30th Aug 2007 08:56
Hellenic Telecomms Organization S A30 August 2007 OTE GROUP REPORTS 2007 SECOND QUARTER RESULTS UNDER IFRS • Group revenues up 8.3%, around 3% on a comparable basis • Greek fixed-line revenues under pressure from unbundling, in line with three-year business plan forecasts; new broadband products launched to defend OTE brand • Solid mobile operations, particularly international, and resilience at RomTelecom • Group OIBDA margin 35.1% • Group net income up 21.9% ATHENS, Greece - August 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 quarterand six months ended June 30, 2007. CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006, IN ACCORDANCE WITH IFRS (• mn except Q2'07 Q2'06 % Change H1'07 H1'06 % Changeper share data)Revenues 1,551.3 1,431.8 8.3% 3,059.9 2,818.6 8.6%Operating Income 252.8 237.5 6.4% 513.1 465.8 10.2%Pre-tax Income 257.4 230.4 11.7% 498.6 433.9 14.9%Net Income 136.6 112.1 21.9% 277.5 221.9 25.1%Basic EPS (•) 0.2786 0.2287 21.9% 0.5661 0.4527 25.1%Operating Incomebefore 544.3 517.5 5.2% 1,083.9 1,030.1 5.2%Depreciation &AmortizationPro Forma*Operating Incomebefore 544.3 517.5 5.2% 1,106.0 1,030.1 7.4%Depreciation andAmortizationas % of Operating 35.1% 36.1% -1pp 36.1% 36.5% -0.4pprevenuesCashflowfrom Operations 352.1 416.0 -15.4% 672.7 788.8 -14.7%CAPEX as % of 15.7% 16.1% -0.4pp 15.3% 14.2% 1.1ppRevenues * 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: "Our performance in the second quarter was mixed. In Greek fixed-line, resultsvalidate our cautious business plan assumptions. OTE now feels the impact oflocal loop unbundling both on rental revenues and on our share in broadbandexpansion. Costs were affected by a fine imposed by the Regulator, which we arecontesting. In Romania, we are encouraged by RomTelecom's renewed efforts toretain customers through improved quality and broader services. Mobileoperations are continuing to gain market share in all countries and to deliverstrong profitability. We remain moderately optimistic for the second half,insofar as the continued launch of competitive new products and efforts toreduce our cost base should enable us to overcome tough market conditions,particularly in Greek fixed-line." Financial Highlights Revenues OTE Group Revenues for the three months ended June 30, 2007 increased by 8.3%,compared to the second quarter of 2006, largely reflecting the consolidation ofGermanos, acquired by Cosmote in October 2006, and the deconsolidation ofArmenTel since November 2006. Management estimates that comparable revenues wereup approximately 3% in the quarter, as solid performance in mobile operations,particularly international, strong ADSL growth and resilience at RomTelecom morethan offset the decline from voice revenues in Greek fixed-line operations. Total Operating Expenses Total Operating Expenses excluding depreciation and amortization increased by10.1% in Q2'07 to €1,007.0mn, as lower payroll and employee benefits were offsetin the quarter by higher cost of telecommunications equipment (largelyreflecting sales of handsets and accessories through the Germanos network),increased advertising costs, and higher "other" tax payments. - Payroll and Employee Benefits Payroll and Employee Benefits decreased by 5.1% to €317.6mn in Q2'07, reflectingcontinuing benefits from the OTE fixed-line Voluntary Retirement Plan. - Other Operating Expenses Other Operating Expenses were up 8.5% to €322mn, mainly reflecting higherexpenses in the Group's rapidly growing activities and newly consolidatedoperations. Operating Income before Depreciation and Amortization Operating Income before Depreciation and Amortization (OIBDA) was up 5.2% to€544.3mn in Q2'07, as compared to €517.5mn in Q2'06. OIBDA margin, at 35.1%, wasslightly lower compared to the same period last year, reflecting theconsolidation of Germanos, whose margins are lower than the Group average, andthe disposal of ArmenTel. Net income In the quarter, OTE Group posted Net Income of €136.6mn, up 21.9% from €112.1mnin Q2'06, reflecting the positive impact from lower statutory tax rates inGreece and Bulgaria effective from Q1'07, and higher foreign exchange gains. Cash flow Cash provided by operating activities stood at €352.1mn for the three monthsended June 30, 2007. The 15.4% drop in cash flow from operations partly reflectsnegative working capital movement. In addition, OTE incurred an outflow of €73.4million related to Greek fixed-line redundancy payments, while, under Cash Flowsfrom Investing Activities, OTE posted an outflow