Ote Ads Regulatory News (OTES)

29 Nov 2007 09:55

Hellenic Telecomms Organization S A29 November 2007 OTE GROUP REPORTS 2007 THIRD QUARTER RESULTS UNDER IFRS • Group revenues up 9.7%, or up approx. 3% on a comparable basis • Greek fixed-line revenues resilient despite sharp increase in LLU • Excluding non-recurring €50mn VRP reversal in Q3'06, comparables in line: pro-forma Group OIBDA down slightly on Germanos consolidation; Group OIBDA margin at 37.7%, highest quarterly level in 2007 o Fixed-line: margin in Greece and Romania in line with Business Plan guidance; o Mobile: strong margin improvement across all international operations • Launch of voluntary cash public offer for Cosmote minority shareholders ATHENS, Greece - November 29, 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 nine months ended September 30, 2007: (• mn except Q3'07 Q3'06 % Change 9M'07 9M'06 % Changeper share data)Revenues 1,627.7 1,483.9 9.7% 4,687.6 4,302.5 9.0%Operating Income 319.2 403.5 -20.9% 832.3 869.3 -4.3%Pre-tax Income 260.1 378.1 -31.2% 758.7 812.0 -6.6%Net Income 155.5 223.6 -30.5% 433.0 445.5 -2.8%Basic EPS (•) 0.3173 0.4562 -30.5% 0.8834 0.9090 -2.8%OIBDA* 613.2 678.1 -9.6% 1,697.1 1,708.2 -0.6%Pro forma** OIBDA 613.2 628.3 -2.4% 1,719.2 1,658.4 3.7%as % of OperatingRevenues 37.7% 42.3% -4.6pp 36.7% 38.5% -1.8ppCash flow fromoperations 343.9 423.5 -18.8% 1,016.6 1,212.3 -16.1%CAPEX as % of 14.2% 12.5% 1.7pp 14.9% 13.6% 1.3ppRevenues * Operating income before depreciation and amortization ** Excluding impact of OTE SA Voluntary Retirement Program (€49.8mn reversal inQ3'06) Commenting on the quarter, Panagis Vourloumis, Chairman and CEO, noted: "In recent months, we have made considerable progress toward our goal ofbuilding a coordinated Group better equipped to succeed in the convergingtelecommunications markets in which we operate. This led to our offer to takeover 100% of our mobile operations, but is also reflected in the programmedintegration of OTEnet within Greek fixed-line and the spin-off of OTE Globe. Ourplans to divest non-core activities are also on track. In the quarter, weachieved solid operating performances, characterized by continued strong growthin mobile and satisfactory resilience in fixed-line, and obtained good resultsfrom our cost-cutting exercises. All this strengthens our confidence that ourstrategy is the right one and that we are achieving our business plan targets inthis rapidly evolving competitive environment." Financial Highlights Revenues OTE Group Revenues for the three months ended September 30, 2007 increased by9.7% compared to the third quarter of 2006. This quarter continues to reflectthe net positive impact of the Germanos acquisition and ArmenTel'sdeconsolidation in Q4'06. Management estimates that comparable revenues were upby approximately 3% in Q3'07, as a result of strong performance in the mobileoperations and the ongoing ADSL growth. Total Operating Expenses Total Operating Expenses excluding depreciation & amortization, adjusted for theVRP reversal, increased by 18.7% in Q3'07 to €1,014.5mn, driven by higher costof telecommunication equipment, largely reflecting sales of handsets &accessories through the Germanos network. - Payroll and Employee Benefits In Q3'07, Payroll and Employee Benefits totaled €301.8mn, up 8.6% compared toQ3'06, which already included the benefits of the OTE-fixed line VoluntaryRetirement Plan. - Other Operating Expenses Other Operating Expenses were up 6.4% to €309.8mn, mainly reflecting higherrepairs & maintenance costs, bad debt provisions and commissions. Operating Income before Depreciation and Amortization Operating Income before Depreciation and Amortization (OIBDA) adjusted for theimpact of the Voluntary Retirement Plan was down 2.4% to €613.2mn in Q3'07, ascompared to €628.3mn in Q3'06. The OIBDA margin stood at 37.7%, as compared to42.3% in the respective quarter last year, mainly reflecting the consolidationof Germanos, whose 2.9% margin in the quarter is lower than the Group average,and the disposal of ArmenTel. Net Income OTE Group reported Net Income of €155.5mn, as compared to €223.6mn in Q3'06,when net income had benefited from the €49.8mn reversal of Voluntary Retirementcharges. In addition, FX losses of €22mn, related to changes in value of theRomanian currency, were recorded in Q3'07, while higher interest costs relatedto the Germanos acquisition and higher depreciation charges resulting fromsignificant capital expenditure of the international businesses also impactedNet Income. Cash Flow Cash provided by operating activities amounted to €343.9mn for the three monthsended September 30, 2007. The 18.8% drop in cash flow from operations mainlyreflects an increase in income taxes paid in Q3'07 at the Greek fixed-line andthe mobile operations. In addition, OTE incurred an outflow of approximately€78mn related to Greek fixed-line redundancy payments, while, under Cash Flowsfrom Investing Activities, OTE posted an outflow of €23.8mn, related to the loangranted to the auxiliary pension fund. Capital Expenditure Capital expenditure