OTE GROUP REPORTS 2016 THIRD QUARTER RESULTS

  • Group Revenues up 2.7%, best quarterly growth in a decade
    • Driven by Revenues in Greece, up 3.5%, on solid performance across the board
  • Group EBITDA up 2%, fueled by Greek Fixed business, up 9%
  • Higher investments in future revenue and profitability growth
    • Delivering strong Data, Broadband and TV performance
    • Investing in state-of-the-art services (NGA networks, TV content)
ATHENS, Greece - November 10, 2016 - Hellenic Telecommunications Organization SA

(ASE: HTO; OTC MARKET: HLTOY), the Greek full-service telecommunications provider, today announced consolidated results (prepared under IFRS) for the quarter ended September 30, 2016.

(€ mn)

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Revenues

997.9

971.3

+2.7%

2,881.1

2,865.6

+0.5%

EBITDA

320.3

335.3

-4.5%

930.8

890.5

+4.5%

Pro Forma EBITDA*

357.0

350.1

+2.0%

977.2

994.5

-1.7%

Pro Forma EBITDA margin (%)

35.8%

36.0%

-0.2pp

33.9%

34.7%

-0.8pp

Net Income/(loss)

55.9

78.3

-28.6%

123.4

115.1

+7.2%

Adj. Net Income/(loss)**

74.6

67.1

+11.2%

149.6

168.0

-11.0%

Basic EPS (€)

0.1144

0.1602

-28.6%

0.2525

0.2355

+7.2%

Adj. Net Operating Cash Flow ***

209.4

234.6

-10.7%

661.8

684.7

-3.3%

Adj. CapEx ***

183.7

141.6

+29.7%

486.5

432.6

+12.5%

Adj. Free Cash Flow***

25.7

93.0

-72.4%

175.3

252.1

-30.5%

Cash & Other financial assets

1,372.0

1,059.0

+29.6%

1,372.0

1,059.0

+29.6%

Net Debt (Underlying)

793.5

1,090.5

-27.2%

793.5

1,090.5

-27.2%

Greek Fixed Line (OTE SA)

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Revenues

397.7

377.3

+5.4%

1,166.1

1,123.9

+3.8%

Pro Forma EBITDA*

171.1

157.2

+8.8%

494.0

450.3

+9.7%

Pro Forma EBITDA*margin (%)

43.0%

41.7%

+1.3pp

42.4%

40.1%

+2.3pp

* Excluding the impact of Voluntary Retirement Programs and Restructuring Plans

** Excluding one-off items - See reconciliation table, Page 4

*** Cash Flow includes interest received but excludes Spectrum, Voluntary Exit Programs and One-off litigation/Restructuring payments

Commenting on OTE's results for the third quarter of 2016, Michael Tsamaz, Chairman & CEO, noted: "We are pleased to report one of our strongest quarters in recent history. Revenues were up across all our key businesses. Our performance was particularly remarkable in Greek fixed operations, where growth in retail services continued to intensify, thanks to further progress in TV and broadband. Greek mobile revenues were up slightly, helped by a favorable comparison to last year's quarter and strong revenues from visitors in the summer months. Group EBITDA was up, driven by our excellent results in Greek fixed."

Mr. Tsamaz added: "Our solid performances in a challenging context are the direct consequence of our considerable, comprehensive investments, the largest in the markets in which we participate. To continue delivering, to meet the needs of our business and residential customers, we aim to continue our investments in future-oriented technology, infrastructure and content."

Outlook

In the final quarter of 2016, OTE expects a continuation of the trends that shaped the performance in the first nine months of the year. In Greece, OTE is leveraging its capabilities and resources to mitigate the impact from continuing challenging economic conditions, intensifying competition, as well as pressures on consumer and business spending, notably from increased taxation. In Romania, OTE is strengthening its initiatives to sustain the initial signs of stabilization recorded in the third quarter.

OTE is intensifying its capital commitments to preserve its technological edge, support the infrastructure in its markets and bolster future revenue and profitability growth. Total Capex in the full year should exceed €0.6bn, excluding spectrum. Reflecting OTE's significant investments for the future, OTE expects free cash flow (excluding VES, one-off charges and spectrum payments) for full year 2016 to amount to approximately €440mn.