of €34.3 million, related tothe loan granted to the auxiliary pension fund. Capital Expenditure Capital expenditure in Q2'07 totaled €244.1mn, up 5.7% from Q2'06, mainlyattributable to higher investments at Greek fixed-line and RomTelecom.Management estimates that full-year 2007 Group capital expenditure will exceed€1bn, but might not reach the level announced at the time of the three-yearbusiness plan presentation (€1,242 mn). Debt As of June 30, 2007, total OTE Group gross debt amounted to €4,064.5mn, adecrease of 11.5% compared to 2006 year end. Net debt totaled €2,321.2mn, down8.9% from 2006 year end. OTE Group debt outstanding breaks down as follows: (• mn) Jun 30, 2007 Dec 31, 2006 % ChangeShort-Term: -Bank loans 6.5 25.2 -74.2%Medium & Long-term: -Bonds 3,356.8 3,844.3 -12.7% -Bank loans 701.2 721.0 -2.7%Total Indebtedness 4,064.5 4,590.5 -11.5%Cash and Cash equivalents 1,743.3 2,042.5 -14.6%Net Debt 2,321.2 2,548.0 -8.9% 1. OTE Fixed-Line TRAFFIC STATISTICS (Minutes, million) Q2'07 Q2'06 % ChangeLocal 2,779.7 2,915.2 -4.6%National Long - Distance 447.8 461.8 -3.0%International Long - Distance 72.2 76.7 -5.9%Fixed-to-Mobile 470.1 449.8 4.5%Special Calls 47.0 49.6 -5.2%Total Voice traffic 3,816.7 3,953.1 -3.5%Subscription Dial-up Internet 1,180.8 2,170.2 -45.6% Due to the growth of alternative carrier networks and technologicaldevelopments, a growing portion of voice traffic is carried through channelswhose volume cannot be quantified, making accurate market share calculationsimpossible. (• mn) Q2'07 Q2'06 % Change H1'07 H1'06 % ChangeRevenues 657.5 692.6 -5.1% 1,318.4 1,377.3 -4.3% - Basic Monthly Rentals 169.1 175.0 -3.4% 340.1 344.3 -1.2% - Fixed-to-fixed calls 125.2 131.0 -4.4% 255.7 268.0 -4.6% - Fixed-to-mobile calls 67.8 82.2 -17.5% 133.3 162.0 -17.7% - International 51.5 49.2 4.7% 92.2 91.7 0.5% - Other 243.9 255.2 -4.4% 497.1 511.3 -2.8%Operating Income 71.0 68.7 3.3% 147.1 117.6 25.1%Operating income beforedepreciation andamortization 197.4 199.9 -1.2% 403.6 383.5 5.2%as % of Operating revenues 30.0% 28.8% 1.2pp 30.6% 27.8% 2.8ppVoluntary Retirement costs 0.0 0.0 - 22.1 0.0 -Pro Forma Operating incomebefore depreciation andamortization 197.4 199.9 -1.2% 425.7 383.5 11.0%as % of Operating revenues 30.0% 28.8% 1.2pp 32.3% 27.8% 4.5ppDepreciation &Amortization 126.4 131.2 -3.7% 256.5 265.9 -3.5% In Q2'07, total fixed-line revenues decreased by 5.1% compared to the sameperiod last year, reaching €657.5mn. Nearly half of this decline is attributableto the deconsolidation of OTE Globe effective April 1, 2007. Lower monthlyrentals, fixed-to-fixed and fixed-to-mobile revenues also contributed to thedrop in revenues. The decline in fixed-to-mobile revenues is attributed to lowertermination rates implemented by mobile operators. Other revenues were down4.4%, as the rise in ADSL revenues was offset by drops in other categories,notably prepaid cards. The drop in monthly rentals reflects PSTN line disconnections. As of the end ofJune 2007, there were approximately 4.7 million PSTN lines in service, down 2.5%from the prior year level. Conversely, the number of ISDN lines (64K) rose by0.4% to a total of nearly 1.4 million. The total number of lines dropped by 1.8%or around 62,000, reaching 6.1 million. At the end of June, OTE had approximately 675,000 ADSL customers, as compared tonearly 593,000 at the end of March 2007, with retail customers accounting forover two-thirds of the total. The total Greek ADSL market reached 787,000customers as of the end of Q2'07, compared to 646,000 at the end of March 2007.The drop in OTE's overall broadband market share reflects the rapid growth oflocal loop unbundling (LLU). Due to the rapid increase in broadband penetrationand active promotion by OTE as well as competitors, the Company now estimatesthat the total Greek ADSL market should exceed 1.05 million by 2007 year-end,with the number of OTE customers passing the 800,000 mark. OTE is taking action to defend its positions in the face of aggressivecommercial and promotional policy initiatives by unbundlers. In May, OTE reducedmonthly charges for existing broadband access by a range of up to 26%, andlaunched new, higher, broadband access speeds of 4-8Mbps. OTE continues topromote Conn-X Talk, offering always-on broadband and unlimited weekday nightand weekend fixed-to-fixed calls. Finally, in July OTE launched Conn-X Talk 24/7, offering every day-all day unlimited calls. In total, subscribers for theseflat-rate prepaid plans today count for 60,000. OTE is working on a number