HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. 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."
Outlook
OTE 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,adjustedCapex 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 | |
BREAKDOWN PER COUNTRY (After Eliminations)
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, Greece
Access 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% |
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.SUMMARY FINANCIAL DATA - FIXED-LINE OPERATIONS, GREECE
(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Revenues | 390.8 | 389.5 | +0.3% | 782.8 | 768.4 | +1.9% |
- Retail Fixed Services | 224.8 | 223.3 | +0.7% | 448.8 | 443.9 | +1.1% |
- Wholesale Fixed Services | 85.2 | 87.1 | -2.2% | 172.9 | 168.5 | +2.6% |
- Other | 80.8 | 79.1 | +2.1% | 161.1 | 156.0 | +3.3% |
Other income/ (expense), net | 1.3 | 0.5 | +160.0% | 2.8 | 2.8 | - |
Adj. EBITDA | 163.1 | 161.8 | +0.8% | 331.1 | 322.9 | +2.5% |
Adj. EBITDA margin (%) | 41.7% | 41.5% | +0.2pp | 42.3% | 42.0% | +0.3pp |
Voluntary leave schemes | 0.0 | 0.0 | - | (2.1) | (2.6) | -19.2% |
Depreciation, Amortization & Impairments | (78.4) | (76.5) | +2.5% | (155.8) | (159.0) | -2.0% |
Operating Income (EBIT) | 84.7 | 85.3 | -0.7% | 173.2 | 161.3 | +7.4% |
Greek fixed-line operations posted year-over-year revenue growth of 0.3% in Q2'17. Revenues from retail fixed services rose 0.7%, supported by continued solid performances in broadband and, to a lesser extent, pay-TV. The modest drop in voice revenues was roughly in line with the trends experienced since mid-2016. These resilient performances reflect OTE's investments in high-speed networks and new solutions, improvements in customer experience, and the steady rollout of commercial initiatives aiming to drive ARPU potential and increase loyalty of our embedded base. Broadband revenues were boosted by the strong VDSL take-up in the quarter, resulting from the extending reach of the network as well as commercial efforts to increase the awareness and appeal of the service. Wholesale Revenues were negatively affected by the retroactive application of lower regulated unbundling prices.
Total Greek fixed-line Operating Expenses, excluding depreciation, amortization and charges related to voluntary leave schemes, restructuring and non-recurring litigations amounted to €229.0mninQ2'17, a slight increase of 0.4% compared toQ2'16.Personnel expenses were down 6.4%, reflectingvoluntary leave schemes last year. In order to reach its EBITDA and free cash flowtargets, OTE is sustaining stringent cost-containment initiativestargeting personnel-related costs as well as all other expense lines.
Adjusted EBITDA increased by 0.8% to €163.1mninQ2'17, boosted by revenue growth and cost-reduction initiatives.As a result, adjusted EBITDA margin in Greek fixed-line operations rose 20 basis points to 41.7% compared toQ2'16.
MOBILE OPERATIONS, GREECE
June 2017 | June 2016 | Change | ||||
Mobile Subscribers | 7,737,040 | 7,610,022 | +1.7% | |||
(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Service Revenues | 235.9 | 234.5 | +0.6% | 453.8 | 456.3 | -0.5% |
Total Revenues | 292.7 | 291.2 | +0.5% | 566.2 | 568.1 | -0.3% |
Adjusted EBITDA | 99.9 | 97.0 | +3.0% | 186.8 | 188.9 | -1.1% |
Adj. EBITDA margin (%) | 34.1% | 33.3% | +0.8pp | 33.0% | 33.3% | -0.3pp |
As of June 30, 2017, COSMOTE provided mobile telephony services to 7.7mn customers in Greece, up 1.7% year on year.
Total Mobile revenues increased by 0.5% in Q2'17, extending the improving trend recorded in the previous quarter, driven by service revenues, which totaled €235.9mn in the quarter, an increase of 0.6%. Supported by strong data growth, this represents the first quarter after several years when a positive trend in mobile service revenues seems to take hold.