in the third quarter totaled €230.8mn, up 24.2% from Q3'06,mainly due to Greek fixed-line investments as well as investments in mobiletelephony. Management estimates that full-year 2007 Group capital expendituremight not reach the level announced at the time of the three-year business planpresentation. Debt As of 30 September 2007, total OTE Group gross debt amounted to €4,042.8mn, adecrease of 11.9% compared to 2006 year end. Net debt totaled €2,470.4mn, down3% from 2006 year end. OTE Group debt outstanding breaks down as follows: (• mn) Sep 30, 2007 Dec 31, 2006 % ChangeShort-Term: -Bank loans 6.7 25.2 -73.4%Medium & Long-term: -Bonds 3,358.6 3,844.3 -12.6% -Bank loans 677.5 721.0 -6.0%Total Indebtedness 4,042.8 4,590.5 -11.9%Cash and Cash equivalents 1,572.4 2,042.5 -23.0%Net Debt 2,470.4 2,548.0 -3.0% 1. OTE Fixed-Line TRAFFIC STATISTICS (Minutes, million) Q3'07 Q3'06 % ChangeLocal 2,357.9 2,530.1 -6.8%National Long - Distance 444.6 454.6 -2.2%International Long - Distance 70.0 76.0 -7.9%Fixed-to-Mobile 482.0 472.9 1.9%Special Calls 46.3 49.8 -7.0%Total Voice traffic 3,400.8 3,583.4 -5.1%Subscription Dial-up Internet 957.0 1,777.3 -46.2% (• mn) Q3'07 Q3'06 % Change 9M'07 9M'06 % ChangeRevenues 668.1 679.5 -1.7% 1,986.5 2,056.8 -3.4% - Basic Monthly Rentals 170.9 174.3 -2.0% 511.0 518.6 -1.5% - Fixed-to-fixed calls 114.6 118.7 -3.5% 370.3 386.7 -4.2% - Fixed-to-mobile calls 66.5 77.7 -14.4% 199.8 239.7 -16.6% - International 55.2 51.2 7.8% 147.4 142.9 3.1% - Other 260.9 257.6 1.3% 758.0 768.9 -1.4%Operating Income 98.5 157.8 -37.6% 245.6 275.4 -10.8%Operating income beforedepreciation and 222.5 288.2 -22.8% 626.1 671.6 -6.8%amortizationas % of Operating revenues 33.3% 42.4% -9.1pp 31.5% 32.7% -1.2ppVoluntary Retirementcosts/(reversals) 0.0 (49.8) 22.1 (49.8)Pro Forma Operating incomebefore depreciation andamortization 222.5 238.4 -6.7% 648.2 621.8 4.2%as % of Operating revenues 33.3% 35.1% -1.8pp 32.6% 30.2% 2.4ppDepreciation & Amortization 124.0 130.4 -4.9% 380.5 396.3 -4.0% In Q3'07, total fixed-line revenues amounted to €668.1mn. The rate of revenueerosion in the quarter (-1.7%) was significantly slower than in the first twoquarters of 2007, and virtually the entire decline in revenues is attributableto the deconsolidation of OTE Globe. Despite the decrease in leased linesrevenues and prepaid cards, Other Revenues rose by 1.3%, mainly due to strongrevenues from ADSL, interconnection and services. PSTN line loss continued in Q3'07, having a negative effect on monthly rentals.The 3.4% drop in PSTN lines primarily reflects the impact of LLU, as well as apick up in fixed-to-mobile substitution stimulated by aggressive competitiveoffers. During the period, the number of ISDN lines (64K) fell by 0.8%. As ofthe end of September 2007, the number of PSTN lines exceeded 4.6 million, whileISDN lines stood at nearly 1.4 million. The total number of lines dropped by2.8% reaching 6 million, or by approximately 78,000 lines compared to Q2'07. The number of OTE ADSL customers continued to increase at a rapid pace,exceeding 756,000 at the end of September, a jump of approximately 82,000compared to the end of Q2'07. Retail customers account for over two-thirds ofthe total. As of September 30, the total Greek ADSL market reached nearly947,000 customers, compared to 787,000 at the end of June 2007. OTE managementestimates that the market should comfortably exceed 1.1 million ADSL subscribersby the end of 2007, with OTE ADSL customers exceeding 800,000. The pressure onOTE's retail broadband market share continued in Q3'07, reflecting theheightened competitive environment and strong growth in LLU activity. With LLUdriving the growth of the market, management now expects the number of unbundledlines to exceed 300,000 by 2007 year end, ahead of earlier projections. To meet this intensifying competition, OTE continues to promote new offerings intelephony and broadband. Along with Conn-x Talk, in July OTE launched Conn-xTalk 24/7 that was well accepted by the market. The total number of Conn-x Talkflat-rate subscribers is continuously increasing, already exceeding 100,000 or28% of the eligible customer base. As announced in August, OTE also launched anumber of competitive offerings, but due to regulatory delays these did notproduce the anticipated positive impact expected for Q3'07. In Q3'07, total operating expenses amounted to €569.6mn, roughly unchanged fromthe prior year level excluding the €49.8mn reversal of Voluntary Retirement Planin Q3'06. Payroll and employee benefits were higher by 5.4% to €172.4mn, as thepositive impact of the Voluntary Retirement Program was already reflected inQ3'06 results. In addition, of the 500 additional employees eligible forVoluntary Retirement in 2007, only slightly more than half had effectively leftthe Company by the end of the quarter. In the quarter, other operating expenses stood at €119.5mn, roughly unchangedcompared to Q3'06, as the Company pursues its efforts to attack its cost base. In Q3'07, Operating Income before Depreciation and Amortization (OIBDA) totaled€222.5mn, down 6.7% compared to pro forma OIBDA in Q3'06 (excluding the €49.8mnVoluntary Retirement Plan reversal). The OIBDA margin declined by 1.8 percentagepoints to 33.3%. 