ofcompetitive new products and services, to be launched in the coming weeks, whichare expected to further strengthen its offering in telephony as well asbroadband. Total operating expenses amounted to €586.5mn, down 6.0% from the Q2'06 level.Payroll and employee benefits declined by 12.5% to €182.9mn, largely reflectingthe positive impact of the Voluntary Retirement Program. Headcount numbers,currently at 11,536 employees, continue to decline gradually as a result of theemployee departures effected in Q2'07. Other operating expenses increased by approximately 5.7% in the quarter to€131.3mn, largely driven by higher Repairs & Maintenance and Cost of Materials,higher Advertising & Promotion costs, Taxes other than income and Utilities(mainly due to inter-company transactions). Provisions for doubtful accountscontinue to decline in line with the 2007-09 Business Plan targets. Finally,Other Provisions reflect a €20mn provision related to the €27.4mn penaltyimposed by the Greek regulator (EETT) in July 07, partly offset by otherprovision releases. Operating Income before Depreciation and Amortization (OIBDA) decreased by 1.2%compared to Q2'06 and reached €197.4mn. OIBDA margin improved by 1.2 percentagepoint to 30.0% of operating revenues. 2. Cosmote SUMMARY CONSOLIDATED RESULTS FOR THE SECOND QUARTER OF 2007 IN ACCORDANCE WITH IFRS(• mn) Cosmote AMC GloBul CosmoFon Cosmote Germanos Consolidated Greece Romania Group Q2'07 Q2'06 % ChangeRevenues 436.0 41.1 99.9 15.2 36.2 223.1 738.4 540.7 36.6% Operatingincomebeforedepreciationand 183.5 25.4 38.0 4.8 -8.0 8.4 248.4 203.6 22.0%amortization as % ofOperatingrevenues 42.1% 61.6% 38.0% 31.3% n/a 3.8% 33.6% 37.7% -4.1pp In Q2'07, Cosmote continued its strong performance across all geographicalmarkets. Excluding the contribution of Germanos, international operationsaccounted for approximately 31% of this quarter's revenues, a ratio thatreflects the successful expansion of Cosmote in Southeastern Europe since 2005. In Greece, Cosmote revenues were up 7.2% from the respective period last year to€436.0mn, posting an accelerated pace of growth compared to Q1'07, althoughresults have been affected by regulatory decisions. The negative regulatoryeffect was approximately €12mn on revenues and €6mn on OIBDA. Operating Incomebefore Depreciation and Amortization (OIBDA) increased by 7.6% in the quarterfor a margin of 42.1%. Blended AMOU further increased to 163 minutes in the six months ended June 30,primarily driven by pre-paid but also post-paid AMOU. Blended ARPU for thisperiod fell to €27.2, as a result of lower termination rates and reducedpre-paid ARPU driven by price offerings. In Q2'07, Cosmote reported 254,708 newnet additions, reaching a total customer base of approximately 5.7 million, andmaintained its leading position in the Greek mobile market. In Albania, AMC delivered strong revenue and OIBDA growth. Revenues increased by17.8% to €41.1mn in the quarter, while OIBDA was up 26.0% and reached a marginof 61.6%. In the six months ended June 30, blended AMOU remained at 58 minutesand blended ARPU at €14. Subscriber and outgoing traffic growth, mainly drivenby contract customers, continued this quarter and AMC's customer base reached1.1mn at the end of June 2007. In Bulgaria, GloBul maintained its strong revenue growth rate in Q2'07 andachieved a significant margin improvement. Revenues rose by 21.3% in Q2'07reaching €99.9mn, while OIBDA margin stood at 38.0% in the quarter, despite ahighly competitive market environment. Blended AMOU at the end of June 2007 roseto 88 minutes, while blended ARPU stood at €10. The company achieved 171,000 newnet additions and its total customer base approached 3.6 million. In FYROM, CosmoFon delivered an 18.2% revenue increase compared to Q2'06,reaching €15.2mn. OIBDA was up 155.7% to €4.8mn for a margin of 31.3%. BlendedAMOU for the six months was 81 minutes, 58.8% higher than the same period lastyear, while blended ARPU stood at €10. In Romania, Cosmote Romania continued its strong subscriber take-up and thecustomer base exceeded 2.2 million with more than 357,000 net additions duringQ2'07. The majority of customers remain prepaid, but Cosmote is increasinglyfocusing on the post paid segment. Blended ARPU for the period of six monthsstood at €6.2, while revenues reached €36.2mn in Q2'07, continuing their rapidgrowth quarter after quarter. Cosmote delivered strong customer growth and profitability improvement acrossall geographical markets. Consolidated revenues for Q2'07 stood at €738.4mn, a36.6% increase