HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. OTE GROUP REPORTS 2017 SECOND QUARTER RESULTS
- Group Adj. EBITDA up 1%, supported by resumed growth (+3%) in Greek mobile
-
Greece: stabilized revenues in core businesses; Adj. EBITDA up 1.5%, margin up more than 100bps, fueled by continued healthy growth in retail
- Fixed: strong broadband and VDSL net additions
- Mobile: post-paid subscriber and ARPU growth, higher data revenues
- Significant investments in Greece, mainly for FTTC development
OTE GROUP (€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Revenues | 938.8 | 954.7 | -1.7% | 1,867.8 | 1,883.2 | -0.8% |
Adjusted EBITDA | 313.9 | 310.9 | +1.0% | 618.0 | 620.2 | -0.4% |
Adj. EBITDA margin (%) | 33.4% | 32.6% | +0.8pp | 33.1% | 32.9% | +0.2pp |
Operating profit (EBIT) | 110.3 | 99.2 | +11.2% | 214.8 | 196.4 | +9.4% |
Profit to owners of the parent | 31.1 | 33.6 | -7.4% | 67.5 | 67.5 | - |
Adj. Profit to owners of the parent | 40.8 | 38.3 | +6.5% | 79.0 | 75.0 | +5.3% |
Basic EPS (€) | 0.0636 | 0.0687 | -7.4% | 0.1381 | 0.1381 | - |
Total Assets | 7,420.7 | 7,119.5 | +4.2% | 7,420.7 | 7,119.5 | +4.2% |
Adj. Net Operating Cash Flow | 272.9 | 263.4 | +3.6% | 446.6 | 452.4 | -1.3% |
Adjusted CapEx | 223.0 | 138.1 | +61.5% | 408.0 | 302.8 | +34.7% |
Adjusted Free Cash Flow | 49.9 | 125.3 | -60.2% | 38.6 | 149.6 | -74.2% |
Cash & Other financial assets | 1,514.4 | 1,042.8 | +45.2% | 1,514.4 | 1,042.8 | +45.2% |
Adjusted Net Debt | 527.4 | 736.4 | -28.4% | 527.4 | 736.4 | -28.4% |
OTE Fixed Line (€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Revenues | 390.8 | 389.5 | +0.3% | 782.8 | 768.4 | +1.9% |
Adjusted EBITDA | 163.1 | 161.8 | +0.8% | 331.1 | 322.9 | +2.5% |
Adjusted EBITDA margin (%) | 41.7% | 41.5% | +0.2pp | 42.3% | 42.0% | +0.3pp |
Note: The purpose and calculations of all 'Adjusted' data presented in this report are detailed in the Alternative Performance Measures Section
ATHENS, Greece - August 3, 2017 - Hellenic Telecommunications Organization SA(ASE: HTO; OTC MARKET: HLTOY), the Greek full-service telecommunications provider, today announced consolidated results (prepared under IFRS and reviewed by the auditors) for the quarter ended June 30, 2017.
Commenting on OTE's results for the second quarter of 2017, Michael Tsamaz, Chairman & CEO, noted: "We are pleased to report a solid three months of operations, marked by the first quarter of EBITDA growth in our Greek mobile activities in five years. At the top-line level, Greek fixed and mobile operations achieved higher revenues, supported by our continued success in providing adapted, cost-effective solutions to our clients. Broadband was strong, particularly VDSL, resulting from the extended reach of our network. Greek mobile service revenues turned positive, reversing a multi-year downtrend. In Romania, the ongoing success of our FMC service provided support to the fixed business. Our progress on the revenue front goes hand in hand with unwavering cost control, a priority if we want to convert revenues into EBITDA growth and cash flow generation in a period of accelerated investments".Mr. Tsamaz added: "We are continuing to invest aggressively in the solutions that will drive future growth and customer satisfaction. In the first six months of the year, the percentage of revenues we reinvested
in networks and content rose considerably. We are more than ever convinced this is the right approach as Greece shows promising early signs of recovery."
OutlookOTE expects the fundamental drivers and first-half trends to remain largely unchanged in the second half. Broadband demand, notably for higher speeds, should continue strengthening, fueled in particular by the expanded reach of the VDSL offering; conversely, the number of voice-only customers should experience further decline, while growth in mobile data volume and revenues is likely to continue. Performance in Romania and Albania remains challenging. The Group will continue to invest heavily in the technologies, infrastructure and content that enable its customers to succeed across all its markets. OTE maintains its 2017 full-year guidance, namely an adjusted FCF target of approximately €250m, reflecting the increase in Capex to over €700mn, as well as exceptional income tax outlays.
OTE GROUP HIGHLIGHTS
OTE Group posted consolidated revenues of €938.8mn in Q2'17, down 1.7%.
