HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. OTE GROUP REPORTS 2017 THIRD QUARTER RESULTS
- Positive performance in Greece continues; Romania & Albania remain challenging
-
Greece:
- Adj. EBITDA up 1.1% and margin up 60 bps to 41.2%
- Fixed: Fiber uptake driving strong BB performance; current phase of FTTC development completed ahead of schedule (13k cabinets and 43,000 km fiber network), new phase of about 4k cabinets planned for 2018
- Mobile: Service Revenues up 2.1%; Adj. EBITDA up 7.6%, supported by Data revenues and roaming
-
Romania Fixed Revenues up 2.2%, ongoing initiatives to stabilize market position
OTE GROUP (€ mn)
Q3 '17
Q3 '16
Change
9M '17
9M '16
Change
Revenues
991.2
997.9
-0.7%
2,859.0
2,881.1
-0.8%
Adjusted EBITDA
348.7
357.0
-2.3%
966.7
977.2
-1.1%
Adj. EBITDA margin (%)
35.2%
35.8%
-0.6pp
33.8%
33.9%
-0.1pp
- Peak 2017 Capex revised upwards to fund accelerated NGA deployment; gradual return to normalized level starting from next year
Operating profit (EBIT) | 120.6 | 119.2 | +1.2% | 335.4 | 315.6 | +6.3% |
Profit to owners of the parent | 52.4 | 55.9 | -6.3% | 119.9 | 123.4 | -2.8% |
Adj. Profit to owners of the parent Basic EPS (€) | 76.5 0.1072 | 74.7 0.1144 | +2.4% -6.3% | 155.6 0.2453 | 149.8 0.2525 | +3.9% -2.8% |
Total Assets | 7,164.2 | 7,419.5 | -3.4% | 7,164.2 | 7,419.5 | -3.4% |
Adj. Net Operating Cash Flow | 148.1 | 209.4 | -29.3% | 594.7 | 661.8 | -10.1% |
Adjusted CapEx | 176.2 | 183.7 | -4.1% | 584.2 | 486.5 | +20.1% |
Adjusted Free Cash Flow | (28.1) | 25.7 | -209.3% | 10.5 | 175.3 | -94.0% |
Cash & Other financial assets | 1,302.5 | 1,372.0 | -5.1% | 1,302.5 | 1,372.0 | -5.1% |
Adjusted Net Debt | 648.9 | 793.5 | -18.2% | 648.9 | 793.5 | -18.2% |
Note: The purpose and calculations of all 'Adjusted' data presented in this report are detailed in the Alternative Performance Measures Section
ATHENS, Greece - November 9, 2017 - 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, 2017.
Commenting on OTE's results for the third quarter of 2017, Michael Tsamaz, Chairman & CEO, noted: "We achieved good operating performance in the third quarter. Reflecting our longstanding investments in high-speed data and TV content, together our retail Greek fixed and mobile operations posted positive revenues, impacted only by wholesale tariff cuts mandated by the regulator. Greece delivered a very strong EBITDA margin at the country level, thanks to a substantial increase in mobile service revenues and cost control across the board. Romanian fixed operations benefited from the continuing high demand for FMC service, but conditions remain challenging throughout our international operations. We have launched new initiatives to tighten costs and strengthen our profitability."Mr. Tsamaz added: "Our capital investments in the first nine months of the year are up substantially, a trend that we expect to continue in the fourth quarter, as we have sped up the pace of our FTTC, 4G & 4G+ investments to provide solutions that benefit customer experience and support the digital transformation of our markets. Our first wave of vectoring enabled cabinets will go live in late November, allowing us to offer a full menu of high speed broadband options for all client segments. The increase in our capital expenditure will support our drive to boost our operational performance and profitability."
OutlookFor the fourth quarter of 2017, OTE does not expect material changes in the operational drivers and trends that have prevailed since the beginning of the year. In Greece, trends should remain generally positive, supported by continuing strong growth in mobile data, broadband and pay-TV services, while voice revenues should continue declining. Performance in Romania and Albania remains challenging. The Group is implementing a number of cost-saving measures aimed at improving profitability over time.
To support its major growth initiatives, OTE is further accelerating its investments in technologies, infrastructure and content. In particular, the first phase of FTTC investments have been completed in record time and the commercial launch has been accelerated to leverage the availability and rapid uptake of this technology. Consequently, management now expects Capex to peak in 2017 at approximately
€800mn. Reflecting the increased Capex, as well as a shortfall in EBITDA in its international operations, OTE now expects 2017 full-year adjusted FCF to be approximately €100mn. Capital expenditure and adjusted FCF will gradually return to normalized levels, starting as of next year.
OTE GROUP HIGHLIGHTS
OTE Group posted consolidated revenues of €991.2mn in Q3'17, down 0.7%.