over Q2'06, partly reflecting the consolidation of Germanos sinceQ4'06. OIBDA as a percentage of operating revenues declined from 37.7% in Q2'06to 33.6% in Q2'07, mainly reflecting losses at the Romanian operation and thenewly consolidated Germanos operation. Additional details are available in Cosmote's Q2'07 press release issued onAugust 28, 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 SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006 IN ACCORDANCE WITH IFRS (• mn) Q2'07 Q2'06 % H1'07 H1'06 % Change ChangeRevenues 217.3 217.1 0.1% 439.4 440.0 -0.1%Operating IncomebeforeDepreciation & 73.9 71.7 3.1% 164.6 166.7 -1.3%amortizationOperating IncomebeforeDepreciation &amortization as % 34.0% 33.0% 1pp 37.5% 37.9% -0.4ppofOperating RevenuesOperating Income -0.8 6.1 - 25.8 32.5 -20.6%Net Income/(Loss) 1.4 -4.2 - 21.2 14.6 45.2%Net Income/(Loss)as % 0.7% -1.9% 2.6pp 4.8% 3.3% 1.5ppof OperatingRevenues Fixed Telephony, 3,087,467 3,770,514 -18.1%Lines Jun 30, 07 Dec 31, 06Cash and cashequivalents 159.5 155.6 2.5%Long term (89.7) (105.1) -14.6%borrowingsNet Cash Position 69.8 50.5 38.2% In the second quarter of 2007, RomTelecom's revenues were unchanged compared tothe second quarter of 2006, reaching €217.3mn. The reduction in traditionaltelephony revenues due to the decline in subscriber lines and retail traffic,together with the lower wholesale and payphone revenues, was offset by thegrowth of new revenue streams such as broadband, business data and TV services. The combination of mobile substitution with increased competition fromfixed-line alternative carriers, led to a decline of 18.1% in the number oflines, compared to the end of June 2006. Usage was also affected, with localtraffic decreasing by 29%. Nevertheless, early indications following theintroduction of new high value packages in May show a significant reduction inchurn. Interconnection revenues declined by 4% in the second quarter of 2007 comparedto the same period of 2006, despite the 18% increase in wholesale traffic, asalternative and mobile operators are increasing their usage of RomTelecom'snetwork at significantly reduced rates, as mandated by the Regulator. Revenuesfrom International traffic were also affected by lower termination rates. Data services (ADSL, VPN, other broadband services), more that tripled in thesecond quarter of 2007 compared to the same period last year, in line with thecompany's objective. The total number of ADSL customers at the end of Q2'07reached 176,000, a net addition of 39,000 since the end of the first quarter of2007. The "Dolce" DTH TV service launched in late November 2006 continued itssuccessful progress, adding over 68,000 customers during the second quarter andreaching a total number of 232,000 customers. Operating expenses for Q2'07 decreased by 1.5% to €143.4mn reflecting lowerredundancy expenses, net provisions and payment to operators, which more thanoffset the higher expenses related to newly launched services. As a result of lower operating expenses, Operating Income before Depreciation &Amortization for Q2'07 increased by 3.1% compared to Q2'06. Net income went froma negative €4.2mn in Q2'06 to a €1.4mn profit in Q2'07, mainly as a result ofincreased financial gains during Q2'07 compared to 2006, as well as thereduction in RomTelecom's share of Cosmote Romania's loss (from €7.3mn loss inQ2'06 to €1.6mn loss in Q2'07). Headcount dropped slightly under the level of December 31, 2006, reaching 12,242employees at the end of Q2'07. Several projects and initiatives are implemented to address the aggressivecompetitive environment: O Successful deployment of satellite television services contributed to therepositioning of RomTelecom as a full telecom and media services provider. O The new tariff scheme implemented in late May aims at granting toresidential subscribers more value for the money they pay offering unlimitedon-net traffic, off peak or round the clock for voice bundle packages. The newscheme was well received by residential customers. O More attractive ADSL offers and new options including calls to CosmoteRomania mobile numbers will reinforce RomTelecom's portfolio of residentialproducts. 