ===== ===== Mobile Telephony 494.3 449.3 10.0% ===== ===== Other Revenues:Prepaid cards 19.8 20.6 -3.9%Directories 14.2 14.6 -2.7%Leased lines and data communications 56.6 54.8 3.3%ISDN, connection & monthly charges 42.1 39.4 6.9%Sales of telecommunication 152.7 54.3 181.2%equipmentInternet services-ADSL 48.2 25.0 92.8%ATM 6.5 7.9 -17.7%Services rendered 22.7 14.4 57.6%Interconnection charges 25.5 31.3 -18.5%Miscellaneous 28.5 19.1 49.2% ----- -----Total Other Revenues 416.8 281.4 48.1% ===== ===== Total Revenues 1,508.6 1,386.7 8.8% ===== ===== EXHIBIT VI - SEGMENT REPORTING (Q1 2007) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS, for the three months ended March 31, 2007 (• mn) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 384.0 141.0 2.6 527.6InternationalTelephony 40.7 28.3 2.0 71.0MobileTelephony 533.4 533.4Other 236.2 154.2 52.8 92.1 535.3Total 660.9 687.6 222.1 96.7 1,667.3 (158.7) 1,508.6Revenues ------- ------- --------- ------- ------- --------- --------- IntersegmentRevenues (58.5) (40.6) (6.1) (53.5) (158.7) Revenue fromExternalCustomers 602.4 647.0 216.0 43.2 1,508.6 1,508.6 ------- ------- --------- ------- ------- --------- --------- OperatingExpenses:Payroll andemployeebenefits (177.9) (48.6) (54.6) (21.5) (302.6) 0.9 (301.7)Voluntaryretirementcosts (22.1) (22.1) - (22.1)Payments tointernationaloperators (35.0) (8.2) (5.9) (0.7) (49.8) 2.0 (47.8)Payments todomestictelephonyoperators (78.2) (89.3) (21.6) (0.2) (189.3) 35.8 (153.5)Depreciationandamortization (130.1) (84.9) (55.0) (9.8) (279.8) 0.5 (279.3)Cost ofequipment &prepaid cards (20.1) (136.2) (6.1) (4.3) (166.7) 13.8 (152.9)Otheroperatingexpenses (121.4) (190.1) (43.2) (40.1) (394.8) 103.8 (291.0)TotalOperatingExpenses (584.8) (557.3) (186.4) (76.6) (1,405.1) 156.8 (1,248.3) ------- ------- --------- ------- ------- --------- --------- ------- ------- --------- ------- ------- --------- ---------OperatingIncome 76.1 130.3 35.7 20.1 262.2 (1.9) 260.3 ------- ------- --------- ------- ------- --------- --------- Operatingincome beforedepreciationandamortization 206.2 215.2 90.7 29.9 542.0 (2.4) 539.6----------- ------- ------- --------- ------- ------- --------- ---------as % ofOperatingrevenues 31.2% 31.3% 40.8% 30.9% 32.5% - 35.8% EXHIBIT VI - SEGMENT REPORTING (Q1 2006) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS, for the three months ended March 31, 2006 (• mn) 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 684.7 496.4 222.8 117.3 1,521.2 (134.5) 1,386.7Revenues ------- ------- --------- ------- ------- --------- --------- 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)Payments tointernationaloperators (30.0) (7.6) (6.6) (3.6) (47.8) 0.6 (47.2)Payments todomestictelephonyoperators (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 ofequipment &prepaid cards (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----------- ------- ------- --------- ------- ------- --------- ---------as % ofOperatingrevenues 26.8% 38.5% 42.6% 36.2% 33.7% - 37.0% 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, 2007, in accordance with IFRS (• thousand) Q1'07 Basic monthly rentals 83,142Domestic Telephony calls 57,809 --------Domestic Telephony 140,951International Telephony 28,331Other Revenues 52,794 --------Total Operating Revenues 222,076 Personnel (inc Voluntary Redundancy) (54,594)Other operating expenses (76,834)Depreciation and Amortization (64,073) --------Total Operating expenses (195,501) Operating income 26,575 Financial, net (2,626) Income before provision for income taxes 23,949 Provision for Income taxes (4,189) --------Net income 19,760 ======== EXHIBIT VIII - OTEnet OTE has a 95.3% stake in OTEnet, which is fully consolidated. OTEnet's keyfinancial figures are stated below: OTEnet Highlights prepared under IFRS for the three months ended March 31, 2007 and 2006 (• mn) Q1'07 Q1'06 % Change Revenues 27.8 25.5 9.0%Operating Income before Depreciation & amortization 0.4 2.9 -as % of Operating Revenues 1.4% 11.4% - EXHIBIT IX -OPERATIONAL HIGHLIGHTS -------------------------------- Operational Highlights as of March 31, 2007 and 2006 --------------------------------OTE Q1'07 Q1'06 % Change PSTN lines 4,756,470 4,849,542 -1.9%ISDN, 64kb equiv. lines 1,387,354 1,359,016 2.1%Total lines 6,143,824 6,208,558 -1.0% ADSL subscribers 593,309 227,214 161.1%Unbundled local loops 52,980 8,677 - COSMOTE (Greece)Pre-paid sub. 3,550,717 3,004,168 18.2%Contract sub. 1,878,208 1,746,102 7.6%Total subscribers 5,428,925 4,750,270 14.3% AMCTotal subscribers 1,024,492 827,524 23.8% GLOBULTotal subscribers 3,401,862 2,561,210 32.8% COSMOFONTotal subscribers 497,637 413,962 20.2% COSMOTE ROMANIATotal subscribers 1,859,023 275,521 - OTEnetResidential clients 604,550 437,400 38.2%Business clients 20,100 15,100 33.1% Employees:-OTE 11,720 14,694 -20.2%-COSMOTE (Greece) 2,156 2,130 1.2%-RomTelecom 12,257 13,093 -6.4%-------------- -------- -------- -------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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