Ote Ads Regulatory News (OTES)

OTE GROUP REPORTS 2016 FIRST QUARTER RESULTS

UNDER IFRS

· Solid performance in Greece:

· Fixed Revenues up 1.7% on strong Broadband, TV, ICT performance

· Moderate drop in Mobile Service Revenues (-3.1%, vs. -3.7% in FY'15)

· Fixed EBITDA up 8%; Combined Fixed & Mobile EBITDA up 1%

· Continuing pressure in Romania

· Adjusted FCF impacted by lower EBITDA, Capex and working capital timing

· Net Debt at €853mn, or 0.6x EBITDA

ATHENS, Greece - May 4, 2016 - 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 ended March 31, 2016.

* Excluding the impact of Voluntary Retirement Programs and Restructuring Plans

** Cash Flow includes interest received but excludes Voluntary Exit Programs, Restructuring and/or Spectrum payments

Commenting on OTE's results for the first quarter of 2016, Michael Tsamaz, Chairman & CEO, noted: "We achieved a positive first quarter in Greece, in circumstances that remain demanding. Our Greek fixed-line revenue growth was solid, driven by the continued healthy results of our TV and broadband solutions, with VDSL reaching record net additions in the quarter. ICT revenues remained strong this quarter. In Greek mobile, the drop in service revenues reflects demand pressures affected mainly by the general market conditions. Our mobile subsidiaries in Romania and Albania turned in positive top-line performances. Our Romanian operations have yet to show the benefits from our ongoing significant efforts and investments, but we are confident in the new management's ability to improve performance over time."

Mr. Tsamaz added: "We are fully aware of the headwinds in front of us for the balance of the year, particularly from the implementation of measures impacting the disposable income of our Greek customers and potentially the demand for our services. We are working hard to provide all our clients with the best value for their money, and we are convinced that the best way to earn and retain their trust, and support our top line, is to continue investing intelligently in our networks and technology. We will execute this with the strictest operational and financial discipline, to sustain the productivity and profitability of our businesses."

Outlook

In the current year, OTE expects a persistence of the trends that shaped its 2015 performance. In Greece, OTE is leveraging its capabilities and resources to mitigate the impact from continuing difficult economic conditions as well as pressures on consumer and business spending. The potential implementation of additional taxation on the Company's offering may have a further impact on demand. In its international operations, the Group expects competition in Romania to remain heated and is taking steps to reverse revenue erosion in the medium term, given ongoing efforts in the technological, commercial, cost-containment and network monetization fronts.

OTE's total Capex should again in 2016 be in the vicinity of €0.55bn, excluding spectrum. OTE also expects free cash flow for full year 2016 to amount to approximately €0.5bn.

BREAKDOWN OF GROUP REVENUES

BREAKDOWN OF GROUP PRO FORMA EBITDA

OTE GROUP HIGHLIGHTS

OTE Group's consolidated revenues stood at €928.5mn in Q1'16, down 1.3% compared to Q1'15, a resilient performance in a testing economic and competitive environment.

Total Operating Expenses, excluding depreciation, amortization, impairments and charges related to voluntary retirement programs and restructuring costs, amounted to €627.9mn in Q1'16, down 0.5% compared to Q1'15. Personnel expenses were 7.1% lower, benefiting from the mid-2015 voluntary retirement scheme generating annual savings of over €30mn.

Together, Greek fixed and mobile Pro Forma EBITDA increased by 1% in the quarter, but was offset by the pressure on the Romanian operations. As a result, Group Pro Forma EBITDA declined by 5.1% in the first quarter to €309.3mn, yielding a 33.3% margin for the period.

Interest Expenses were down 8.8% in the quarter to €36.1mn, reflecting the lower Group net debt.

The Group's Income Tax expense stood at €37.4mn in Q1'16, down 8.8% compared to the previous year, reflecting lower Earnings Before Taxes. The increase in the effective tax rate primarily reflects losses in Romania, which did not trigger deferred tax assets.

Group Net Income stood at €33.9mn in Q1'16, down 16.1% compared to the previous year, mainly reflecting lower EBITDA, as well as the higher effective tax rate.