Data revenues rose by 23% in the quarter, reflecting COSMOTE's focus on providing market-leading coverage and speeds. COSMOTE's 4G and 4G+ footprints now cover approximately 97% and 86% of the Greek population, respectively. About 50% of COSMOTE's data traffic now originates from 4G devices. COSMOTE has introduced a number of new mobile propositions across postpaid and prepaid segments, addressing higher demand for mobile internet and capitalizing on the expanded 4G network capabilities.
The change in roaming regulation within the EU is proving a significant booster of roaming volume, notably in data, and of related revenues. While this impact remained marginal in the second quarter, when the tourist season was in its early stage, it should gain scale in Q3.
In Q2'17, COSMOTE Greece's blended AMOU dropped by 2.2% to 287 minutes. Blended ARPU for the same period was €10.8, down 2.2% from Q2'16, largely due to pressure in the prepaid market, whereas postpaid ARPU increased.ROMANIA |
Total revenues from Group operations in Romania were down 2.6% to €235.5m, reflecting competitive pressure in mobile, especially prepaid, partially offset by a solid performance in Fixed, driven by the Company's fixed-mobile convergent solution and wholesale.
The Group is investing in upgrading its Romanian network infrastructure, including expanding its own 4G coverage and FTTH footprint, which are key elements of its strategy in that market. Capex dedicated to extend 4G coverage will result in providing data access to a wider customer base in a more cost-effective manner. Similarly, expanded FTTH coverage, currently reaching approximately 2.1 million households, is gradually picking up pace with subscribers. Commercially, the focus on convergent bundles, including fixed, mobile and TV, is a significant differentiating factor increasingly appreciated by customers, as evidenced by growing revenues and subscriber numbers.
Combined adjusted EBITDA in Romania posted an increase of 5.9% from €37.0m to €39.2m in the second quarter of 2017.
Fixed Line Operations, Romania
SUMMARY FINANCIAL & SUBSCRIBERS DATA
June 2017 | June 2016 | Change | |
Voice Telephony Lines* | 2,118,210 | 2,182,636 | -3.0% |
Broadband subscribers* | 1,185,687 | 1,193,626 | -0.7% |
TV subscribers | 1,470,692 | 1,461,287 | +0.6% |
FMC Customers | 424,983 | 310,314 | +37.0% |
*Including FMC
(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Revenues | 151.6 | 149.5 | +1.4% | 295.0 | 286.6 | +2.9% |
- Retail Fixed Services | 72.9 | 76.6 | -4.8% | 147.4 | 155.5 | -5.2% |
- Wholesale Fixed Services | 38.1 | 29.9 | +27.4% | 67.5 | 54.1 | +24.8% |
- Other | 40.6 | 43.0 | -5.6% | 80.1 | 77.0 | +4.0% |
Other income/ (expense), net | 6.3 | 5.2 | +21.2% | 13.9 | 10.1 | +37.6% |
Adj. EBITDA | 25.4 | 15.2 | +67.1% | 46.8 | 35.7 | +31.1% |
Adj. EBITDA margin (%) | 16.8% | 10.2% | +6.6pp | 15.9% | 12.5% | +3.4pp |
Voluntary leave schemes | (7.9) | (4.2) | +88.1% | (8.3) | (4.5) | +84.4% |
Depreciation, Amortization & Impairments | (28.3) | (36.6) | -22.7% | (56.3) | (69.2) | -18.6% |
Operating Income (EBIT) | (10.8) | (25.6) | -57.8% | (17.8) | (38.0) | -53.2% |
Romania Fixed
In Q2'17, revenues from Romanian fixed-line activities were up 1.4% from the prior-year level, primarily reflecting the company's successful Fixed-Mobile convergent (FMC) solution and wholesale revenues.
Compared to Q2'16, fixed voice revenues continued their downward trend by 14%, broadband revenues were down slightly by 0.5%, while TV revenues rose by 4.0%. Compared to June 30, 2016, the number of FMC subscribers increased by 37%, the total number of TV subscribers increased marginally by 0.6%, while the number of fixed broadband subscribers was down just 0.7%.
The decrease in other revenues largely reflects the finalization of the RoNet (Rural) project, and the seasonality of ICT revenue partially offset by FMC services. The year-on-year increase in other income in Q2'17 is primarily due to sale of real estate assets.
