HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A.
UNDER IFRS
- Another quarter of solid Revenue performance:
- Greek fixed Revenues up, supported by strong Broadband & TV
- Greek mobile Service Revenues extend the improving trend of prior quarters
- Cost discipline driving robust Group EBITDA margin: 36.0%
- Greek fixed EBITDA margin at 41.7%
- Resilient Greek mobile EBITDA margin: 39.6%
- Strong Free Cash Flow generation continuing: €252mn in 9M'15, up 17.5%
- Net Debt below €1.1bn (0.8x EBITDA) despite heavy investments for future growth:
Capex (ex-spectrum) up 2% in 9M'15 to €433mn
ATHENS,Greece - November 5, 2015 - Hellenic Telecommunications Organization SA(ASE: HTO; OTC MARKET: HLTOY), the Greek full-service telecommunications provider, today announced consolidated results (prepared under IFRS) for the third quarter and nine months ended September 30, 2015.
(€ mn) |
Q3 '15 |
Q3 '14 |
Change |
9M '15 |
9M '14 |
Change | ||||||
Revenues |
971.3 |
987.6 |
-1.7% |
2,865.6 |
2,901.9 |
-1.3% | ||||||
EBITDA |
335.3 |
367.4 |
-8.7% |
890.5 |
1,041.1 |
-14.5% | ||||||
Pro forma EBITDA* |
350.1 |
371.1 |
-5.7% |
994.5 |
1,050.7 |
-5.3% | ||||||
Pro forma EBITDA margin (%) |
36.0% |
37.6% |
-1.6pp |
34.7% |
36.2% |
-1.5pp | ||||||
Net Income |
78.3 |
69.1 |
+13.3% |
115.1 |
194.2 |
-40.7% | ||||||
Basic EPS (€) |
0.1602 |
0.1411 |
+13.5% |
0.2355 |
0.3982 |
-40.9% | ||||||
Adj. Net Operating Cash Flow ** |
234.6 |
277.2 |
-15.4% |
684.7 |
638.5 |
+7.2% | ||||||
Adj. CapEx ** |
141.6 |
149.8 |
-5.5% |
432.6 |
424.0 |
+2.0% | ||||||
Adj. Free Cash Flow** |
93.0 |
127.4 |
-27.0% |
252.1 |
214.5 |
+17.5% | ||||||
Cash & Other financial assets |
1,059.0 |
1,314.3 |
-19.4% |
1,059.0 |
1,314.3 |
-19.4% | ||||||
Net Debt (Underlying) |
1,090.5 |
1,427.4 |
-23.6% |
1,090.5 |
1,427.4 |
-23.6% | ||||||
- 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 third quarter of 2015, Michael Tsamaz, Chairman & CEO, noted: 'In a context that remains tough, we are very pleased with the good quarter we delivered in Greece. Fixed-line revenues were up, with solid growth in retail fixed services, as increases in TV and broadband revenues for the first time more than offset lower voice revenues. The drop in Greek mobile service revenue narrowed once again. These performances vindicate our decision to continue investing heavily all these years, to provide the best technology and customer service, an achievement that we are now celebrating with the rebranding under the Cosmote name of all our customer-facing operations in Greece. In Romania, as we have stated before, conditions are still challenging, but we expect our investments to start paying off in the latter part of the coming year.'
Mr. Tsamaz added: 'Despite further investment for growth and slower cash generation following the bank holiday in Greece, we remain on track to achieve our full-year free cash flow target as conditions continue to stabilize. We should therefore end the year in solid shape to support the growth of our operations in the countries in which we operate.'
Outlook
For the remaining of 2015, OTE expects similar trends to persist in the Greek business and continuing competitive pressures in the international operations.
Greek performance could however be impacted by growing tax demands, and hence a possible decline in disposable income, on consumers and businesses alike. Results will continue to benefit from cost-containment efforts, notably the recently completed voluntary retirement plans. OTE's CapEx should total approximately €0.5bn, excluding spectrum. Assuming reasonable liquidity conditions in the Greek economy and a normalization in its working capital, OTE maintains its free cash flow target of approximately €0.5bn for 2015 (excluding spectrum and VRS).