Capital Expenditures (excluding spectrum payments) amounted to €164.7mn in Q1'16, up 3.1%. Capex in Greek and Romanian fixed-line amounted to €87.3m and €26.0mn, respectively. In mobile operations, Capex stood at €47.8mn (Greece: €30.6mn, Romania: €9.9mn, Albania: €7.3mn), while an additional amount of €13.5mn related to spectrum acquisition in Greece was paid in the quarter.

In Q1'16, the Group's adjusted Free Cash Flow generation (including interest paid/received and excluding VRS, spectrum and restructuring-related payments) stood at €24.3mn, mainly due to lower EBITDA and to the payment rollover into Q1 of certain liabilities as a result of capital controls during the summer of 2015.

The Group's Underlying Net Debt was less than €0.9bn at March 31, 2016, down 24.9% compared to March 31, 2015. The Group's ratio of Underlying Net Debt to 12-month trailing Pro forma EBITDA stood at 0.6x.

OTE Group debt outstanding breaks down as follows:

1. GREECE

Fixed-Line Operations, Greece

ACCESS LINES

In Q1'16, the total Greek access market (OTE active retail lines, Wholesale line rental connections and full LLU subscribers) added 1k lines. OTE fixed-line operations in Greece posted a limited net loss of 4k access lines.

In Q1'16, OTE achieved net additions of 37k retail broadband customers, or 58% of total market net additions, bringing the total number of OTE retail broadband subscribers to 1,544k. OTE's high-speed VDSL broadband service continues to achieve significant success, with net additions of 18k in the quarter. At quarter end, approximately 168k subscribers, or 11% of OTE's retail broadband base, had adopted its VDSL solution. With 535 local exchanges and around 5.1k cabinets in operation, OTE is well positioned to convert a significant part of its customer base to higher broadband speeds and improved services, thereby supporting ARPU. The continuing take up of the service in a challenging period for consumers, underscores the strong appetite for the premium VDSL service in which OTE has been substantially investing. OTE's wholesale VDSL offering also gained traction in Q1'16.

OTE achieved another quarter of growth in its TV offering. As at March 31, 2016, total TV subscribers amounted to 458k, a year-on-year increase of 25%. Together with the rise in subscriber numbers, higher ARPU enabled OTE's pay-TV operations to continue posting strong growth in the quarter. OTE continued to monetize the significant investments it is making in quality content, notably in popular sporting events, including the European football UEFA Champions League, UEFA Europa League, UK Premier League and Greek Cup.

OTE continued posting strong growth in its ICT services, with revenues up 16.6%. This strong performance was supported by the company's progress with private sector organizations, though the State projects (EU funded) are expected to gradually slow down this year.

SUMMARY FINANCIAL DATA - FIXED-LINE OPERATIONS, GREECE

* Excluding impact of Voluntary Retirement Programs & Restructuring costs

Greek fixed-line revenues grew on a year-over-year basis for a sixth consecutive quarter, posting a 1.7% increase in Q1'16. Revenues from retail fixed services grew by 3.1% in the quarter, supported by strong performances in broadband, TV and ICT revenues, the result of ongoing network investments, customer experience improvements and commercial initiatives. Broadband Revenues were boosted by strong VDSL take-up in the quarter.

Total Greek fixed-line Operating Expenses, excluding depreciation, amortization and charges related to voluntary retirement programs and restructuring, amounted to €220.1mn in Q1'16, down 3.4% from Q1'15 reflecting lower device and maintenance costs. Personnel expenses remained unchanged in Greek fixed-line operations, due to the internal transfer to OTE SA of employees previously with the OTE Plus, OTE Investments subsidiaries, during 2015. Excluding this factor, personnel expenses would be down about 10%, reflecting the recent early retirement program. Management is focusing on additional areas of possible cost containment. In particular, efforts to reduce energy costs, which account for c. 5% of total operating expenses, through direct participation in the energy wholesale market, have been identified as a potential area of significant savings. Significant savings in printing and mailing costs, through outsourcing and active promotion of e-bill statements, have also been achieved.