Total Romanian fixed-line Operating Expenses, excluding depreciation, amortization, and charges related to voluntary leave schemes, restructuring and non-recurring litigation costs, decreased by 5.0% in Q2'17 compared to Q2'16. Lower indirect costs like the abolished construction tax, rentals, network maintenance and advertising more than offset higher, customer-driven direct costs (interconnection, mobile handsets, customer premise equipment).
Romania Mobile
Jun '17 | Jun '16 | Change | |
| Mobile subscribers | 4,847,866 | 5,589,924 | -13.3% |
(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Service Revenues | 72.2 | 76.0 | -5.0% | 143.2 | 153.1 | -6.5% |
Total Revenues | 106.5 | 110.1 | -3.3% | 214.3 | 223.1 | -3.9% |
Adjusted EBITDA | 13.8 | 21.8 | -36.7% | 29.5 | 40.1 | -26.4% |
Adj. EBITDA margin (%) | 13.0% | 19.8% | -6.8pp | 13.8% | 18.0% | -4.2pp |
At June 30, 2017, Telekom Romania Mobile's customer base totaled 4.8m, down 13.3% from the year-earlier level. Of this total, 33.3% was postpaid. The total number of business customers grew by 1.7% compared to Q2'16, reflecting the Company's targeted offers for professional users and synergies with fixed-line operations.
Blended ARPU, stood at €5.0, up 5.9% compared to Q2'16, whereas blended AMOUincreased by 1.3%.
Total revenue for the quarter stood at €106.5mn, down by 3.3%, mainly due to lower service revenue, as a result of lower customer base.
In Q2'17, total Operating Expenses, excluding depreciation, amortization, impairments, charges related to voluntary leave schemes, restructuring costs and non-recurring litigation costs,were up 4.4% compared to the same period last year, mainly due to cost of telecommunication services (including the cost of 4G national roaming), personnel and indirect goods and services purchased.
In Q2'17, adjusted EBITDA decreased by 36.7% compared to the year-earlier period. Working together with the Romanian fixed-line operations, Telekom Romania Mobile is taking steps to improve its performance, including enhanced 4G coverage, refocused sales efforts, and cost optimization.
ALBANIA |
Jun '17 | Jun '16 | Change | |
| Mobile subscribers | 1,863,323 | 1,733,480 | +7.5% |
(€ mn) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Service Revenues | 16.5 | 19.1 | -13.6% | 31.7 | 38.8 | -18.3% |
Total Revenues | 17.2 | 20.1 | -14.4% | 32.9 | 40.6 | -19.0% |
Adjusted EBITDA | 2.1 | 5.3 | -60.4% | 2.9 | 9.5 | -69.5% |
Adj. EBITDA margin (%) | 12.2% | 26.4% | -14.2pp | 8.8% | 23.4% | -14.6pp |
As of Q2'17, Telekom Albania's customer base, totaled 1.9m subscribers, up 7.5% compared to the same quarter last year.
Albania has traditionally relied on international terminating traffic, which has been a profitable stream of business. As terminating traffic has declined, due to retail price shifts in foreign markets, profitability has eroded, leading to an adjusted EBITDA decline of 60% compared to Q2'16.
Telekom Albania is taking steps to adapt its operating model to the changes in its market. As such, it has successfully increased outgoing revenues by 14% compared to Q2'16 and is introducing a number of changes in tariff bundles to partly offset the drop in international interconnection revenues and in conjunction with the optimization of indirect expenses lead to profitability recovery.
SIGNIFICANT EVENTS OF THE QUARTER |
DIVIDEND
On June 20, 2017, the General Assembly of OTE's Shareholders approved the distribution of dividend of a total amount of€78.2mn or€0.16 (in absolute amount) per share.
SUBSEQUENT EVENTS OF THE QUARTER |
BILATERAL TERM LOAN WITH EIB AND SYNDICATED FACILITY BY EBRD
On July 10, 2017, COSMOTE S.A. signed, with the guarantee of OTE, a €150.0mn bilateral term loan with EIB and a €150.0mn syndicated facility arranged by EBRD. The funds will be used to provide additional liquidity for COSMOTE's mobile broadband network coverage and capacity expansion investments in Greece. As of the date of the publication of this Report, the loans have not been drawn.
About OTE
OTE Group is the largest telecommunications provider in the Greek market and one of the leading telecom groups in Southeast Europe with presence in Greece, Romania and Albania. OTE is among the largest listed companies, with respect to market capitalization, in the Athens Stock Exchange.
