3rd Quarter Results

OTE GROUP REPORTS 2011 THIRD QUARTER RESULTS

UNDER IFRS

·; Slowdown in Group revenue decline

·; Operating cost reduction across all Group operations

·; Agreement for payroll cost reduction in Greek fixed-line

·; EBITDA margin upheld

·; Strong Operating Cash flow

ATHENS, Greece - November 10, 2011 - Hellenic Telecommunications Organization SA (ASE: HTO, OTC MARKET: HLTOY), the Greek full-service telecommunications provider, today announced unaudited consolidated results (prepared under IFRS) for the quarter and nine months ended September 30, 2011:

* See Exhibit VIII

** Excluding impact of Voluntary Retirement Programs and Restructuring Plans

Commenting on OTE's performance in the third quarter, Michael Tsamaz, Chairman & CEO, stated: "In markets obviously impacted by the magnitude of the economic challenges, the OTE Group turned in a rather resilient set of results this quarter. In Greece, where the pace of net disconnections across the fixed-line market accelerated, line losses at OTE were aligned with prior quarters, and the revenue drop in mobile showed a marked improvement as competitive conditions further stabilized. Outside of Greece, international mobile operations sharply narrowed their revenue decline thanks to positive performances in both Romania and Bulgaria."

Mr. Tsamaz further noted: "These tough markets have an effect on our results, but do not weaken our determination to transform OTE into a high performance organization. By focusing on improving services, products and the overall customer experience, we aim at increasing the total value offered to our customers. Unified portals and call centers, redesigned shops and simplified customer statements are some of the achievements now in place. We are scrutinizing our cost base to maximize efficiency, and expect to benefit from the labor agreement signed in Greek fixed-line operations during the quarter. We are committed to intensifying these efforts in all areas under our control to curtail the impact of the crisis on our performance."

Financial Highlights

BREAKDOWN OF GROUP REVENUES

The OTE Group experienced a revenue drop of 5.8% in Q3'11, continuing the improving trend started in the previous quarter. The sharp slowdown in revenue decline this quarter reflects the gradual stabilization of market conditions in Greek mobile operations as well as slightly improving trends in the Greek fixed-line business, despite the unfavorable economic and consumer spending conditions along with an adverse regulatory and competitive situation. Outside of Greece, both the Romanian and Bulgarian mobile operations returned to year-over-year revenue growth.

Total Operating Expenses, excluding depreciation, amortization and charges related to voluntary retirement programs, amounted to €844.7mn in Q3'11, a drop of 5.9% compared to €898.1mn in Q3'10. The decrease reflects lower costs of telecommunications equipment, lower charges from domestic telephony operators, lower payroll and employee benefits as well as considerable cost-containment efforts across all operations. Since the beginning of the year, headcount has been reduced by 183 in Greek fixed-line, 1,758 at RomTelecom and 466 in mobile operations in Greece and internationally. Additional departures related to programs currently underway will take place in Greek and Romanian fixed-line operations in the final months of the year. Other operating expenses were down only 1%, largely reflecting special real estate tax levies.

Reflecting tight cost-control, pro forma EBITDA margin was roughly unchanged from the Q3'10 level, following two quarters of significant margin erosion.

In the quarter, a charge of €3.7mn was included under voluntary retirement costs reflecting receipt by OTE of definitive notification from the Ministry of Labor concerning the actuarial studies related to the company's 2009 early retirement program. This charge extinguishes all claims relative to this program.

The Group posted net income of €104.4mn for the quarter compared to net income of €126.3mn in Q3'10, largely reflecting the decline in operating income.

Capital expenditures increased by 1.0% in Q3'11 compared to Q3'10, to €171.0mn. Total CAPEX as a percentage of Group revenues in Q3'11 was 13.0%, as compared to 12.2% in Q3'10. Capital expenditures in Greek fixed-line, Romanian fixed-line, and mobile operations amounted to €40.8mn, €19.0mn and €107.4mn, respectively. Q3'11 CAPEX includes a €15.1mn outlay for the acquisition of a 3G license in Albania; excluding this item, Group CAPEX as a percentage of revenues declined to 11.9% in the quarter.

In Q3'11, OTE paid to its shareholders the 2010 dividend approved by its General Assembly in June 23, 2011; total dividend payment amounted to €52.9mn.

During the quarter, the Group generated €318.6mn from operating cash flows compared to €300.2mn for the comparable 2010 quarter, despite lower EBITDA. In Q3'11, the group significantly improved its working capital compared to Q3'10, mainly due to a reduction in account receivables.

OTE Group debt outstanding breaks down as follows:

1. Fixed Line Operations, Greece

ACCESS LINES & TRAFFIC STATISTICS

Note: Starting Q1 2011, to harmonize access line data with those utilized by the Greek regulatory authorities, OTE reports data based on the total number of ISDN connections rather than on channel equivalents. The corresponding total is provided above under "Total connections".