Pro forma EBITDA increased by 8.0% to €161.1m in Q1'16, helped by revenue growth and cost reduction. As a result, pro forma EBITDA margin in Greek fixed-line operations increased by 250 basis points compared to Q1'15, to 42.5%.

MOBILE OPERATIONS, GREECE

SUMMARY FINANCIAL & SUBSCRIBERS DATA

* Excluding impact of Restructuring costs

As of the end of Q1'16, Cosmote provided mobile telephony services to 7.5mn customers in Greece, up 2.3% from March 31, 2015.

In Q1'16, service revenues declined by 3.1% (FY2015: -3.7%), a resilient performance taking into consideration the challenging economic and competitive environment in Greece. Total Revenues were down by 5.7%, as a result of a 13.5% drop in handset sales, mainly due to base effect impact due to Digital Solidarity, a state/EU funded program to promote data connectivity which ran in 2015.

In line with its strategy to develop its customer base, focusing on customer experience and high quality of services, Cosmote is investing in maintaining network superiority in terms of coverage and data speeds. In Q1'16, Cosmote further expanded its 4G footprint, now covering more than 83% of the Greek population, significantly ahead of competition. The company's 4G+ mobile broadband network is operational in Athens, Thessaloniki, and additional cities and tourism destinations across Greece.

Demand for mobile data usage continued to grow at a rapid pace in Q1'16, resulting in 43% growth in Cosmote data traffic compared to Q1'15, driven by handset Internet, as smartphone users now account for approximately 53% of Cosmote's active base.

In Q1'16, Cosmote Greece's blended AMOU dropped by 4.5% to 280 minutes, reflecting demand pressures. Blended ARPU for the same period was €11 down 4.4% from Q1'15, mainly due to usage.

2. Romania

Fixed Line Operations, Romania

SUMMARY FINANCIAL & SUBSCRIBERS DATA

* Excluding impact of Restructuring Plans

In Q1'16, revenues from Romanian fixed-line operations dropped 7.8% compared to Q1'15, primarily reflecting sharply lower voice revenues and timing of ICT projects implementation. Conversely, mobile revenues from fixed-mobile convergent solutions were up 82% as consumers adopt the convergent offering.

Compared to Q1'15, fixed voice revenues were 16% down, while broadband revenues dropped 4% and TV revenues were 1% lower. Year on year, the total number of FMC subscribers nearly tripled, while TV subscriber numbers maintained their growth, up 2.5%, and broadband subscriptions shrank 1.8%.

Total Romanian fixed-line Operating Expenses, excluding depreciation, amortization, charges related to voluntary retirement programs and restructuring, declined by €1.3mn in Q1'16 compared to Q1'15. The company maintained strict control of indirect costs and implemented several transformation projects.

Other income declined by 29% in Q1'16 compared to Q1'15, mainly due to lower income from asset disposals.

MOBILE OPERATIONS, ROMANIA

SUMMARY FINANCIAL & SUBSCRIBERS DATA

* Excluding impact of restructuring costs

In Q1'16, Telekom Romania Mobile's total customer base decreased 4%, to 5.7mn, out of which 29% was postpaid. The number of business customers grew by 5.5% compared to Q1'15, reflecting the Company's targeted offers for professional users and synergies created following its rebranding, together with Telekom Romania Communications, under the Telekom name.

Blended ARPU increased by 2.7% in Q1'16 compared to Q1'15, due to higher incoming ARPU (traffic driven). Blended AMOU increased by 4.6%.

Total Operating Expenses, excluding depreciation, amortization, impairments and charges related to voluntary retirement programs and restructuring costs, stood 18% higher, reflecting mainly the higher cost of goods sold as a result of increased revenues from handsets and higher interconnection costs due to traffic patterns.

Deterioration of prepaid margin due to market competitiveness along with costs associated with the expansion of the Company's business customer base led to a decline in EBITDA.

3. albania

MOBILE OPERATIONS, ALBANIA

SUMMARY FINANCIAL & SUBSCRIBERS DATA

* Excluding impact of Restructuring costs

As of the end Q1'16, Telekom Albania's customer base totaled 1.7mn subscribers, 17.3% down. This reflects the regulatory change in July 2015, which prohibited the differentiation between on/off net pricing and is transforming the market into a single-SIM play.