In Greece, revenues were down 0.5% to €735.8mn, reflecting higher revenues from mobile operations, primarily fueled by growth in data revenues and roaming, that were more than offset by the decrease in retail fixed voice revenues, lower wholesale revenues from LLU pricing regulation, and reduced revenue due to the completion of the Rural Broadband project. Growth in Broadband and pay-TV revenues was notable once again. In Greek mobile, the rebound in total service revenues initiated in the previous quarter gained momentum in Q3'17.
In Romania, total revenues were down 1.0%, reflecting lower revenues in mobile operations. Conversely, revenues from fixed operations were up 2.2%, driven by higher wholesale revenues and the continuing solid performance from Telekom Romania's convergent fixed-mobile solution.
Total Operating Expenses, excluding depreciation, amortization, impairment and charges related to voluntary leave schemes, other restructuring costs and non-recurring litigations, amounted to €656.3mn in Q3'17, a slight increase of 0.9% compared to Q3'16. The increase is largely due to traffic-related costs, while most other expense items were down in the quarter.
The Group's adjusted EBITDA was down 2.3% to €348.7m, reflecting the challenging performance in Romanian and Albania. In Greece, adjusted EBITDA increased by 1.1%, yielding an Adjusted EBITDA margin of 41.2%. Adjusted EBITDA was down 19.5% in Romania, primarily reflecting the performance in mobile, as well as a changing revenue mix in fixed. Adjusted EBITDA was down 30.6% in Albania, where operations were impacted by continuing reduction of incoming revenues.
The Group's Income Tax charge stood at €42.3mn in Q3'17, down 9.8%, reflecting lower profit before taxes.
Adjusted Group profit after minority interests (excluding one-off items) stood at €76.5mn in Q3'17, up 2.4% compared to Q3'16.
Adjusted Capital Expenditures amounted to €176.2mn in Q3'17, down 4.1%. Capex in Greek Fixed-line operations amounted to €82.4mn. Investments in Romania Fixed-line operations amounted to €38.4mn. In Mobile operations, adjusted Capex in Greece stood at €35.7mn, in Romania at €12.7mn, and in Albania at €2.5mn. Capex will accelerate in Q4, reflecting the build out of FTTC.
In Q3'17, the Group posted negative adjusted Free Cash Flow at €28.1mn, due to the increase in taxes paid.
The Group's adjusted Net Debt was €0.6bn at September 30, 2017, down 18% compared to September 30, 2016. The Group's ratio of adjusted Net Debt to 12-month trailing Adjusted EBITDA stood at 0.5x.
BREAKDOWN OF GROUP REVENUES(€ mn) | Q3 '17 | Q3 '16 | Change | 9M '17 | 9M '16 | Change |
Fixed Line Operations, Greece | 391.5 | 397.7 | -1.6% | 1,174.3 | 1,166.1 | +0.7% |
Mobile Operations, Greece | 322.8 | 319.3 | +1.1% | 889.0 | 887.4 | +0.2% |
Fixed Line Operations, Romania | 152.4 | 149.1 | +2.2% | 447.4 | 435.7 | +2.7% |
Mobile Operations, Romania | 111.1 | 112.1 | -0.9% | 325.4 | 335.2 | -2.9% |
Mobile Operations, Albania | 18.0 | 19.4 | -7.2% | 50.9 | 60.0 | -15.2% |
All Other | 125.3 | 126.7 | -1.1% | 351.7 | 343.2 | +2.5% |
Eliminations (Mobile & Group) | (129.9) | (126.4) | +2.8% | (379.7) | (346.5) | +9.6% |
TOTAL | 991.2 | 997.9 | -0.7% | 2,859.0 | 2,881.1 | -0.8% |
Other Operating Income | 13.8 | 9.6 | +43.8% | 35.0 | 25.7 | +36.2% |
(€ mn) | Q3 '17 | Q3 '16 | Change | 9M '17 | 9M '16 | Change |
Fixed Line Operations, Greece | 166.0 | 171.1 | -3.0% | 497.1 | 494.0 | +0.6% |
Margin | 42.4% | 43.0% | -0.6pp | 42.3% | 42.4% | -0.1pp |
Mobile Operations, Greece | 122.8 | 114.1 | +7.6% | 309.6 | 303.0 | +2.2% |
Margin | 38.0% | 35.7% | +2.3pp | 34.8% | 34.1% | +0.7pp |
Fixed Line Operations, Romania | 29.0 | 29.5 | -1.7% | 75.8 | 65.2 | +16.3% |
Margin | 19.0% | 19.8% | -0.8pp | 16.9% | 15.0% | +1.9pp |
Mobile Operations, Romania | 14.0 | 23.9 | -41.4% | 43.5 | 64.0 | -32.0% |
Margin | 12.6% | 21.3% | -8.7pp | 13.4% | 19.1% | -5.7pp |
Mobile Operations, Albania | 2.5 | 3.6 | -30.6% | 5.4 | 13.1 | -58.8% |
Margin | 13.9% | 18.6% | -4.7pp | 10.6% | 21.8% | -11.2pp |
All Other | 15.0 | 15.9 | -5.7% | 37.1 | 41.1 | -9.7% |
Margin | 12.0% | 12.5% | -0.5pp | 10.5% | 12.0% | -1.5pp |