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 Q2'07 were €32.5mn, up 15.7% from Q2'06. Thecompany is in the process of being absorbed by OTE S.A. 5. Events of the quarter THIRD EXTRAORDINARY SHAREHOLDERS MEETING On April 3, 2007, OTE held its Repeated EGM, where 51.5% of its shareholderswere present or represented. The EGM's agenda was approved, i.e. the revision ofcertain articles concerning the composition of the Board, the Greek State'sparticipation in the Company, the establishment of a stock option plan and othermatters. IORDANIS AIVAZIS APPOINTED CHIEF OPERATING OFFICER On May 29, 2007, OTEannounced that Mr. Iordanis Aivazis, former CFO of OTE S.A., will assume thenewly created position of Chief Operating Officer of OTE. Mrs. ChristiniSpanoudaki, Deputy CFO, will assume the position of OTE S.A. CFO. 55TH ANNUAL GENERAL ASSEMBLY OF SHAREHOLDERS On June 21, 2007, OTE held its 55thAGM. The AGM's agenda was approved, i.e. the distribution of a €0.55 dividendper share, the spin-off of the affiliated company "OTE International SolutionsSA" (OteGlobe), the initiation of a stock repurchase program, the re-appointmentof five Board members and other matters. SUCCESSFUL PLACEMENT BY THE HELLENIC REPUBLIC OF 10.7% OF OTE's SHARE CAPITAL OnJune 28, 2007, the Hellenic Republic announced the successful completion of thesale of a 10.7% interest in OTE's share capital via an accelerated book build ata price of €21.40 per share. The Hellenic Republic raised a total of about €1.1billion. Following this transaction, the Hellenic Republic holds directly andindirectly 28.03% of OTE's share capital. 6. subsequent events INTENTION OF THE NATIONAL REGULATORY AUTHORITY (EETT) TO IMPOSE PENALTY TO OTE On July 30, 2007, OTE announced that it had been notified by the Greektelecommunications regulator, EETT, of its intention to impose a series of fineson OTE for alleged anti-competitive behavior. In aggregate, the fines wouldtotal €27.4 million. OTE believes that those allegations are without merit andintends to take legal action against them. PARTICIPATION OF MARFIN INVESTMENT GROUP (MIG) IN OTE SA's SHARE CAPITAL OnAugust 16, 2007, OTE announced that Marfin Investment Group's directparticipation in OTE SA's share capital and its corresponding voting rightsreached 5.30% or 25,974,047 shares. 7. Outlook In mobile operations, strong revenue growth, particularly in internationalactivities, is expected to continue in the second half of the year. Satisfactorytakeup of RomTelecom's data and video services should continue to offset theloss of lines. Finally, OTE's Greek fixed-line operations should be bolstered byintroduction and active promotion of a host of new products and services, whilethe company will further accentuate its cost reduction efforts. The OTE Groupexpects to deliver a full-year 2007 performance consistent with the guidance itsent out in its 2007-09 Business Plan. About OTE OTE 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 Relations Tel: +30 210 611 1574, Email: [email protected] Nektarios Papagiannakopoulos - Senior Financial Analyst Tel. +30 210 611 7593, Email: [email protected] Daria Kozanoglou - Communications Officer, Investor Relations Tel: +30 210 611 1121, Email: [email protected] Marilee Diamanti - IR Coordinator Tel: +30 210 611 5070, Email: [email protected] Christina Hadjigeorgiou - Financial Analyst Tel: +30 210 611 1428, Email: [email protected] Forward-looking statement Any 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 2006 filed with the SEC on June 28, 2007. OTE assumes noobligation to update information in this release. Exhibits to follow: I. Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006 (Under IFRS) II. Condensed Consolidated Income Statements for the three months and six months ended June 30, 2007 and 2006 (Under IFRS) III. Analysis of Group Other Operating Expenses for the three months and six months ended June 30, 2007 and 2006 (Under IFRS) IV. Condensed Consolidated Statement of Cash Flows for the two quarters and six months ended June 30, 2007 (Under IFRS) V. Group Revenues for the three months and six months ended June 30, 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 JUNE 30, 2007 AND DECEMBER 31, 2006 (• mn) Jun 2007 Dec 2006 --------- ---------ASSETS Non - current assets:Telecommunication property, plant andequipment 6,692.3 6,583.5Goodwill 541.8 540.8Telecommunication licenses 403.7 384.2Investments 158.3 158.7Advances to pension funds 229.3 188.1Deferred taxes 97.0 127.4Other non-current assets 737.6 709.7 ------- -------Total non - current assets 8,860.0 8,692.4 ------- ------- Current assets:Materials and supplies 222.4 205.4Accounts receivable 1,199.7 1,160.5Other current assets 442.7 447.8Cash and cash equivalents 1,743.3 2,042.5 ------- -------Total current assets 3,608.1 3,856.2 ------- ------- TOTAL ASSETS 12,468.1 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 