2. Cosmote (• mn) Cosmote AMC GloBul CosmoFon Cosmote Germanos Consolidated Greece Romania Group Q3'07 Q3'06 % Change Revenues 468.6 48.5 109.9 17.2 41.5 260.7 825.0 593.5 39.0% Operatingincomebeforedepreciationand 205.1 31.0 44.5 6.1 -8.8 7.6 281.8 248.6 13.4%amortization as % ofOperatingrevenues 43.8% 64.0% 40.5% 35.5% n/a 2.9% 34.2% 41.9% -7.7pp In Q3'07, Cosmote continued driving customer additions and volume expansionacross all geographical markets, which resulted in sharp revenue growth.Excluding the contribution of Germanos, international operations accounted forapproximately 32% of this quarter's revenues before eliminations. The highproportion of revenues coming from international operations reflects thesuccessful expansion of Cosmote in Southeastern Europe, which should enable thecompany to reach its 15 million subscriber target way ahead of its initial 2009plan. In Greece, Cosmote revenues totaled €468.6mn in Q3'07, up 7.6% compared toQ3'06. OIBDA margin decreased by 2.4pp in the quarter due to lowerinterconnection rates, as well as certain one-off costs related to increasedsocial charges, management reorganization and roaming re-assessment. Excludingthese costs, OIBDA margin in Greece would have been over 45%. Blended AMOU rose 15.8% to 169 minutes in the nine months ended September 2007.Blended ARPU for the same period dropped to €27.9, due to cuts in terminationrates and price offerings in the pre-paid segment. Cosmote reported 255,733 netadditions, an increase of 18.2%, strengthening the company's leading position inthe Greek mobile market with nearly 6 million customers. In Albania, AMC reported strong revenue and OIBDA growth. Revenues in Q3'07 rose18.6% to €48.5mn and OIBDA stood at €31mn, leading to a margin of 64% for thequarter. For the nine months, blended AMOU was 60 minutes and blended ARPU €14.Net additions for the quarter reached 44,508 customers and AMC's customer baseexceeded 1.1 million at the end of September. In Bulgaria, GloBul maintained its strong revenue growth in the quarter,achieving an OIBDA margin improvement of 380 bps compared to Q3'06. Revenuesincreased by 18.4% to €109.9mn, mainly reflecting the growth of post-paidcustomer traffic, while OIBDA margin stood at 40.5% in the quarter, thanks tocost-cutting. Blended AMOU rose by 31.4% to 92 minutes, while blended ARPU stoodat €10. The company achieved 84,078 net additions, mainly focused on expandingthe post-paid customer number and reached a total customer base of approximately3.7 million. In FYROM, CosmoFon delivered an 8.9% revenue increase in Q3'07 to €17.2mn. OIBDArose to €6.1mn with a margin of 35.5%, a 600 bps increase compared to Q3'06, dueto containment of network expenses and payroll. Blended AMOU for the nine monthswas 85 minutes, 54.5% higher than the same period last year, while blended ARPUstood at €11. CosmoFon captured 25,076 net additions in the quarter, reaching atotal of 540,861 customers at the end of September. In Romania, Cosmote Romania continued its strong subscriber take-up and thecustomer base exceeded 2.8 million -or an estimated 13% market share- withapproximately 602,000 net additions during Q3'07. Almost 80% of the newcustomers were pre-paid, but Cosmote Romania increased its post-paid customersegment from the beginning of the year. Blended ARPU stood at €6, while revenuesreached €41.5mn in Q3'07, continuing their rapid growth quarter after quarter. Germanos played a significant role in the expansion of Cosmote's subscriberbase, leading effectively to strong revenue growth. The number of net additionsthrough Germanos has more than doubled, from c. 240,000 in Q3'06 to c. 540,000in Q3'07. Compared to a year ago, Q3'07 net post-paid customers through Germanosin Greece have increased by 53%, in Romania by 573%, in Bulgaria by 67% and inFYROM by 36%.Germanos Group (On a stand-alone basis) reported €260.7mn revenuesand €7.6mn EBITDA, resulting in a margin of 2.9% for the quarter. The number ofGermanos branded stores increased in the nine month period from 610 to 705,targeting 765 by the end of the year and a total of 1,100 shops within theGermanos network. Cosmote delivered strong customer growth and profitability improvement acrossall geographical markets. Consolidated revenues for Q3'07 stood at €825mn, a39.0% increase over Q3'06, largely reflecting the consolidation of Germanossince Q4'06. Excluding Germanos, Q3'07 revenues would have increased byapproximately 14%. OIBDA as a percentage of operating revenues declined from41.9% in Q3'06 to 34.2% in Q3'07, largely due to the integration of Germanos. Additional details are available in Cosmote's Q3'07 press release issued onNovember 9, 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 (unaudited) for thethird quarter of 2007, under IFRS, are stated below: (• mn) Q3'07 Q3'06 % Change 9M'07 9M'06 % ChangeOperating 209.6 225.0 -6.8% 649.0 665.0 -2.4%RevenuesOIBDA 77.1 93.1 -17.2% 