In Q3'11, OTE fixed-line operations in Greece recorded the loss of nearly 103,000 PSTN and ISDN connections, a slight improvement compared to the trend in prior quarters, as residential and business customers continue to look to reduce all non-essential expenses. However, roughly half of OTE's line loss in the quarter is due to net disconnections, a sharply higher percentage than in prior periods, reflecting slower growth at alternative carriers.

At the end of September 2011, the total Greek ADSL market amounted to approximately 2.7 million subscribers, as compared to 2.4 million at the end of Q3'10. During the quarter, total market net additions reached 42,000, reflecting the continued impact of macroeconomic developments on market growth. Once again held back by its inability to compete effectively on pricing, OTE lost approximately 9,300 ADSL subscribers during the quarter.

During the quarter, OTE carried out a number of initiatives aimed at streamlining and improving its interaction with customers. It has begun a systematic program of refurbishment of all the stores that it intends to retain - by the end of the year, 35 retail outlets out of a network of 135 units should have been adapted to the new format, with the balance expected to be renovated in 2012. Since November 1, access to all OTE call centers is provided through a single nationwide number, a change that has resulted in a nearly 50% decline in repeat calls in the first days following implementation. Similarly, a single portal, ote.gr, has replaced a number of overlapping websites, and the layout of OTE's monthly statement has been simplified. All of these measures, carefully prepared and tested over the past year, are aimed at bettering customer experience and raising OTE's image with consumers.

SUMMARY FINANCIAL DATA

* Excluding impact of Voluntary Retirement Programs

Total Greek fixed-line Revenues declined by 10.3%, a sharply improved rate of decline compared to prior quarters (Q2'11: -15.0%; Q1'11: -13.4%; Q4'10: -15.8%).

Total Greek fixed-line Operating Expenses, excluding depreciation, amortization and charges related to voluntary retirement programs, amounted to €339.9mn in Q3'11, a drop of 9.8% compared to €377.0mn in Q3'10. Total personnel related cost (payroll, benefits, staff retirement indemnities and youth account) rose to 34.1% of total revenues in Q3'11, up from 32.4% in the comparable quarter last year, but lower compared to Q2'11 of 37.2%.

In the quarter, OTE pursued efforts across the board to reduce its cost base. In addition to the new labor agreement reached in late September and to the measures highlighted above, which will enhance efficiency and customer-friendliness, OTE shut down a total of 71 shops.

2. Fixed Line Operations, Romania 

SUMMARY FINANCIAL & ACCESS LINE DATA

* Excluding impact of Restructuring Plans

In an economic environment that shows no sign of improvement, exacerbating competition, RomTelecom posted an 11.8% drop in reported revenues in Q3'11. This decline, however, partly reflects a change in revenue-recognition policies related to accrued revenues reversal as well as a switch in commercial policy regarding customer-premise equipment (CPE). Excluding these two factors, comparable revenues were down by 8.7% compared to Q3'10, roughly in line with the drop experienced in prior quarters. The decline in the quarter primarily reflected a 17% decrease in PSTN services, due to line losses and lower ARPU.

RomTelecom partly offset the decline in voice telephony through ongoing rebalancing of its revenue mix. Compared to Q3'10, the total number of broadband customers rose by 17%, while the number of TV subscribers increased by 20%, largely reflecting subscriber acquisitions. Consequently, as a percentage of total RomTelecom voice clients, broadband penetration rose to 44% and television service penetration to 48%. As of September 30, 2011, the total number of revenue-generating units (RGUs, defined as voice, broadband and TV subscriptions) had risen to 4.9 million, up 5.3% compared to the end of Q3'10.

During the quarter, RomTelecom introduced a significant product portfolio redesign aimed at providing bundles that are simpler and more easily comparable with those of other operators, at leveraging upsell, and at combatting the lingering perception that RomTelecom is a voice-only provider.

In addition, subscription packages featuring CPE rental, offering more financial flexibility to the customers, were launched during the quarter.

Thanks to its CDMA network, RomTelecom was able to capture wireless broadband market share, with RGUs nearing 82,000 by the end of Q3'11.

NextGen, RomTelecom's low-cost subsidiary, continued to gain market share, achieving a sequential RGU increase of 40% through a combination of organic growth and successful asset deals.

In the quarter, pro forma EBITDA excluding redundancy costs was adversely affected by the above-mentioned change in accounting policy. Excluding this adjustment, comparable pro forma EBITDA would be down only by 3.1% compared to Q3'10, resulting in a sizable improvement in pro forma EBITDA margin.