In Greece, revenues were down 1.4% to €687.7mn as higher revenues from fixed and mobile operations, fueled by growth in retail and service revenues respectively, as well as from ICT projects, were offset by a drop in low-margin revenues related to the Rural Broadband project, now nearing completion, and by lower wholesale revenues due to a drop in the LLU regulated prices. Broadband revenues were up significantly as customers continue converting to higher-speed VDSL services, and pay-TV revenues were up once again, though at a slower pace, reflecting strong subscriber additions in the second half of 2016.
In Romania, total revenues were down 2.6%, impacted by the drop in revenues in mobile operations. Conversely, revenues from fixed operations were up 1.4%, driven by higher wholesale revenues and another period of robust performance from Telekom Romania's convergent fixed-mobile solution.
Total Operating Expenses, excluding depreciation, amortization, impairments and charges related to voluntary leave schemes, restructuring and non-recurring litigation costs, amounted to €633.9mn in Q2'17, down 2.7% compared to Q2'16.
The Group's adjusted EBITDA was up 1.0% to €313.9m. In Greece, adjusted EBITDA increased by 1.5%, yielding an Adjusted EBITDA margin of 39.6%, up more than 100 basis points. Adjusted EBITDA was up 5.9% in Romania, as a sharp increase in fixed offset the impact of continuing competitive pressure in mobile. Adjusted EBITDA was down 60.4% in Albania, where operations were further impacted by changes in international traffic patterns and termination rates.
The Group's Income Tax charge stood at €39.8mn in Q2'17, down 1.5%, reflecting lower profit before taxes.
Adjusted Group profit after minority interests (excluding one-off items) stood at €40.8mn in Q2'17, up 6.5% compared to Q2'16.
Adjusted Capital Expenditures amounted to €223.0mn in Q2'17, up 61.5%, mainly reflecting investments in Fixed-line operations in Greece at €131.1mn. Investments in Romania Fixed-line operations amounted to €20.5mn. In Mobile operations, adjusted Capex in Greece stood at €50.7mn, in Romania at €16.6mn and in Albania at €2.4mn.
In Q2'17, the Group's adjusted Free Cash Flow stood at €49.9mn, primarily reflecting the increase in Capital Expenditures.
The Group's adjusted Net Debt was €0.5bn at June 30, 2017, down 28% compared to June 30, 2016. The Group's ratio of adjusted Net Debt to 12-month trailing Adjusted EBITDA stood at 0.4x, unchanged from the prior quarter.
BREAKDOWN OF GROUP REVENUES(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Fixed Line Operations, Greece | 390.8 | 389.5 | +0.3% | 782.8 | 768.4 | +1.9% |
Mobile Operations, Greece | 292.7 | 291.2 | +0.5% | 566.2 | 568.1 | -0.3% |
Fixed Line Operations, Romania | 151.6 | 149.5 | +1.4% | 295.0 | 286.6 | +2.9% |
Mobile Operations, Romania | 106.5 | 110.1 | -3.3% | 214.3 | 223.1 | -3.9% |
Mobile Operations, Albania | 17.2 | 20.1 | -14.4% | 32.9 | 40.6 | -19.0% |
Others | 105.2 | 110.8 | -5.1% | 226.4 | 216.5 | +4.6% |
Eliminations (Mobile & Group) | (125.2) | (116.5) | +7.5% | (249.8) | (220.1) | +13.5% |
TOTAL | 938.8 | 954.7 | -1.7% | 1,867.8 | 1,883.2 | -0.8% |
Other Operating Income | 9.0 | 7.4 | +21.6% | 21.2 | 16.1 | +31.7% |
(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Fixed Line Operations, Greece | 163.1 | 161.8 | +0.8% | 331.1 | 322.9 | +2.5% |
Margin | 41.7% | 41.5% | +0.2pp | 42.3% | 42.0% | +0.3pp |
Mobile Operations, Greece | 99.9 | 97.0 | +3.0% | 186.8 | 188.9 | -1.1% |
Margin | 34.1% | 33.3% | +0.8pp | 33.0% | 33.3% | -0.3pp |
Fixed Line Operations, Romania | 25.4 | 15.2 | +67.1% | 46.8 | 35.7 | +31.1% |
Margin | 16.8% | 10.2% | +6.6pp | 15.9% | 12.5% | +3.4pp |
Mobile Operations, Romania | 13.8 | 21.8 | -36.7% | 29.5 | 40.1 | -26.4% |
Margin | 13.0% | 19.8% | -6.8pp | 13.8% | 18.0% | -4.2pp |
Mobile Operations, Albania | 2.1 | 5.3 | -60.4% | 2.9 | 9.5 | -69.5% |
Margin | 12.2% | 26.4% | -14.2pp | 8.8% | 23.4% | -14.6pp |