241.6 259.8 -7.0%OIBDA Margin 36.8% 41.4% -4.6pp 37.2% 39.1% -1.9ppOperating Income 7.4 34.1 -78.3% 33.1 66.6 -50.3%Net Income/ (1.7) 27.0 19.5 41.6 -53.1%(Loss)Increase/(Decrease) in 35.7 42.4 -15.8% 150.9 101.7 48.4%GrossPP&E Fixed Telephony, 3,024,086 3,637,146 -16.9%Lines Sep 30, 2007 Dec 31, 2006Cash and cash 151.2 155.6 -2.8%equivalentsShort term - -borrowingsLong term (87.3) (105.1) -16.9%borrowingsNet Cash 63.9 50.5 26.4%Position RomTelecom's operating revenues in Q3'07 were down nearly 7% from the sameperiod in 2006. The decline in traditional telephony services (drop in number ofsubscriber lines and retail traffic, as well as wholesale and payphonerevenues), together with the lower tariffs implemented in Q2 2007 for both voiceand ADSL products, was partly offset by the rapidly growing customer base foremerging services: Broadband, Business Data and TV services. The combination of mobile substitution and higher competition from fixed-linealternative carriers affected the number of lines, which decreased by 16.9%since the end of September 2006. Usage is reduced as well, particularly localtraffic, which was 17% lower in Q3'07 compared to Q3'06. However, theintroduction of new attractive packages in late May seems to have resulted in asignificant reduction of churn, a higher rate of new additions month aftermonth, and a recovery in usage per line. Specifically, PSTN gross additions inQ3'07 increased by 25% compared to the same period last year. Interconnection revenues declined by 6% in Q3'07 despite the 16% increase inwholesale traffic, due to the intense competition from alternative and mobileoperators using RomTelecom's network. On the other hand, significantly reducedrates were applied for the termination of traffic on RomTelecom's network asmandated by the Regulator. Revenues from International traffic terminated toRomTelecom were also lower due to reduced traffic and termination rates. Data services (ADSL, VPN, other broadband services), a rapidly emerging revenuegenerator, recorded significant growth (+178%) in Q3'07 compared to the sameperiod last year, in line with the Company's objective to increase its share ofthe non-voice services market. The total number of billed ADSL customers at theend of Q3'07 was approximately 242,000, representing an increase of about189,000 from the year earlier level. Success of Dolce, the DTH TV service launched in late November 2006, continuedduring the quarter, as over 59,000 new subscribers brought the total to 291,000at September 30, 2007. The growth of ADSL and satellite TV resulted in asignificant increase in sales of equipment, up 249%. Excluding depreciation and amortization, Operating expenses were roughlyunchanged in Q3'07 compared to the same quarter last year. Higher advertisingexpenses related to newly launched services and increased Cost-of-Goods-Sold asa result of higher sales of customer premise equipment were offset by reducedredundancy payments as well as lower payments to domestic operators andprovisions. Operating Income before Depreciation & Amortization declined by 17.3% in Q3'07,as a result of lower operating revenues. The 78.3% reduction in OperatingIncome, combined with FX losses and a near doubling of RomTelecom's share in theloss of Cosmote Romania compared to Q3'06, yielded a net loss of €1.7mn. With 12,304 employees at September 30, 2007, headcount was little changed fromthe level at 2006 year end. Several projects and initiatives are implemented to address the aggressivecompetitive environment: O Successful deployment of satellite television services contributes to the repositioning of RomTelecom as a full telecom and media services provider; O The new tariff scheme implemented in late May continues to be well received by residential customers; O Efforts to retain existing customers, a top management prioritycoordinated under the "Customer First" program, include the implementation ofnew commercial packages, proactive customer communications, improved callcenters and new-concept shops; they have resulted in a significant reduction ingross churn; O More attractive ADSL offers and new options with calls to Cosmote mobilenumbers consolidate the RomTelecom's residential products portfolio. 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 Q3'07 were €30.4mn, up 11.3% from Q3'06. Thecompany is in the process of being absorbed by OTE SA. 5. Events of the quarter OTE COMPLETES THE BROADBAND ROADSHOW On July 4, 2007, OTE announced the successful completion of its nationwidebroadband roadshow, "OTE on the Broadband". With the main objective to educateand engage the interest of citizens across Greece on internet and broadbandservices, the mobile information unit of OTE visited 33 locations from July toSeptember 2006 and from May to June 2007, covering most regions of Greece. THE NATIONAL REGULATORY AUTHORITY (EETT) IMPOSES FINES 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 totaled€27.4mn. OTE claimed that those allegations were without merit and took legalaction against them. OTE ANNOUNCES NEW RETAIL PACKAGES AND SERVICES On