BREAKDOWN OF GROUP REVENUES

(€ mn)

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Fixed Line Operations, Greece

397.7

377.3

+5.4%

1,166.1

1,123.9

+3.8%

Mobile Operations, Greece

319.3

319.1

+0.1%

887.4

915.9

-3.1%

Fixed Line Operations, Romania

149.1

143.5

+3.9%

435.7

442.7

-1.6%

Mobile Operations, Romania

112.1

109.2

+2.7%

335.2

317.4

+5.6%

Mobile Operations, Albania

19.4

22.0

-11.8%

60.0

55.6

+7.9%

Others

126.7

111.4

+13.7%

343.2

340.4

+0.8%

Eliminations (Mobile & Group)

(126.4)

(111.2)

+13.7%

(346.5)

(330.3)

+4.9%

TOTAL

997.9

971.3

+2.7%

2,881.1

2,865.6

+0.5%

Other Income

9.6

11.3

-15.0%

25.7

36.7

-30.0%

BREAKDOWN OF GROUP PRO FORMA EBITDA

(€ mn)

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Fixed Line Operations, Greece

171.1

157.2

+8.8%

494.0

450.3

+9.7%

Margin

43.0%

41.7%

+1.3pp

42.4%

40.1%

+2.3pp

Mobile Operations, Greece

114.1

126.5

-9.8%

303.0

336.8

-10.0%

Margin

35.7%

39.6%

-3.9pp

34.1%

36.8%

-2.7pp

Fixed Line Operations, Romania

29.5

23.9

+23.4%

65.2

82.8

-21.3%

Margin

19.8%

16.7%

+3.1pp

15.0%

18.7%

-3.7pp

Mobile Operations, Romania

23.9

24.4

-2.0%

64.0

69.7

-8.2%

Margin

21.3%

22.3%

-1pp

19.1%

22.0%

-2.9pp

Mobile Operations, Albania

3.6

4.6

-21.7%

13.1

10.9

+20.2%

Margin

18.6%

20.9%

-2.3pp

21.8%

19.6%

+2.2pp

Others

15.9

13.7

+16.1%

41.1

44.5

-7.6%

Margin

12.5%

12.3%

+0.2pp

12.0%

13.1%

-1.1pp

Eliminations (Mobile & Group)

(1.1)

(0.2)

-

(3.2)

(0.5)

-

OTE Group

357.0

350.1

+2.0%

977.2

994.5

-1.7%

Margin

35.8%

36.0%

-0.2pp

33.9%

34.7%

-0.8pp

OTE GROUP HIGHLIGHTS

In an environment that remains constraining in OTE's two key markets, Group consolidated revenues stood at €997.9mn in Q3'16, up 2.7% compared to Q3'15, driven by a sharp increase in Greek fixed-line revenues.

Total Operating Expenses, excluding depreciation, amortization, impairments and charges related to voluntary retirement programs and restructuring costs, amounted to €650.5mn in Q3'16, up 2.8% compared to Q3'15. This increase chiefly reflected higher interconnection costs, due to increased wholesale revenues and traffic in the Greek and Romanian businesses. Personnel expenses were down 7.2%, partly attributable to the headcount voluntary exit scheme in Greek fixed-line operations announced in June 2016. The full impact of this plan will be reflected in OTE's cost base starting with Q4.

By country, combined Greek fixed and mobile Pro Forma EBITDA was up 0.9% in the third quarter, yielding a Pro Forma EBITDA margin of 40.6%. Group performance was helped by a 10.6% increase in the Romanian EBITDA, reversing the trends in the first six months of the year. Albania recorded a drop in both Revenues and EBITDA, due to reduced international traffic.

The Group's Income Tax expense stood at €46.9mn in Q3'16, reflecting losses recorded in Romania, whose accounting treatments do not give rise to deferred tax assets. The Group's effective tax rate in the quarter was 48%.

Group Net Income stood at €55.9mn in Q3'16. On an adjusted basis, excluding one-off items, Group Net Income was up 11.2% to €74.6mn in Q3'16.

Capital Expenditures (excluding spectrum payments) amounted to €183.7mn in Q3'16, up 29.7%, on the back of higher investments in fixed-line operations in Greece and Romania. CapEx in Greek and Romanian fixed-line amounted to €110.6m and €31.9mn, respectively. In mobile operations, Capex stood at

€36.1mn (Greece: €27.7mn, Romania: €6.5mn, Albania: €1.9mn).