OTE Group offers the full range of telecommunications services: from fixed-line and mobile telephony, broadband services, to pay television and ICT solutions. In addition to its core telecommunications activities, the Group is also involved in maritime communications, real-estate and professional training.
Additional Information is also available on:https://www.cosmote.gr/
Information on Financial Statements of OTE Group is available on:https://www.cosmote.gr/fixed/en/corporate/ir/financial-results/financial-statements-of-ote-group-and-ote-sa
Forward looking Disclaimer:
Certain statements in this document constitute forward-looking statements. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. OTE will not update such statements on a regular basis. As a result, you are cautioned not to place any reliance on such forward-looking statements. Nothing in this document should be construed as a profit forecast and no representation is made that any of these statement or forecasts will come to pass. Persons receiving this announcement should not place undue reliance on forward-looking statements and are advised to make their own independent analysis and determination with respect to the forecast periods, which reflect the Group's view only as of the date hereof.
Exhibits to follow:
I. Alternative Performance Measures "APMs"II. Consolidated Statements of Financial Position as of June 30, 2017 and December 31, 2016III. Consolidated Income Statements for the quarter and six months ended June 30, 2017 and comparative 2016IV. Group Revenues for the quarter and six months ended June 30, 2017 and comparative 2016V. Consolidated Statement of Cash Flows for the quarter ended June 30, 2017 and comparative quartersI. ALTERNATIVE PERFORMANCE MEASURES "APMs" |
The Group uses certain Alternative Performance Measures ("APMs") in making financial, operating and planning decisions as well as in evaluating and reporting its performance. These APMs provide additional insights and understanding to the Group's underlying operating and financial performance, financial condition and cash flow. The APMs should be read in conjunction with and do not replace by any means the directly reconcilable IFRS line items.
Definitions and reconciliations of Alternative Performance Measures ("APMs") |
Alternative Performance Measures ("APMs")
In discussing the performance of the Group, "Adjusted" measures are used such as: Adjusted EBITDA and the respective margin %, Adjusted net operating cash flow, Adjusted CapEx, and Adjusted Free Cash Flow. These are calculated by deducting from the performance measures deriving from directly reconcilable amounts of the Financial Statements, the impact of costs or payments related to voluntary leave schemes, costs or payments for restructuring plans and non-recurring litigations and Spectrum acquisitions.
Costs or payments related to Voluntary Leave Schemes
Costs or payments related to Voluntary Leave Schemescomprise the exit incentives provided to employees and the contributions to the social security fund to exit/retire employees before conventional retirement age. These costs are included within the income statement as well as within the cash flow statement lines "costs related to voluntary leave schemes" and "payments for voluntary leave schemes".However, they are excluded from the adjusted results in order for the user to obtain a better understanding of the Group's operating and financial performance achieved from ongoing activity.
Costs or payments related to other restructuring plans and non-recurring litigations
Other restructuring costs and non-recurring litigations comprise non-ongoing activity related costs arising from significant changes in the way the Group conducts businessand non-recurring legal expenses. These costs are included in the Company's/Group's income statement, while the payment of these expenses are included in the cash flow statement. However, they are excluded from the adjusted results in order for the user to obtain a better understanding of the Group's operating and financial performance achieved from ongoing activity.
Spectrum payments comprise the amounts paid to acquire rights (licenses) through auctions run by the National Regulator to transmit signals over specific bands of the electromagnetic spectrum. As those payments are of significant size and of irregular timing, it is a common industry practice to be excluded from the calculation of the Adjusted Free Cash Flow and Adjusted Capital Expenditure (CapEx) in order to facilitate comparability with industry peers.
Net debt
Net debt is an APM used by management to evaluate the Group's capital structure and leverage. Net debt is defined as short-term borrowings plus long-term borrowings plus short-term portion of long-term borrowings less cash and cash equivalents as illustrated in the table below.