September 5, 2007, OTE announced the introduction of new retail offerings,available from September 12, 2007, offering increased value through various flatrate packages. PARTICIPATION OF MARFIN INVESTMENT GROUP (MIG) IN OTE SA's SHARE CAPITAL On September 18, 2007, OTE announced that it was informed by Marfin InvestmentGroup that its participation in OTE SA's share capital and in the correspondingvoting rights reached 10.805%. APPOINTMENT OF NEW MANAGING DIRECTOR OF COSMOTE On September 26, 2007, the Board of Directors of Cosmote accepted theresignation of Evangelos Martigopoulos, the company's Managing Director. He wasreplaced by Michael Tsamaz, who joined the OTE Group in 2001 as Executive VicePresident of OTE International Investments and had been Managing Director of OTEGlobe since April 2006. Prior to OTE, Mr Tsamaz worked at Vodafone Greece, firstas Commercial Director, then as General Director, Commercial and Administrative.Mr Tsamaz, 48, began his career with Philip Morris Europe S.A, where he held anumber of positions in Greece and abroad. 6. subsequent events EXTRAORDINARY SHAREHOLDERS MEETING On November 8, 2007, the Extraordinary General Meeting of OTE shareholdersapproved an amended version of OTE's share repurchase program as well asamendments to the company's Articles of Association, reflecting recent changesto Greek Corporate Law. VOLUNTARY PUBLIC OFFER FOR COSMOTE On November 9, 2007, OTE announced its intention to proceed with a voluntarycash public offer for the 32.2% interest in the share capital of its listedmobile telephony subsidiary, Cosmote SA, that it did not already own, at a priceof €26.25 per share. The transaction is financed through a 12-month (plusthree-month extension option) bridge facility provided by four majorinternational banks under favorable terms. The Company intends to refinance thisbridge facility in the bond markets in the coming months. Immediately followingthe announcement of the public offer, Moody's and S&P reaffirmed the ratings ofOTE. Following the completion of the bond refinancing, OTE expects the Group'sDebt/EBITDA ratio to initially increase from 1.1x to approximately 2x,comparable to the leverage levels of other major European integrated operators. Since the announcement of the voluntary public offer, OTE has been purchasingCosmote shares in the open market. As at November 27, OTE held 88.55% ofCosmote's share capital. Pending approval from the Greek Capital Markets Committee, expected in thecoming days, the public offer should be open for a period of four to eightweeks. The acquisition of full control over Cosmote is in line with the OTE Group'sstrategy to better coordinate its activities across the telecommunicationsspectrum, thereby enhancing its competitiveness and rationalizing itsdistribution infrastructure. In addition, OTE will gain direct access toCosmote's cash flow, enabling it to effectively manage its balance sheetstructure. IORDANIS AIVAZIS ELECTED NEW MEMBER OF COSMOTE's BoD On November 26, 2007, Cosmote's Board of Directors elected Iordanis Aivazis, OTEChief Operating Officer, as a new member in replacement of Yiannis Sarantitis,who tendered his resignation. According to the company's Articles ofAssociation, Mr Aivazis's election will be submitted for approval to the nextAGM. MARFIN INVESTMENT GROUP (MIG) IN OTE SA's SHARE CAPITAL On November 27, 2007, OTE announced that it was informed by Marfin InvestmentGroup that its participation in OTE SA's share capital and in the correspondingvoting rights reached 17.0735%. 7. Outlook In the coming quarters, OTE will actively pursue the integration of itstelecommunications activities in order to strengthen its competitive positioningand take advantage of opportunities made possible by the growing convergence ofvoice, mobile and data traffic. In addition, management expects to reduce itsexposure to non-core activities, notably through the sale of its directoriesbusiness, and to unlock value from its real estate assets. Management alsoexpects to intensify the speed and scope of its cost-reduction measures, notablythrough cross-sector initiatives in such areas as call centers and retaildistribution. In the fourth quarter of 2007, the revenue trends that haveprevailed throughout the year should continue, while operating expenses shouldbe positively impacted by employee departures in Greek fixed-line, inparticular. 