RomTelecom pursued its downsizing and migration to a more flexible, cost-effective operating model. As a result, operating expenses (excluding D&A and one-off costs) were down 11% in Q3'11, notwithstanding higher customer acquisition related costs, such as TV content. Payroll and benefits were down 23%, due to the improvements in operating efficiency and voluntary leave programs. As of September 30, 2011, total headcount at RomTelecom and subsidiaries was 7,421, down from 9,192 one year earlier, resulting in a sharp increase in productivity.

3. Mobile Operations

SUMMARY FINANCIAL DATA

*Excluding impact of Restructuring Plan at Mobile Operations in Greece & Voluntary Exit Scheme in Romania

As of September 30, 2011, the mobile operations of the OTE Group counted approximately 20.4 million customers, down by 4.3% from the prior-year level, mainly due to the impact of prepaid registration in Greece. In markets that remain depressed and fiercely competitive, management estimates that the Group's mobile operations strengthened their positions in all four countries in which they are present.

Mobile Operations, Greece

As of the end of Q3'11, Cosmote provided mobile telephony services to 7.9 million customers in Greece. The 5.5% drop in subscriber numbers compared to September 30, 2010 primarily reflects the final impact of the mandatory registration process introduced in late 2009.

Cosmote estimates that total mobile service revenues in the Greek market further declined in the quarter, as the challenging economic conditions continued to impact consumer spending. Against this backdrop, Cosmote recorded a service revenue decline of approximately 2% in the quarter, a sharp improvement compared to its performance in the first half of the year. Incoming revenues were down 23%, primarily reflecting termination rate cuts, while outgoing service revenues were up 2%, positively affected by a 36% increase in prepaid revenues.

Cosmote has developed a strong position in mobile internet data, supported by innovative, flexible offerings targeting all customer segments. Combined with the growing availability of affordable smartphones, this active approach led to a 14% increase in data revenues compared to the same quarter last year.

Roaming revenues benefited from an increase in tourism during the summer season compared to the prior year, as well as from higher traffic directed by roaming partners.

In 9M'11, blended AMOU increased by 16.1% to 302.6 minutes, continuing the trend of prior quarters, mostly driven by prepaid AMOU, up 18.3% as a result of attractive on-net offers. Blended ARPU for the same period was €15.7, down approximately 4% from 9M'10, mainly reflecting lower ARPU in the postpaid segment.

The 1% drop in EBITDA reflects strong cost-control across the board, including lower payroll and selling and distribution expenses.

Mobile Operations, Albania

In Q3'11, AMC's total customer base reached approximately 1.8 million, a decrease of nearly 11.0% compared to Q3'10.

Revenues were once again affected by the implementation of lower local and international termination rates, the latter also heavily affecting EBITDA. Aggressive pricing strategies in a highly fragmented market also put pressure on service revenues, particularly in the prepaid segment.

Despite these negative factors, AMC achieved a solid EBITDA margin in the quarter, as management pursues efforts to optimize the organization's cost structure with particular focus on marketing and distribution.

Mobile Operations, Bulgaria

Globul's postpaid customer base increased by 14% from Q3'10 to a total of over 2.5 million, or 60.8% of its total customer base. Globul launched additional innovative offers aimed at migrating customers from prepaid to postpaid services, resulting in a decrease in its prepaid customer base. All told, Globul's total customer base at the end of Q3'11 was about 4.2 million, up 7% from the prior year level.

Globul's fixed telephony offer using the mobile network had another quarter of strong growth, reaching a total subscriber base of 200k customers. Mobile data services also recorded a significant increase from the previous year, as the subscriber base more than tripled.

Service revenues increased by 0.8% in Q3'11, as the decline caused by the intense competition in the business postpaid segment was more than offset by improved performance in roaming and interconnect.

Operating expenses were up 7.6%, mainly due to higher handset sales. Despite savings in other expense categories, EBITDA decreased by 5.5% in the quarter.

Mobile Operations, Romania

As of the end of Q3'11, Cosmote's total customer base in Romania reached 6.5 million, of which 22.8% was postpaid. With service revenues up approximately 7.0%, Cosmote Romania retained its market share despite intense competition, notably in the prepaid segment.

EBITDA increased by approximately 27% compared to the same quarter last year, meeting the company's target and reflecting the significant operating improvements following the successful integration of Zapp as well as savings in distribution and network expenses. Cosmote Romania stands out among European mobile operators, achieving substantial service revenue and EBITDA growth under tough circumstances.

4. Events of the Quarter

Full utilization of €900mn Syndicated Credit Facility

On July 13, OTE drew the remaining €300mn available under the €900mn Syndicated Credit Facility signed in February 2011.