BREAKDOWN OF GROUP REVENUES
(€ mn) |
Q3 '15 |
Q3 '14 |
Change |
9M '15 |
9M '14 |
Change |
Fixed Line Operations, Greece |
377.3 |
376.4 |
+0.2% |
1,123.9 |
1,119.5 |
+0.4% |
Mobile Operations, Greece |
319.1 |
329.4 |
-3.1% |
915.9 |
936.9 |
-2.2% |
Fixed Line Operations, Romania |
143.5 |
151.3 |
-5.2% |
442.7 |
457.7 |
-3.3% |
Mobile Operations, Romania |
109.2 |
107.0 |
+2.1% |
317.4 |
326.8 |
-2.9% |
Mobile Operations, Albania |
22.0 |
21.3 |
+3.3% |
55.6 |
61.1 |
-9.0% |
Others |
111.4 |
111.5 |
-0.1% |
340.4 |
315.5 |
+7.9% |
Eliminations (Mobile & Group) |
(111.2) |
(109.3) |
+1.7% |
(330.3) |
(315.6) |
+4.7% |
TOTAL |
971.3 |
987.6 |
-1.7% |
2,865.6 |
2,901.9 |
-1.3% |
Other income/ (expense), net |
11.3 |
16.7 |
-32.3% |
36.7 |
43.0 |
-14.7% |
BREAKDOWN OF GROUP PRO FORMA EBITDA
(€ mn) |
Q3 '15 |
Q3 '14 |
Change |
9M '15 |
9M '14 |
Change |
Fixed Line Operations, Greece |
157.2 |
150.8 |
+4.2% |
450.3 |
432.5 |
+4.1% |
margin |
41.7% |
40.1% |
+1.6pp |
40.1% |
38.6% |
+1.5pp |
Mobile Operations, Greece |
126.5 |
133.7 |
-5.4% |
336.8 |
355.4 |
-5.2% |
margin |
39.6% |
40.6% |
-1pp |
36.8% |
37.9% |
-1.1pp |
Fixed Line Operations, Romania |
23.9 |
35.0 |
-31.7% |
82.8 |
118.4 |
-30.1% |
margin |
16.7% |
23.1% |
-6.4pp |
18.7% |
25.9% |
-7.2pp |
Mobile Operations, Romania |
24.4 |
25.5 |
-4.3% |
69.7 |
78.1 |
-10.8% |
margin |
22.3% |
23.8% |
-1.5pp |
22.0% |
23.9% |
-1.9pp |
Mobile Operations, Albania |
4.6 |
7.6 |
-39.5% |
10.9 |
21.4 |
-49.1% |
margin |
20.9% |
35.7% |
-14.8pp |
19.6% |
35.0% |
-15.4pp |
Others |
13.7 |
18.4 |
-25.5% |
44.5 |
44.8 |
-0.7% |
margin |
12.3% |
16.5% |
-4.2pp |
13.1% |
14.2% |
-1.1pp |
Eliminations (Mobile & Group) |
(0.2) |
0.1 |
- |
(0.5) |
0.1 |
- |
Group OTE |
350.1 |
371.1 |
-5.7% |
994.5 |
1,050.7 |
-5.3% |
margin |
36.0% |
37.6% |
-1.6pp |
34.7% |
36.2% |
-1.5pp |
OTE GROUP HIGHLIGHTS
OTE Group posted another resilient top-line performance in Q3'15, supported by further improvement in its Greek fixed and mobile operations, despite the country's tough economic conditions. Greek fixed-line revenues were up by 0.2%, posting a fourth consecutive quarter of year-over-year increase. Greek mobile service revenues were down 3.3%, continuing the improving trend of previous quarters (Q2'15: -4.6%, Q1'15: -4.9%).