In Q3'16, the Group's adjusted Free Cash Flow generation (including interest paid/received and excluding VRS, spectrum, and one-off litigation and restructuring-related payments) stood at €25.7mn. In the first nine months of 2016, adjusted Free Cash Flow totaled €175.3mn, down 30.5% compared to 9M'15, primarily reflecting higher CapEx.

BREAKDOWN PER COUNTRY (After Eliminations)

Revenues (€ mn)

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Greece

739.5

714.8

+3.5%

2,116.0

2,100.4

+0.7%

Romania

241.6

239.2

+1.0%

716.8

720.1

-0.5%

Albania

16.8

17.3

-2.9%

48.3

45.1

+7.1%

OTE Group

997.9

971.3

+2.7%

2,881.1

2,865.6

+0.5%

Pro Forma EBITDA (€ mn)

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Greece

300.0

297.2

+0.9%

834.9

831.1

+0.5%

margin

40.6%

41.6%

-1pp

39.5%

39.6%

-0.1pp

Romania

53.4

48.3

+10.6%

129.2

152.5

-15.3%

margin

22.1%

20.2%

+1.9pp

18.0%

21.2%

-3.2pp

Albania

3.6

4.6

-21.7%

13.1

10.9

+20.2%

margin

21.4%

26.6%

-5.2pp

27.1%

24.2%

+3pp

OTE Group

357.0

350.1

+2.0%

977.2

994.5

-1.7%

margin

35.8%

36.0%

-0.2pp

33.9%

34.7%

-0.8pp

Group Net Income to Adjusted Net Income Reconciliation:

€ mn

Q3 '16

Q3 '15

Change

9M '16

9M '15

Change

Net Income / (loss)

55.9

78.3

-28.6%

123.4

115.1

+7.2%

VES, Restructuring & Other one-off costs

31.9

12.1

39.3

78.3

Reversal of provision related to Asset sale

(13.1)

-

(13.1)

(26.6)

Net Impact from Impairments

-

-

-

12.6

Reassessment of income tax charge for 2014

-

-

-

12.0

Re-measurement of tax position due to the tax rate change

-

(23.3)

-

(23.3)

Adjusted Net income

74.6

67.1

+11.2%

149.6

168.0

-11.0%

Note: After tax impact

BOND MATURITY PROFILE

Total Debt (€ mn):

2,165.5

Bonds (€ mn)

ISIN

XS0885718782

ISIN

XS1327539976

ISIN

XS1086785182

Maturity

February 2018

December 2019

July 2020

Coupon (%)

7.875%

4.375%

3.5%

Nominal Amount

650

350

700

The Group's Underlying Net Debt was €0.8bn at September 30, 2016, down 27.2% compared to September 30, 2015. The Group's ratio of Underlying Net Debt to 12-month trailing Pro Forma EBITDA stood at 0.6x.

1. GREECE FIXED-LINE OPERATIONS, GREECE ACCESS LINES

Sep 30, 2016

Sep 30, 2015

Change

PSTN connections

1,957,794

2,343,579

-16.5%

ISDN connections (BRA & PRA)

276,873

315,282

-12.2%

Other (MSAN & VoB)

439,580

37,169

-

OTE access line connections (incl. WLR)

2,674,247

2,696,030

-0.8%

OTE Retail access line connections (excl. WLR)

2,663,402

2,675,999

-0.5%

Total OTE Broadband active subscribers

1,648,250

1,481,623

+11.2%

OTE Broadband active retail subscribers

1,605,395

1,459,347

+10.0%

of which OTE retail VDSL connections

200,557

132,192

+51.7%

OTE TV Subscribers (IPTV & Satellite)

478,033

413,602

+15.6%

Unbundled local loops (active)

2,054,505

2,040,328

+0.7%

In Q3'16, the total Greek access market (OTE active retail lines, Wholesale line rental connections and full LLU subscribers) lost 9k lines. OTE fixed-line operations in Greece posted a net loss of 7k access lines.

OTE - Hellenic Telecommunications Organization SA published this content on 10 November 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 November 2016 09:04:12 UTC.

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