1,822.6 1,724.1 -------- -------- 3,763.3 3,664.8 -------- --------Minority interest 1,288.8 1,223.9 -------- -------- Total equity 5,052.1 4,888.7 -------- -------- Non - current liabilities:Long-term debt 4,026.4 4,037.3Reserve for staff retirement indemnities 207.5 198.5Reserve for voluntary retirement program 372.7 361.4Reserve for Youth Account 277.3 277.3Other non - current liabilities 262.7 126.9 -------- --------Total non - current liabilities 5,146.6 5,001.4 -------- -------- Current liabilities:Accounts payable 830.7 938.0Short-term borrowings 6.5 25.2Current maturities of long-term debt 31.6 528.0Income taxes payable 176.8 142.0Deferred revenue 196.0 196.2Dividends payable 272.4 3.7Reserve for voluntary retirement program 183.0 316.7Other current liabilities 572.4 508.7 -------- --------Total current liabilities 2,269.4 2,658.5 -------- -------- TOTAL EQUITY AND LIABILITIES 12,468.1 12,548.6 ======== ======== Movement in Shareholders' equity -------------------------------- ---------- --- 2007 ---------- Shareholders' equity, January 1 4,888.7 ----------Profit for the period 350.2Dividends declared (350.8)Net income recognized directly in equity 164.0 ---------- 163.4 ---------- ==========Shareholders' equity, June 30 5,052.1 ========== EXHIBIT II - CONDENSED CONSOLIDATED INCOME STATEMENT HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months and six months ended June 30, 2007 and 2006 (• mn) Q2'07 Q2'06 % H1'07 H1'06 % Unaudited Unaudited Change Unaudited Unaudited ChangeRevenues:DomesticTelephony 516.5 568.9 -9.2% 1,043.3 1,141.5 -8.6%InternationalTelephony 77.4 92.5 -16.3% 148.1 175.9 -15.8%MobileTelephony 551.0 493.2 11.7% 1,045.3 942.5 10.9%Other 406.4 277.3 46.6% 823.2 558.7 47.3% --------- --------- --------- ---------Total Revenues 1,551.3 1,431.9 8.3% 3,059.9 2,818.6 8.6% ========= ========= ========= ========= OperatingExpenses:Payroll andemployeebenefits (317.6) (334.5) -5.1% (619.3) (653.1) -5.2%Voluntaryretirementcosts 0.0 0.0 - (22.1) 0.0 -Payments tointernationaloperators (56.7) (50.6) 12.1% (104.5) (97.8) 6.9%Payments todomestictelephonyoperators (165.5) (187.8) -11.9% (319.0) (362.7) -12.0%Depreciationandamortization (291.5) (280.0) 4.1% (570.8) (564.3) 1.2%Cost oftelecommunicationsequipment (145.2) (44.7) 224.8% (298.1) (109.8) 171.5%Otheroperatingexpenses (322.0) (296.7) 8.5% (613.0) (565.1) 8.5% --------- --------- --------- ---------TotalOperatingExpenses (1,298.5) (1,194.3) 8.7% (2,546.8) (2,352.8) 8.2% ========= ========= ========= ========= OperatingIncome 252.8 237.6 6.4% 513.1 465.8 10.2%Other income /(expense):Interest income 20.6 18.4 12.0% 40.4 28.7 40.8%Interestexpense (49.4) (46.8) 5.6% (106.8) (89.1) 19.9%FXgain/(loss),net 16.9 (1.2) - 22.7 0.2 -Financial net (11.9) (29.6) -59.8% (43.7) (60.2) -27.4%Dividends 16.4 22.5 -27.1% 16.4 22.5 -27.1%Investmentincome/(loss)/Gain on saleof investment 0.1 0.0 - 12.8 5.8 120.7% --------- --------- --------- ---------Total Otherincome /(expense) 4.6 (7.1) - (14.5) (31.9) -54.5% Profit beforeincome taxes 257.4 230.5 11.7% 498.6 433.9 14.9% ========= ========= ========= ========= Income taxes (84.9) (84.7) 0.2% (148.4) (146.2) 1.5% --------- --------- --------- --------- Profit for theperiod 172.5 145.8 18.3% 350.2 287.7 21.7% ========= ========= ========= ========= Attributable to:Equity holdersof the parent 136.6 112.2 21.7% 277.5 221.9 25.1%Minorityinterest 35.9 33.6 6.8% 72.7 65.8 10.5% --------- --------- --------- --------- 172.5 145.8 18.3% 350.2 287.7 21.7% ========= ========= ========= ========= EXHIBIT III - GROUP OTHER OPERATING EXPENSE ANALYSIS (• mn) Q2'07 Q2'06 % Change H1'07 H1'06 % ChangeCommission to dealers 48.1 53.6 -10.3% 104.2 97.3 7.1%Repairs, maintenance, 54.8 42.5 28.9% 101.5 93.8 8.2%cost of materialsProvision for doubtfulaccounts 20.8 27.9 -25.4% 43.9 49.1 -10.6%Advertising 58.9 45.6 29.2% 101.4 76.6 32.4%Taxes other than incometaxes 18.1 9.9 82.8% 29.1 21.4 36.0%Other 121.3 117.2 3.5% 232.9 226.9 2.6% TOTAL 322.0 296.7 8.5% 613.0 565.1 8.5% EXHIBIT IV - CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the two quarters and six months ended June 30, 2007 (• mn) Q1'07 Q2'07 H1'07Cash Flows from Operating Activities: Profit before taxes 241.2 257.4 498.6Adjustments to reconcile to net cash provided byoperating activities: Depreciation and amortization 279.3 291.5 570.8 Provisions for voluntary retirement 22.1 - 22.1 Provisions 47.3 57.1 104.4 Investments and financial income/loss (38.3) (54.0) (92.3) Amortization of advances to