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: dtzelepis@ote.gr Nektarios Papagiannakopoulos - Senior Financial Analyst Tel. +30 210 611 7593, Email: npapagiannakopoulos@ote.gr Daria Kozanoglou - Communications Officer, Investor Relations Tel: +30 210 611 1121, Email: nkozanoglou@ote.gr Marilee Diamanti - IR Coordinator Tel: +30 210 611 5070, Email: mdiamant@ote.gr Christina Hadjigeorgiou - Financial Analyst Tel: +30 210 611 1428, Email: cchatzigeo@ote.gr 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 September 30, 2007 and December 31, 2006 (Under IFRS) II. Condensed Consolidated Income Statements for the three months and nine months ended September 30, 2007 and 2006 (Under IFRS) III. Analysis of Group Other Operating Expenses for the three months and nine months ended September 30, 2007 and 2006 (Under IFRS) IV. Condensed Consolidated Statement of Cash Flows for the three quarters and nine months ended September 30, 2007 (Under IFRS) V. Group Revenues for the three months and nine months ended September 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 SEPTEMBER 30, 2007 AND DECEMBER 31, 2006 (• mn) Sep 2007 Dec 2006 --------- ---------ASSETS (Unaudited) Non - current assets:Telecommunication property, plant andequipment 6,499.1 6,583.5Goodwill 541.1 540.8Telecommunication licenses 394.0 384.2Investments 158.2 158.7Advances to pension funds 237.3 188.1Deferred taxes 83.3 127.4Other non-current assets 711.9 709.7 -------- -------Total non - current assets 8,624.9 8,692.4 -------- ------- Current assets:Materials and supplies 196.9 205.4Accounts receivable 1,187.5 1,160.5Other current assets 429.0 447.8Cash and cash equivalents 1,572.4 2,042.5 -------- -------Total current assets 3,385.8 3,856.2 -------- ------- TOTAL ASSETS 12,010.7 12,548.6 ======== ======= EQUITY AND LIABILITIES Equity attributable to equity holdersof the parent:Share capital 1,171.5 1,171.5Paid-in surplus 485.9 485.9Legal reserve 283.3 283.3Retained earnings 1,899.3 1,724.1 -------- -------- 3,840.0 3,664.8 -------- --------Minority interest 1,251.2 1,223.9 -------- -------- Total equity 5,091.2 4,888.7 -------- -------- Non - current liabilities:Long-term debt 4,004.5 4,037.3Reserve for staff retirement 208.9 198.5indemnitiesReserve for voluntary retirement 378.3 361.4programReserve for Youth Account 275.7 277.3Other non - current liabilities 253.4 126.9 -------- --------Total non - current liabilities 5,120.8 5,001.4 -------- -------- Current liabilities:Accounts payable 843.6 938.0Short-term borrowings 6.7 25.2Current maturities of long-term debt 31.6 528.0Income taxes payable 91.0 142.0Deferred revenue 182.4 196.2Dividends payable 4.1 3.7Reserve for voluntary retirement 105.1 316.7programOther current liabilities 534.2 508.7 -------- --------Total current liabilities 1,798.7 2,658.5 -------- -------- TOTAL EQUITY AND LIABILITIES 12,010.7 12,548.6 ======== ======== Movement in OTE Group Shareholders' equity -------------------------------- 2007 ---------- (Unaudited) Shareholders' equity, January 1 4,888.7 ----------Profit for the period 541.8Dividends declared (350.8)Net income recognized directly in equity 11.5 ---------- 202.5 ---------- ==========Shareholders' equity, September 30 5,091.2 ========== EXHIBIT II - CONDENSED CONSOLIDATED INCOME STATEMENT HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months and nine months ended September 30, 2007 and 2006 (• mn) Q3'07 Q3'06 % 9M'07 9M'06 % Unaudited Unaudited Change Unaudited Unaudited ChangeRevenues:DomesticTelephony 497.1 557.4 -10.8% 1,540.4 1,698.9 -9.3%InternationalTelephony 79.7 92.6 -13.9% 227.8 268.5 -15.2%MobileTelephony 595.9 548.4 8.7% 1,641.2 1,490.9 10.1%Other 455.0 285.5 59.4% 1,278.2 844.2 51.4% --------- --------- --------- ---------Total Revenues 1,627.7 1,483.9 9.7% 4,687.6 4,302.5 9.0% ========= ========= ========= ========= OperatingExpenses:Payroll andemployeebenefits (301.8) (278.0) 8.6% (921.1) (931.1) -1.1%Voluntaryretirementcosts 0.0 49.8 -100.0% (22.1) 49.8Payments tointernationaloperators (57.5) (54.4) 5.7% (162.0) (152.2) 6.4%Payments todomestictelephonyoperators (167.8) (183.3) -8.5% (486.8) (546.0) -10.8%Depreciationandamortization (294.0) (274.6) 7.1% (864.8) (838.9) 3.1%Cost oftelecommunicationsequipment (177.6) (48.7) 264.7% (475.7) (158.5) 200.1%Otheroperatingexpenses (309.8) (291.2) 6.4% (922.8) (856.3) 7.8% --------- --------- --------- ---------TotalOperatingExpenses (1,308.5) (1,080.4) 21.1% (3,855.3) (3,433.2) 12.3% ========= ========= ========= ========= OperatingIncome 319.2 403.5 -20.9% 832.3 869.3 -4.3%Other income /(expense):Interest income 17.9 20.1 -10.9% 58.3 48.8 19.5%Interestexpense (57.0) (48.8) 16.8% (163.8) (137.9) 18.8%FXgain/(loss),net (22.0) 3.0 0.7 3.2 -78.1%Financial net (61.1) (25.7) 137.7% (104.8) (85.9) 22.0%Dividends 0.0 0.0 - 16.4 22.5 -27.1%Investmentincome/(loss)/Gain on saleof investment 2.0 0.3 566.7% 14.8 6.1 142.6% --------- --------- --------- ---------Total Otherincome /(expense) (59.1) (25.4) 132.7% (73.6) (57.3) 28.4% Profit beforeincome taxes 260.1 378.1 -31.2% 758.7 812.0 -6.6% ========= ========= ========= ========= Income taxes (68.5) (99.8) -31.4% (216.9) (246.0) -11.8% --------- --------- --------- --------- Profit for theperiod 191.6 278.3 -31.2% 541.8 566.0 -4.3% ========= ========= ========= ========= Attributable to:Equity holdersof the parent 155.5 223.6 -30.5% 433.0 445.5 -2.8%Minorityinterest 36.1 54.7 -34.0% 108.8 120.5 -9.7% --------- --------- --------- --------- 191.6 278.3 -31.2% 541.8 566.0 -4.3% ========= ========= ========= ========= EXHIBIT III - GROUP OTHER OPERATING EXPENSE ANALYSIS (• mn) Q3'07 Q3'06 % Change 9M'07 9M'06 % ChangeCommission to dealers 60.0 57.3 4.7% 164.2 154.6 6.2%Repairs, maintenance, 51.0 43.1 18.3% 152.5 136.9 11.4%cost