Telekom Albania posted a 30.6% increase in mobile handset data revenues in Q1'16 compared to the same period last year, fueled by the launch of LTE services in July'15 and by its competitive smartphone and service offering.

Retail regulation introduced in July 2015 further intensified competition in the Albanian market in Q4'15 and consequently affected Q1'16. In this context, Telekom Albania successfully managed to bolster its total revenues by 25.8% and service revenues by 25.5%, compared to Q1'15. In addition, new prepaid and postpaid tariff plans introduced in July led to higher incoming national and international traffic and an overall ARPU increase.

EBITDA performance in Q1'16, although negatively affected by increased interconnection costs, was higher by 16.7% compared to Q1'15, due to higher revenue performance and efficient cost management.

4. Events of the quarter

TELEKOM ROMANIA SIGNS NATIONAL ROAMING AGREEMENT WITH ORANGE ROMANIA

On February 16, 2016, Telekom Romania announced its cooperation with Orange Romania, through an agreement for national roaming on Orange's 4G network. This will enhance Telekom Romania's market offerings to reach the best 4G coverage in the country. In addition, Telekom Romania has agreed to offer its FTTH/B urban network to Orange Romania on a wholesale basis. This will monetize TKR's infrastructure, increasing its utilization. The cooperation of the two leading Romanian operators will improve capital deployment and competitiveness in the country.

The OTE Group is the largest telecommunications provider in the Greek market and one of the leading telecom groups in Southeast Europe with presence in Greece, Romania and Albania. OTE is among the largest listed companies, with respect to market capitalization, in the Athens Stock Exchange.

OTE Group offers the full range of telecommunications services: from fixed-line and mobile telephony, broadband services, to pay television and ICT solutions. In addition to its core telecommunications activities, the Group is also involved in maritime communications, real-estate and professional training.

Additional Information is also available on https://www.cosmote.gr.

Contacts:

Evrikos Sarsentis - Head of Mergers, Acquisitions and Investor Relations

Tel: +30 210 611 1574, Email: esarsentis@ote.gr

Maria Tsavdaridou - Assistant to the Head of Mergers, Acquisitions and Investor Relations

Tel: +30 210 611 1574, Email: mtsavdaridou@ote.gr

Kostas Maselis - Deputy Director, Investor Relations

Tel: + 30 210 611 7593, Email: kmaselis@ote.gr

Sofia Ziavra - Financial Analysis Manager, Investor Relations

Tel: + 30 210 611 8190, Email: sziavra@ote.gr

Christina Hadjigeorgiou - Senior Financial Analyst, Investor Relations

Tel: + 30 210 611 1428, Email: cchatzigeo@ote.gr

Exhibits to follow:

I. Consolidated Statements of Financial Position as of March 31, 2016 and December 31, 2015

II. Consolidated Income Statements for the quarter ended March 31, 2016 and comparative 2015

III. Consolidated Statement of Cash Flows for the quarter ended March 31, 2016 and comparative quarters

IV. Free Cash Flow to Adjusted Free Cash Flow Reconciliation for the quarter ended March 31, 2016 and comparative quarters

V. Group Revenues for the quarter ended March 31, 2016 and comparative 2015

VI. Segment Reporting based on the Group's legal structure

VII. Operational Highlights

EXHIBIT I - CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

EXHIBIT II - CONSOLIDATED INCOME STATEMENT

* Excluding the impact of Voluntary Retirement Programs and Restructuring Plans

EXHIBIT III - CONSOLIDATED STATEMENT OF CASH FLOWS

EXHIBIT IV - FREE CASH FLOW TO ADJUSTED FREE CASH FLOW RECONCILIATION:

EXHIBIT V - GROUP REVENUES

EXHIBIT VI - SEGMENT REPORTING (Q1 2016)

*Excluding impact of Voluntary Retirement Programs and Restructuring Plans

EXHIBIT VI - SEGMENT REPORTING (Q1 2015)

*Excluding impact of Voluntary Retirement Programs and Restructuring Plans

EXHIBIT VII - OPERATIONAL HIGHLIGHTS