pension funds 8.8 8.8 17.6 Interest expense 57.4 49.4 106.8 Adjustments for working capital movements relatedto operating activities Decrease/(increase) in materials and supplies (2.5) (14.5) (17.0) Decrease/(increase) in accounts receivable (51.9) (68.0) (119.9) (Decrease)/increase in liabilities (183.7) (73.3) (257.0) Minus: Interest paid (46.3) (31.9) (78.2) Income taxes paid (12.8) (70.4) (83.2) ------- ------- ------Net Cashprovided byOperatingActivities 320.6 352.1 672.7 ------- ------- ------ Cash Flows from Investing Activities: Acquisition of subsidiary or associate, net of (19.3) (11.8) (31.1) cash acquired Loans granted (53.6) (34.3) (87.9) Purchase of property, plant and equipment or (223.2) (244.1) (467.3) intangible assets Proceeds from sale of investment 6.3 28.5 34.8 Other long-term liabilities 144.5 - 144.5 Interest received 13.7 13.7 27.4 Dividends received - 6.3 6.3 ------- ------- ------Net Cash usedin InvestingActivities (131.6) (241.7) (373.3) ------- ------- ------ Cash Flows from Financing Activities: Proceeds from minority shareholders for 12.6 - 12.6 issuance of subsidiary's share capital Repayment of long-term debt and short-term (519.6) (9.1) (528.7) borrowings Dividends paid (0.4) (82.1) (82.5) ------- ------- ------Net Cashprovided/(usedin) byFinancingActivities (507.4) (91.2) (598.6) ------- ------- ------ (318.4) 19.2 (299.2)Net Increase/(Decrease) in Cash and CashEquivalentsCash and Cashequivalents atbeginning ofperiod 2,042.5 1,724.1 2,042.5 ------- ------- ------Cash and CashEquivalents atend of period 1,724.1 1,743.3 1,743.3 ======= ======= ======= EXHIBIT V - GROUP REVENUES HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months and six months ended June 30, 2007 and 2006 (• mn) Q2'07 Q2'06 % Change H1'07 H1'06 % ChangeDomestic Telephony:Basic monthly rentals 248.9 244.3 1.9% 503.0 485.3 3.6%Local and long distance calls -Fixed to fixed 146.1 176.6 -17.3% 303.4 370.4 -18.1% -Fixed to mobile 98.4 125.3 -21.5% 191.8 241.3 -20.5% ----- ----- ----- ------ 244.5 301.9 -19.0% 495.2 611.7 -19.0% ===== ===== ===== ======Other 23.1 22.7 1.8% 45.1 44.5 1.3% ----- ----- ----- ------Total Domestic Telephony 516.5 568.9 -9.2% 1,043.3 1,141.5 -8.6% ===== ===== ===== ====== International Telephony:International traffic 27.6 37.3 -26.0% 55.0 69.3 -20.6%Payments fromInternational mobileoperators 12.1 10.8 12.0% 22.2 18.6 19.4% ----- ----- ------ ------ 39.7 48.1 -17.5% 77.2 87.9 -12.2% ===== ===== ====== ======Payments fromInternational operators 37.7 44.4 -15.1% 70.9 88.0 -19.4% ----- ----- ------ ------Total InternationalTelephony 77.4 92.5 -16.3% 148.1 175.9 -15.8% ===== ===== ====== ====== Mobile Telephony 551.0 493.2 11.7% 1,045.3 942.5 10.9% ===== ===== ====== ====== Other Revenues:Prepaid cards 19.9 26.7 -25.5% 39.7 47.3 -16.1%Directories 14.1 14.0 0.7% 28.3 28.6 -1.0%Leased lines and datacommunications 69.4 64.2 8.1% 132.5 126.9 4.4%ISDN, connection &monthly charges 41.7 40.0 4.2% 83.8 79.4 5.5%Sales oftelecommunication 139.4 31.0 349.7% 292.1 85.3 242.4%equipmentInternet services-ADSL 56.0 32.0 75.0% 104.2 57.0 82.8%Services rendered 20.3 17.1 18.7% 43.0 31.5 36.5%Interconnection charges 21.4 29.7 -27.9% 46.9 61.0 -23.1%Miscellaneous 24.2 22.6 7.1% 52.7 41.7 26.4% ----- ----- ------ ------Total Other Revenues 406.4 277.3 46.6% 823.2 558.7 47.3% ===== ===== ====== ====== Total Revenues 1,551.3 1,431.9 8.3% 3,059.9 2,818.6 8.6% ===== ===== ====== ====== EXHIBIT VI - SEGMENT REPORTING (H1 2007) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS, for the six months ended June 30, 2007 (• mn) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 764.4 - 275.1 5.1 1,044.6InternationalTelephony 92.2 - 57.6 4.0 153.8MobileTelephony - 1,130.7 - - 1,130.7Other 461.8 295.3 106.7 211.6 1,075.4Total 1,318.4 1,426.0 439.4 220.7 3,404.5 (344.6) 3,059.9Revenues ------- ------- --------- ------- ------- --------- --------- IntersegmentRevenues (122.6) (89.8) (13.7) (118.5) (344.6) Revenue fromExternalCustomers 1,195.8 1,336.2 425.7 102.2 3,059.9 3,059.9 ------- ------- --------- ------- ------- --------- --------- OperatingExpenses:Payroll andemployeebenefits (360.8) (99.2) (113.1) (44.8) (617.9) (1.4) (619.3)Voluntaryretirementcosts (22.1) - - - (22.1) - (22.1)Payments tointernationaloperators (72.7) (17.4) (12.4) (21.1) (123.6) 19.1 (104.5)Payments todomestictelephonyoperators (161.3) (187.1) (45.5) (0.5) (394.4) 75.4 (319.0)Depreciationandamortization (256.5) (172.3) (120.6) (18.0) (567.4) (3.4) (570.8)Cost ofequipment &prepaid cards (45.2) (267.9) (11.3) (8.8) (333.2) 35.1 (298.1)Otheroperatingexpenses (252.7) (390.8) (92.5) (90.8) (826.8) 213.8 (613.0)TotalOperatingExpenses (1,171.3) (1,134.7) (395.4) (184.0) (2,885.4) 338.6 (2,546.8) ------- ------- --------- ------- ------- --------- --------- ------- ------- --------- ------- ------- --------- ---------OperatingIncome 147.1 291.3 44.0 36.7 519.1 (6.0) 513.1 ------- ------- --------- ------- ------- --------- --------- Operatingincome beforedepreciationandamortization 403.6 463.6 164.6 54.7 1,086.5 (2.6) 1,083.9----------- ------- ------- --------- ------- ------- --------- ---------as % ofOperatingrevenues 30.6% 32.5% 37.5% 24.8% 31.9% - 35.4% EXHIBIT VI - SEGMENT REPORTING (H1 2006) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS, for the six months ended June 30, 2006 (• mn) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 810.0 - 299.6 33.2 1,142.8InternationalTelephony 91.7 - 65.3 21.9 178.9MobileTelephony - 1,002.4 - 23.8 1,026.2Other 475.6 34.7 75.1 167.1 752.5Total 1,377.3 1,037.1 440.0 246.0 3,100.4 (281.8) 2,818.6Revenues ------- ------- --------- ------- ------- --------- --------- IntersegmentRevenues (102.5) (86.3) (8.2) (84.8) (281.8) Revenue fromExternalCustomers 1,274.8 950.8 431.8 161.2 2,818.6 2,818.6 ------- ------- --------- ------- ------- --------- --------- OperatingExpenses:Payroll andemployeebenefits (424.3) (65.6) (117.3) (45.4) (652.6) (0.5) (653.1)Payments tointernationaloperators (63.6) (16.0) (13.8) (7.2) (100.6) 2.8 (97.8)Payments todomestictelephonyoperators (188.5) (192.2) (50.5) (8.1) (439.3) 76.6 (362.7)Depreciationandamortization (265.9) (149.0) (116.0) (35.1) (566.0) 1.7 (564.3)Cost ofequipment &prepaid cards (79.0) (33.9) (6.4) (2.8) (122.1) 12.3 (109.8)Otheroperatingexpenses (238.4) (335.0) (85.3) (97.4) (756.1) 191.0 (565.1)TotalOperatingExpenses (1,259.7) (791.7) (389.3) (196.0) (2,636.7) 283.9 (2,352.8) ------- ------- --------- ------- ------- --------- --------- ------- ------- --------- ------- ------- --------- ---------OperatingIncome 117.6 245.4 50.7 50.0 463.7 2.1 465.8 ------- ------- --------- ------- ------- --------- --------- Operatingincome beforedepreciationandamortization 383.5 394.4 166.7 85.1 1,029.7 0.4 1,030.1----------- ------- ------- --------- ------- ------- --------- ---------as % ofOperatingrevenues 27.8% 38.0% 37.9% 34.6% 33.2% - 36.5% EXHIBIT VII - INTERNATIONAL ASSETS RomTelecom OTE has a 54.01% stake in RomTelecom, which is fully consolidated. ROMTELECOM INCOME STATEMENT For the six months ended June 30 2007, in accordance with IFRS (• thousand) H1'07 (Unaudited)Basic monthly rentals 162,899Domestic Telephony calls 112,188 ---------Domestic Telephony 275,086International Telephony 57,634Other Revenues 106,646 ---------Total Operating Revenues 439,367 Personnel (inc Voluntary Redundancy) (113,117)Other operating expenses (161,675)Depreciation and Amortization (138,817) ---------Total Operating expenses (413,609) Operating income 25,758 Financial, net 2,846 Income before provision for income taxes 28,604 Provision for Income taxes (7,419) ---------Net income 21,185 ========= 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 and six months ended June 30, 2007 and 2006 (• mn) Q2'07 Q2'06 % Change H1'07 H1'06 % Change Revenues 32.5 28.1 15.7% 60.3 53.6 12.5% Operating Income before Depreciation & amortization 4.0 1.4 - 4.4 4.3 2.3% Operating Income before Depreciation & Amortization as % of Operating Revenues 12.3% 5.0% 7.3pp 7.3% 8.0% -0.7pp EXHIBIT IX -OPERATIONAL HIGHLIGHTS ----------------------------- Operational Highlights for the quarters ended June 30, 2007 and 2006 ----------------------------- OTE Q2'07 Q2'06 % ChangePSTN lines 4,702,407 4,822,307 -2.5%ISDN, 64kb equiv. lines 1,379,596 1,373,932 0.4%Total lines 6,082,003 6,196,239 -1.8% ADSL subscribers 674,680 300,053 124.9%Unbundled local loops 112,356 10,899 - COSMOTE (Greece)Pre-paid sub. 3,763,549 3,108,936 21.1%Contract sub. 1,920,084 1,773,487 8.3%Total subscribers 5,683,633 4,882,423 16.4% AMCTotal subscribers 1,090,939 849,466 28.4% GLOBULTotal subscribers 3,573,172 2,688,077 32.9% COSMOFONTotal subscribers 515,785 432,689 19.2% COSMOTE ROMANIATotal subscribers 2,216,465 531,619 - OTEnetResidential clients 632,715 446,500 41.7%Business clients 21,840 16,194 34.9% Employees: -OTE 11,536 12,511 -7.8% -COSMOTE (Greece) 2,163 2,141 1.0% -RomTelecom 12,242 12,950 -5.5% ----------- -------- -------- -------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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