of materialsProvision for doubtfulaccounts 26.8 21.9 22.4% 70.7 71.0 -0.4%Advertising 46.1 45.0 2.4% 147.5 121.6 21.3%Taxes other than incometaxes 13.3 13.1 1.5% 42.4 34.5 22.9%Other 112.6 110.8 1.6% 345.5 337.7 2.3% TOTAL 309.8 291.2 6.4% 922.8 856.3 7.8% EXHIBIT IV - CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three quarters and nine months ended September 30, 2007 (• mn) Q1'07 Q2'07 Q3'07 9M'07Cash Flows from Operating Activities: Profit before taxes 241.2 257.4 260.1 758.7Adjustments to reconcile to net cashprovided by operating activities: Depreciation and amortization 279.3 291.5 294.0 864.8 Provisions for voluntary retirement 22.1 - 0.0 22.1 Provisions 47.3 57.1 51.4 155.8 Investments and financial income/loss (38.3) (54.0) 2.1 (90.2) Amortization of advances to pension 8.8 8.8 8.8 26.4 funds Interest expense 57.4 49.4 57.0 163.8 Adjustments for working capitalmovements related to operatingactivities Decrease/(increase) in materials and (2.5) (14.5) 25.5 8.5 supplies Decrease/(increase) in accounts (51.9) (68.0) (40.1) (160.0) receivable (Decrease)/increase in liabilities (183.7) (73.3) (89.9) (346.9) Minus: Interest paid (46.3) (31.9) (80.5) (158.7) Income taxes paid (12.8) (70.4) (144.5) (227.7) ------- ------- ------ -------Net Cashprovided byOperatingActivities 320.6 352.1 343.9 1,016.6 ------- ------- ------ ------- Cash Flows from Investing Activities: Acquisition of subsidiary or (19.3) (11.8) (11.3) (42.4) associate, net of cash acquired Loans granted (53.6) (34.3) (23.8) (111.7) Purchase of property, plant and (223.2) (244.1) (230.8) (698.1) equipment or intangible assets Proceeds from sale of investment 6.3 28.5 33.9 68.7 Other long-term liabilities 144.5 - 0.0 144.5 Interest received 13.7 13.7 8.7 36.1 Dividends received - 6.3 0.3 6.6 ------- ------- ------ -------Net Cash usedin InvestingActivities (131.6) (241.7) (223.0) (596.3) ------- ------- ------ ------- Cash Flows from Financing Activities: Proceeds from minority shareholders 12.6 - 0.0 12.6 for issuance of subsidiary's share capital Repayment of long-term debt and (519.6) (9.1) (23.3) (552.0) short-term borrowings Dividends paid (0.4) (82.1) (268.5) (351.0) ------- ------- ------ -------Net Cashprovided/(usedin) byFinancingActivities (507.4) (91.2) (291.8) (890.4) ------- ------- ------ ------- (318.4) 19.2 (170.9) (470.1)Net Increase/(Decrease) in Cash and CashEquivalentsCash and Cashequivalents atbeginning ofperiod 2,042.5 1,724.1 1,743.3 2,042.5 ------- ------- ------ -------Cash and CashEquivalents atend of period 1,724.1 1,743.3 1,572.4 1,572.4 ======= ======= ======= ======= EXHIBIT V - GROUP REVENUES HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS for the three months and nine months ended September 30, 2007 and 2006 (• mn) Q3'07 Q3'06 % Change 9M'07 9M'06 % ChangeDomestic Telephony:Basic monthly rentals 247.5 253.0 -2.2% 750.5 738.3 1.7%Local and long distance calls -Fixed to fixed 130.3 161.8 -19.5% 433.7 532.2 -18.5% -Fixed to mobile 96.4 119.3 -19.2% 288.2 360.6 -20.1% ----- ----- ----- ------ 226.7 281.1 -19.4% 721.9 892.8 -19.1% ===== ===== ===== ======Other 22.9 23.3 -1.7% 68.0 67.8 0.3% ----- ----- ----- ------Total Domestic Telephony 497.1 557.4 -10.8% 1,540.4 1,698.9 -9.3% ===== ===== ===== ====== International Telephony:International traffic 27.6 32.8 -15.9% 82.6 102.1 -19.1%Payments fromInternational mobileoperators 14.9 12.3 21.1% 37.1 30.9 20.1% ----- ----- ----- ------ 42.5 45.1 -5.8% 119.7 133.0 -10.0% ===== ===== ===== ======Payments fromInternational operators 37.2 47.5 -21.7% 108.1 135.5 -20.2% ----- ----- ----- ------Total InternationalTelephony 79.7 92.6 -13.9% 227.8 268.5 -15.2% ===== ===== ===== ====== Mobile Telephony 595.9 548.4 8.7% 1,641.2 1,490.9 10.1% ===== ===== ===== ====== Other Revenues:Prepaid cards 20.5 28.4 -27.8% 60.2 75.7 -20.5%Directories 14.0 13.6 2.9% 42.3 42.2 0.2%Leased lines and datacommunications 68.2 71.8 -4.9% 200.7 198.7 1.0%ISDN, connection &monthly charges 40.1 40.5 -1.0% 123.9 119.9 3.3%Sales oftelecommunication 185.4 35.0 429.7% 477.5 120.3 296.9%equipmentInternet services-ADSL 57.6 34.4 67.2% 161.7 91.4 76.9%Services rendered 16.8 15.3 9.8% 59.8 46.8 27.8%Interconnection charges 33.1 24.1 37.3% 80.0 85.1 -6.0%Miscellaneous 19.3 22.4 -13.4% 72.1 64.1 12.5% ----- ----- ----- ------Total Other Revenues 455.0 285.5 59.4% 1,278.2 844.2 51.4% ===== ===== ===== ====== Total Revenues 1,627.7 1,483.9 9.7% 4,687.6 4,302.5 9.0% ===== ===== ===== ====== EXHIBIT VI - SEGMENT REPORTING (9M 2007) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS, for the nine months ended Sep 30, 2007 (• mn) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 1,135.0 400.0 7.5 1,542.5InternationalTelephony 147.4 87.0 6.4 240.8MobileTelephony 0.0 1,783.3 0.0 0.0 1,783.3Other 704.1 467.7 162.0 327.6 1,661.4Total 1,986.5 2,251.0 649.0 341.5 5,228.0 (540.4) 4,687.6Revenues ------- ------- --------- ------- ------- --------- --------- Intersegment R evenues (194.1) (133.2) (20.4) (192.7) (540.4) Revenue from External Customers 1,792.4 2,117.8 628.6 148.8 4,687.6 4,687.6 ------- ------- --------- ------- ------- --------- --------- OperatingExpenses:Payroll andemployeebenefits (533.2) (153.3) (166.9) (67.2) (920.6) (0.5) (921.1)Voluntaryretirementcosts (22.1) (22.1) (22.1)Payments tointernationaloperators (110.6) (27.2) (19.4) (40.6) (197.8) 35.8 (162.0)Payments todomestictelephonyoperators (245.0) (292.2) (70.8) (1.6) (609.6) 122.8 (486.8)Depreciationandamortization (380.5) (268.5) (181.2) (35.2) (865.4) 0.6 (864.8)Cost ofequipment &prepaid cards (77.3) (427.3) (17.1) (12.4) (534.1) 58.4 (475.7)Otheroperatingexpenses (372.2) (605.6) (133.1) (132.9) (1,243.8) 321.0 (922.8)TotalOperatingExpenses (1,740.9) (1,774.1) (588.5) (289.9) (4,393.4) 538.1 (3,855.3) ------- ------- --------- ------- ------- --------- --------- ------- ------- --------- ------- ------- --------- ---------OperatingIncome 245.6 476.9 60.5 51.6 834.6 (2.3) 832.3 ------- ------- --------- ------- ------- --------- --------- Operatingincome beforedepreciationandamortization 626.1 745.4 241.7 86.8 1,700.0 (2.9) 1,697.1----------- ------- ------- --------- ------- ------- --------- ---------as % ofOperatingrevenues 31.5% 33.1% 37.2% 25.4% 32.5% 36.2% EXHIBIT VI - SEGMENT REPORTING (9M 2006) HELLENIC TELECOMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES Prepared under IFRS, for the nine months ended Sep 30, 2006 (• mn) OTE Cosmote Romtelecom All Other Total Adjustments & Consolidated EliminationsRevenues:DomesticTelephony 1,198.8 451.4 51.3 1,701.5InternationalTelephony 142.9 97.3 34.1 274.3MobileTelephony 1,575.1 39.6 1,614.7Other 715.1 55.5 116.3 254.3 1,141.2Total 2,056.8 1,630.6 665.0 379.3 4,731.7 (429.2) 4,302.5Revenues ------- ------- --------- ------- ------- --------- --------- Intersegment R evenues (156.2) (128.8) (13.5) (130.7) (429.2) Revenue fromExternalCustomers 1,900.6 1,501.8 651.5 248.6 4,302.5 4,302.5 ------- ------- --------- ------- ------- --------- --------- OperatingExpenses:Payroll andemployeebenefits (587.8) (98.6) (174.9) (68.6) (929.9) (1.2) (931.1)Voluntaryretirementcosts 49.8 49.8 49.8Payments tointernationaloperators (101.4) (24.6) (19.6) (11.2) (156.8) 4.6 (152.2)Payments todomestictelephonyoperators (280.1) (293.5) (77.8) (13.9) (665.3) 119.3 (546.0)Depreciationandamortization (396.3) (225.5) (165.9) (53.7) (841.4) 2.5 (838.9)Cost ofequipment &prepaid cards (108.1) (53.5) (9.6) (4.6) (175.8) 17.3 (158.5)Otheroperatingexpenses (357.5) (517.3) (123.3) (145.5) (1,143.6) 287.3 (856.3)TotalOperatingExpenses (1,781.4) (1,213.0) (571.1) (297.5) (3,863.0) 429.8 (3,433.2) ------- ------- --------- ------- ------- --------- --------- ------- ------- --------- ------- ------- --------- ---------OperatingIncome 275.4 417.6 93.9 81.8 868.7 0.6 869.3 ------- ------- --------- ------- ------- --------- --------- Operatingincome beforedepreciationandamortization 671.7 643.1 259.8 135.5 1,710.1 (1.9) 1,708.2----------- ------- ------- --------- ------- ------- --------- ---------as % ofOperatingrevenues 32.7% 39.4% 39.1% 35.7% 36.1% 39.7% EXHIBIT VII - INTERNATIONAL ASSETS RomTelecom OTE has a 54.01% stake in RomTelecom, which is fully consolidated. ROMTELECOM INCOME STATEMENT For the nine months ended September 30 2007, in accordance with IFRS (• thousand) 9M 2007 (Unaudited)Basic monthly rentals 239,445Domestic Telephony calls 160,580 -----------Domestic Telephony 400,025International Telephony 86,998Other Revenues 161,951 -----------Total Operating Revenues 648,974 Personnel (inc Voluntary Redundancy) (166,504)Other operating expenses (240,441)Depreciation and Amortization (208,488) -----------Total Operating expenses (615,833) Operating income 33,141 Financial, net (11,328) Income before provision for income taxes 21,813 Provision for Income taxes (2,314) -----------Net income 19,499 =========== 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 nine months ended September 30, 2007 and 2006 (• mn) Q3'07 Q3'06 % Change 9M'07 9M'06 % Change Revenues 30.4 27.3 11.3% 90.7 81.0 12.0% Operating Income before Depreciation & amortization 2.4 1.2 100% 6.7 5.5 21.8% Operating Income before Depreciation & Amortization as % of Operating Revenues 7.8% 4.2% 3.6pp 7.4% 6.8% 0.6pp EXHIBIT IX -OPERATIONAL HIGHLIGHTS -------------------------------- Operational Highlights for the quarters ended September 30, 2007 and 2006 --------------------------------OTE Q3'07 Q3' 06 % ChangePSTN lines 4,634,697 4,798,244 -3.4%ISDN, 64kb equiv. lines 1,368,724 1,379,072 -0.8%Total lines 6,003,421 6,177,316 -2.8% ADSL subscribers 756,451 373,633 102.5%Unbundled local loops 190,251 13,463 1313.1% COSMOTE (Greece)Pre-paid sub. 3,970,518 3,210,173 23.7%Contract sub. 1,968,848 1,813,764 8.6%Total subscribers 5,939,366 5,023,937 18.2% AMCTotal subscribers 1,135,447 900,965 26.0% GLOBULTotal subscribers 3,657,250 2,881,499 26.9% COSMOFONTotal subscribers 540,861 450,321 20.1% COSMOTE ROMANIATotal subscribers 2,818,059 669,685 320.8% Employees: -OTE 11,560 10,965 5.4%-COSMOTE (Greece) 2,204 2,145 2.8%-RomTelecom 12,304 12,667 -2.9% This information is provided by RNS The company news service from the London Stock Exchange