Others | 10.4 | 11.9 | -12.6% | 22.1 | 25.2 | -12.3% |
Margin | 9.9% | 10.7% | -0.8pp | 9.8% | 11.6% | -1.8pp |
Eliminations (Mobile & Group) | (0.8) | (2.1) | -61.9% | (1.2) | (2.1) | -42.9% |
OTE Group | 313.9 | 310.9 | +1.0% | 618.0 | 620.2 | -0.4% |
Margin | 33.4% | 32.6% | +0.8pp | 33.1% | 32.9% | +0.2pp |
Revenues (€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Greece | 687.7 | 697.3 | -1.4% | 1,373.1 | 1,376.5 | -0.2% |
Romania | 235.5 | 241.8 | -2.6% | 465.3 | 475.2 | -2.1% |
Albania | 15.6 | 15.6 | - | 29.4 | 31.5 | -6.7% |
OTE Group | 938.8 | 954.7 | -1.7% | 1,867.8 | 1,883.2 | -0.8% |
Adjusted EBITDA (€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Greece | 272.6 | 268.6 | +1.5% | 538.8 | 534.9 | +0.7% |
margin | 39.6% | 38.5% | +1.1pp | 39.2% | 38.9% | +0.3pp |
Romania | 39.2 | 37.0 | +5.9% | 76.3 | 75.8 | +0.7% |
margin | 16.6% | 15.3% | +1.3pp | 16.4% | 16.0% | +0.4pp |
Albania | 2.1 | 5.3 | -60.4% | 2.9 | 9.5 | -69.5% |
margin | 13.5% | 34.0% | -20.5pp | 9.9% | 30.2% | -20.3pp |
OTE Group | 313.9 | 310.9 | +1.0% | 618.0 | 620.2 | -0.4% |
margin | 33.4% | 32.6% | +0.8pp | 33.1% | 32.9% | +0.2pp |
GREECE
OTE's retail revenues in Greece were positive in the second quarter, on both fixed and mobile fronts, as its strong operating performance drove revenue growth. OTE's total revenues in Greece were down 1.4%, as higher performances in fixed-line and mobile activities, fueled by broadband and cellular data, were offset by lower wholesale revenues and the wind-down of the Rural Broadband Project. Overall, adjusted EBITDA from combined Greek fixed and mobile businesses increased by 1.5% in Q2'17.
Fixed-Line Operations, GreeceAccess Lines | June 2017 | June 2016 | Change |
PSTN connections | 1,451,966 | 2,091,833 | -30.6% |
ISDN connections (BRA & PRA) | 247,205 | 285,701 | -13.5% |
Other (MSAN & VoB) | 941,486 | 304,426 | +209.3% |
Access line connections (incl. WLR) | 2,640,657 | 2,681,960 | -1.5% |
Retail access line connections | 2,631,838 | 2,670,364 | -1.4% |
Active Broadband retail subscribers | 1,682,170 | 1,575,383 | +6.8% |
of which: Retail VDSL connections | 279,581 | 186,208 | +50.1% |
COSMOTE TV Subscribers | 503,800 | 458,920 | +9.8% |
Unbundled local loops (active) | 2,105,945 | 2,055,870 | +2.4% |
In Q2'17, the total Greek access market (OTE active retail lines, Wholesale line rental connections and full LLU subscribers) lost 5k lines, while OTE's fixed-line operations posted a net loss of 8k access lines.
OTE achieved net additions of 27k retail broadband customers in Q2'17, representing 89% of total net additions. The total number of OTE retail broadband subscribers rose to 1,682k. Penetration of OTE's high-speed VDSL broadband service continued to expand, with net additions of 27k in the quarter. At quarter end, OTE's VDSL offer had been adopted by 280k subscribers, or 16.6% of OTE's total retail broadband base, up sharply from 15.2% at the end of the first quarter of 2017. OTE's continuing success in expanding a premium service in a period of significant downward pressure on consumer spending validates the strategy of investing in VDSL. From the total number of cabinets allocated to OTE for VDSL upgrade last February, the company had activated approximately 53% by the end of the quarter, with an additional 35% close to completion.
In Q2'17, the total number of TV subscribers decreased by 1k sequentially to 504k. The anticipated slowdown in customer acquisition following a long period of particularly rapid subscriber growth reflects the maturity of this market segment, the additional taxation on pay-TV subscriptions implemented last year and a seasonal slowdown.
OTE - Hellenic Telecommunications Organization SA published this content on 03 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 03 August 2017 08:23:12 UTC.
Original documenthttps://www.cosmote.gr/fixed/documents/10280/213529551/OTE_Q2_2017_RESULTS_ENG.pdf/898d15dd-4aec-42dc-843a-e9bd5297d1ac
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