Eliminations (Mobile & Group) | (0.6) | (1.1) | -45.5% | (1.8) | (3.2) | -43.8% |
OTE Group | 348.7 | 357.0 | -2.3% | 966.7 | 977.2 | -1.1% |
Margin | 35.2% | 35.8% | -0.6pp | 33.8% | 33.9% | -0.1pp |
Revenues (€ mn) | Q3 '17 | Q3 '16 | Change | 9M '17 | 9M '16 | Change |
Greece | 735.8 | 739.5 | -0.5% | 2,108.9 | 2,116.0 | -0.3% |
Romania | 239.2 | 241.6 | -1.0% | 704.5 | 716.8 | -1.7% |
Albania | 16.2 | 16.8 | -3.6% | 45.6 | 48.3 | -5.6% |
OTE Group | 991.2 | 997.9 | -0.7% | 2,859.0 | 2,881.1 | -0.8% |
Adjusted EBITDA (€ mn) | Q3 '17 | Q3 '16 | Change | 9M '17 | 9M '16 | Change |
Greece | 303.2 | 300.0 | +1.1% | 842.0 | 834.9 | +0.9% |
margin | 41.2% | 40.6% | +0.6pp | 39.9% | 39.5% | +0.4pp |
Romania | 43.0 | 53.4 | -19.5% | 119.3 | 129.2 | -7.7% |
margin | 18.0% | 22.1% | -4.1pp | 16.9% | 18.0% | -1.1pp |
Albania | 2.5 | 3.6 | -30.6% | 5.4 | 13.1 | -58.8% |
margin | 15.4% | 21.4% | -6pp | 11.8% | 27.1% | -15.3pp |
OTE Group | 348.7 | 357.0 | -2.3% | 966.7 | 977.2 | -1.1% |
margin | 35.2% | 35.8% | -0.6pp | 33.8% | 33.9% | -0.1pp |
GREECE
OTE's retail revenues in Greece were up nearly 1% in the third quarter, as higher mobile service revenues offset a slight erosion in fixed retail revenues, entirely due to voice. OTE's total revenues in Greece were down 0.5%, as higher performances in broadband and mobile activities, were offset by lower wholesale revenues. Overall, adjusted EBITDA from combined Greek fixed and mobile businesses increased by 1.1% in Q3'17.
Fixed-Line Operations, GreeceAccess Lines | September 2017 | September 2016 | Change |
PSTN connections | 1,345,049 | 1,957,794 | -31.3% |
ISDN connections (BRA & PRA) | 240,695 | 276,873 | -13.1% |
Other (MSAN & VoBB) | 1,051,768 | 439,580 | +139.3% |
Access line connections (incl. WLR) | 2,637,512 | 2,674,247 | -1.4% |
Retail access line connections | 2,628,750 | 2,663,402 | -1.3% |
Active Broadband retail subscribers | 1,716,188 | 1,605,395 | +6.9% |
of which: Retail VDSL connections | 311,107 | 200,557 | +55.1% |
COSMOTE TV Subscribers | 517,155 | 478,033 | +8.2% |
Unbundled local loops (active) | 2,105,006 | 2,054,342 | +2.5% |
In Q3'17, the total Greek access market (OTE active retail lines, Wholesale line rental connections and full LLU subscribers) lost 4k lines, while OTE's fixed-line operations posted a limited net loss of 3k access lines.
OTE achieved strong net additions of 34k retail broadband customers in Q3'17, while the total number of OTE retail broadband subscribers rose to 1,716k. Penetration of OTE's high-speed VDSL broadband service continued to expand, with net additions of 32k in the quarter. At quarter end, OTE's VDSL offer had been adopted by 311k subscribers, or 18.1% of OTE's total retail broadband base, up sharply from 16.6% at the end of the second quarter of 2017. OTE is successfully converting a growing number of customers to its high-speed offering, highlighting the market's appetite for high-speed broadband services and supporting its investment in FTTC. From the total number of cabinets allocated to OTE for VDSL/Vectoring upgrade last February, the Company had activated approximately 72% by the end of the quarter, with the remaining currently being readied for commercialization, largely within the year. In late November, OTE plans to commercially launch vectoring and super vectoring based products, offering broadband speeds of up to 200Mbps, another step-change in the services offered to its customers. Accelerated investments, driven by the rapid rollout of FTTC during the year will enable an extended launch ahead of initial schedule. This is expected to boost performance, responding to continuing demand for enhanced high-speed broadband.
OTE achieved a quarter of growth in its TV offering, with net additions of 13k, in a seasonally good quarter. As at September 30, 2017, the total number of TV subscribers amounted to 517k, a year-on-year increase of 8.2%.
OTE - Hellenic Telecommunications Organization SA published this content on 09 November 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 09 November 2017 08:23:01 UTC.
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