Shareholding Changes

On July 11, Deutsche Telekom AG purchased 49,015,038 shares of OTE SA with a total value of 391,630,153.62 euro, as a result of the exercise of a Put Option held by the Hellenic Republic based on the Shareholders Agreement of 2008. Following this transaction, the Hellenic Republic's direct and indirect participation in OTE SA's total shares and voting rights stands at 10.00% (49,015,042 shares), while Deutsche Telekom AG's participation in OTE SA's stands at 40.00000008%, (196,060,156 shares and voting rights).

Collective Labor Agreement

On September 23, OTE SA agreed with its Union the framework of a three-year Collective Labour Agreement. The basic terms include: A reduction of weekly working hours to 35 hours, with a parallel reduction in salaries of approximately 11% and the guarantee that the company will not introduce work rotation or proceed with any dismissals for the duration of the Collective Labour Agreement.

Bond Repurchases

During Q3 2011 OTE PLC repurchased Notes with a total nominal amount of €80.2mn issued under its €650mn 3.75% program due on November 11, 2011. The repurchased Notes have been cancelled. The outstanding nominal amount of the Notes following the above repurchases at the end of the quarter was €276.0mn.

5. Subsequent Events

OTE files Form 15F to terminate SEC registration and reporting obligations

On September 29, OTE SA filed a Form 15F with the United States Securities and Exchange Commission in order to terminate its registration and reporting obligations. The termination of registration under the Exchange Act is expected to become effective approximately 90 days after the filing of the Form 15F.

OTE launches Satellite TV offering

On October 17, OTE launched satellite TV services in Greece to build up on the foothold gained through its IPTV offering. Both services will now be offered under the OTE TV brand.

New BOD Member

On October 26, following the resignation of non-executive BoD member Mr. Roland Mahler, Ms. Claudia Nemat was elected as new member for the remainder of Mr. Mahler's tenure and in the same capacity. Ms. Nemat has been a member of the Board of Management of Deutsche Telekom AG since October 2011, responsible for European operations outside of Germany.

6. Outlook

For the balance of 2011, OTE expects that its revenues will continue to be affected by difficult economic conditions in all countries. In Greek mobile, market stabilization should continue. Mobile operations should also show more resilience in other countries. Ongoing cost-cutting measures should positively impact the Group's performance.

OTE Group is Greece's leading telecommunications organization and one of the pre-eminent players in Southeastern Europe, providing top-quality products and services to its customers.

Apart from serving as a full service telecommunications group in the Greek telecoms market, OTE Group has also expanded during the last decade its geographical footprint throughout South East Europe, acquiring stakes in the incumbent telecommunications companies of Romania and Serbia, and establishing mobile operations in Albania, Bulgaria, and Romania. At present, companies in which OTE Group has an equity interest employ about 28,700 people in four countries, and our portfolio of solutions ranges from fixed and mobile telephony to Internet applications, satellite, maritime communications and consultancy services.

OTE shares are listed on the Athens Stock Exchange, and the London Stock Exchange (in the form of GDRs). Following their delisting from NYSE in September 2010, the company's ADRs trade in the US OTC market. OTE's American Depositary Receipts (ADR's) represent ½ ordinary share.

Additional Information is also available on http://www.ote.gr.

Contacts:

Dimitris Tzelepis - Head of Investor Relations

Tel: +30 210 611 1574, Email: [email protected] 

Maria Kountouri - Assistant to the Head of Investor Relations

Tel: +30 210 611 5381, Email: [email protected]

Kostas Maselis - Senior Financial Analyst, Investor Relations

Tel: + 30 210 611 7593, Email: [email protected]

Sofia Ziavra - Financial Analyst, Investor Relations

Tel: + 30 210 611 8190, Email: [email protected] 

Forward-looking statement

Exhibits to follow:

I. Consolidated Balance Sheets as of September 30, 2011

II. Consolidated Income Statements for the three months and nine months ended September 30, 2011

III. Consolidated Statement of Cash Flows for the three months ended September 30, 2011

IV. Group Revenues for the three months and nine months ended September 30, 2011

V. Segment Reporting based on the Company's legal structure

VI. Mobile Operations

VII. Operational Highlights

VIII. EBITDA and Pro Forma EBITDA calculation

EXHIBIT I - CONSOLIDATED BALANCE SHEET

EXHIBIT II - CONSOLIDATED INCOME STATEMENT

EXHIBIT III - CONSOLIDATED STATEMENT OF CASH FLOWS

EXHIBIT IV - GROUP REVENUES

EXHIBIT V - SEGMENT REPORTING (9M 2011)

*Excluding impact of Voluntary Retirement Programs and Restructuring Plans

EXHIBIT V - SEGMENT REPORTING (9M 2010)

* Excluding impact of Voluntary Retirement Programs and Restructuring Plans

EXHIBIT VI- MOBILE OPERATIONS

 *Excluding impact of Voluntary Retirement Programs and Restructuring Plans

EXHIBIT VII -OPERATIONAL HIGHLIGHTS