In Romania, revenues from mobile operations rose by 2.1%, posting a second consecutive quarter of growth following the anniversary of mobile termination rate cuts in April 2014. Romanian fixed-line revenues were down by 5.2% in Q3'15, mainly due to lower wholesale revenues.
Despite competitive and regulatory pressures, Telekom Albania achieved a significant turnaround in its top-line performance, with service revenues up 4.4%.
Other revenues, representing 11% of OTE Group revenues, were unchanged year over year, at €111.4mn.
Total Operating Expenses, excluding depreciation, amortization, impairments and charges related to voluntary retirement programs and restructuring costs, amounted to €632.5mn in Q3'15, nearly unchanged compared to Q3'14. In the quarter, the Group interconnection and roaming expenses rose by 8.0% due to higher seasonal wholesale traffic at OTE Globe. Conversely, following the successful completion at the end of the second quarter of an additional voluntary exit scheme aimed at generating annual personnel cost savings of more than €30mn, personnel costs were down 3% at the OTE Group level.
Group Pro Forma EBITDA declined by 5.7% in the third quarter to €350.1mn, resulting in a 36.0% pro forma EBITDA margin in the period. This largely reflects lower profitability in the Romanian fixed business, largely due to a high base of comparison from significant disposal of real estate assets and copper in Q3'14. Pro Forma EBITDA in OTE Group's international business is under pressure from increased competitive pressures. Through both network and commercial investments throughout all operations, the Group is focusing on initiatives to restore future performance.
Interest Expenses were down 47.5% in the quarter to €35.7mn, reflecting lower Group net debt. In addition, in Q3'14, OTE had incurred a €21mn charge related to bond buybacks.
The Group's Income Tax expense was €20.7mn in Q3'15, compared to €34.4mn a year ago. Q3'15 was positively impacted by €29.4mn from the re-assessment of the Group's deferred tax position due to the tax rate change in Greece from 26% to 29%.
Group Net Income stood at €78.3mn in Q3'15, up 13.3% compared to the previous year, reflecting the positive impact of the re-assessment of the Group's deferred tax position.
Capital Expenditures amounted to €141.6mn in Q3'15, down 5.5% from a high base in Q3'14, when the expansion of the fiber network in Romania had required significant outlays. Capex in Greek and Romanian fixed-line amounted to €66.8m and €21.2mn, respectively. In mobile operations, total Capex stood at €50.1mn.
In Q3'15, the Group's adjusted Free Cash Flow generation (including interest received and excluding VRS, spectrum and restructuring-related payments) was strong despite higher working capital requirements in a period of severe liquidity restrictions in the Greek economy. In 9M'15, the Group's adjusted Free Cash Flow totaled €252.1mn, up 17.5% compared to 9M'14.
The Group's Underlying Net Debt stood just below €1.1bn at September 30, 2015, down 23.6% compared to September 30, 2014. The Group's ratio of Underlying Net Debt to 12-month trailing Pro forma EBITDA stood at 0.8x.
OTE Group debt outstanding breaks down as follows:
(€ mn) |
Sep 30, 2015 |
Dec 31, 2014 |
Change |
Sep 30, 2014 |
Change |
Short-Term: | |||||
-Bank loans |
0.0 |
0.0 |
- |
0.0 |
- |
Medium & Long-term: | |||||
-Bonds |
2,016.5 |
2,472.6 |
-18.4% |
2,564.8 |
-21.4% |
-Bank loans |
133.0 |
165.9 |
-19.8% |
176.9 |
-24.8% |
Total Indebtedness |
2,149.5 |
2,638.5 |
-18.5% |
2,741.7 |
-21.6% |
Cash and Cash equiv. |
1,052.3 |
1,509.9 |
-30.3% |
1,310.1 |
-19.7% |
Net Debt |
1,097.2 |
1,128.6 |
-2.8% |
1,431.6 |
-23.4% |
Other financial assets |
6.7 |
3.7 |
+81.1% |
4.2 |
+59.5% |
Underlying Net Debt |
1,090.5 |
1,124.9 |
-3.1% |
1,427.4 |
-23.6% |
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