Adjusted Net Debt
Net debt (adjusted) is used by management to evaluate the Group's capital structure and leverage defined as Net debt including other financial assets as they are highly liquidity assets. The calculations are described in the table below:
(Euro million) | 30/06/2017 | 30/06/2016 | Change |
Long-term borrowings | 1,234.9 | 1,734.8 | -28.8% |
Short-term portion of long-term borrowings | 806.9 | 44.4 | - |
Short-term borrowings | - | - | - |
Cash and cash equivalents | (1,508.5) | (1,035.4) | +45.7% |
Net Debt | 533.3 | 743.8 | -28.3% |
Other financial assets | (5.9) | (7.4) | -20.3% |
| Adjusted Net Debt | 527.4 | 736.4 | -28.4% |
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)
EBITDA is intended to provide useful information to analyze the Group's operating performance. EBITDA is defined as total revenues plus other operating income less total operating expenses before depreciation, amortization and impairment, as illustrated in the table below. EBITDA margin (%) is defined as EBITDA divided by total revenues.
Adjusted EBITDA
Adjusted EBITDA is intended to provide useful information to analyze the Group's operating performance excluding the impact of costs related to voluntary leave schemes, other restructuring costs and non-recurring litigations. Adjusted EBITDA is defined as EBITDA adding back costs related to voluntary leave schemes, other restructuring costs and non-recurring litigations, as illustrated in the table below. Adjusted EBITDA margin (%) is defined as Adjusted EBITDA divided by total revenues.
(Euro million) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Total Revenues | 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% |
Total operating expenses before depreciation, amortization and impairment | (642.1) | (657.0) | -2.3% | (1,281.7) | (1,288.8) | -0.6% |
EBITDA | 305.7 | 305.1 | +0.2% | 607.3 | 610.5 | -0.5% |
EBITDA margin % | 32.6% | 32.0% | +0.6pp | 32.5% | 32.4% | +0.1pp |
Costs related to voluntary leave schemes | 8.2 | 4.8 | +70.8% | 10.7 | 7.7 | +39.0% |
Other restructuring and non-recurring litigations | 0.0 | 1.0 | -100.0% | 0.0 | 2.0 | -100.0% |
Adjusted EBITDA | 313.9 | 310.9 | +1.0% | 618.0 | 620.2 | -0.4% |
Adjusted EBITDA margin % | 33.4% | 32.6% | +0.8pp | 33.1% | 32.9% | +0.2pp |
Adjusted Net Operating Cash Flow
Net Cash from operating activities focuses on the cash inflows and outflows from a company's main business activities (interest expense and income tax paid included on the outflows). Adjusted Net Operating Cash Flow is defined as net cash flows from operating activities adding back payments for voluntary leave schemes, payments for other restructuring plans and non-recurring litigation expenses plus interest received, as illustrated in the table below:
(Euro million) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Net cash flows from operating activities (reported) | 269.7 | 253.0 | +6.6% | 432.1 | 438.0 | -1.3% |
Payment for voluntary leave schemes | 2.9 | 5.3 | -45.3% | 10.2 | 8.7 | +17.2% |
Payment for restructuring and non-recurring litigations | - | 4.4 | -100.0% | 3.6 | 4.4 | -18.2% |
Interest received | 0.3 | 0.7 | -57.1% | 0.7 | 1.3 | -46.2% |
Adjusted Net Operating Cash Flow | 272.9 | 263.4 | +3.6% | 446.6 | 452.4 | -1.3% |
Capital expenditure (CAPEX) and Adjusted Capital expenditure
Capital expenditure is defined as payments for purchase of property plant and equipment and intangible assets. The Group uses capital expenditure as an APM to ensure that the cash spending is in line with its overall strategy for the use of cash. Adjusted capital expenditure is calculated by excluding spectrum payments from Capital expenditure as illustrated in the table below:
(Euro million) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Purchase of property plant and equipment and intangible assets (reported) - CAPEX | (223.0) | (138.1) | +61.5% | (423.5) | (316.3) | +33.9% |
Spectrum Payments | - | - | - | 15.5 | 13.5 | +14.8% |
Adjusted CAPEX | (223.0) | (138.1) | +61.5% | (408.0) | (302.8) | +34.7% |
Free Cash Flow
Free cash flow is an APM used by the Group and defined as cash generated by operating activities after payments for purchase of property plant and equipment and intangible assets (CAPEX). Free cash flow is intended to measure the cash generation from the Group's business, based on operating activities, including the efficient use of working capital and taking into account its payments for purchases of property plant and equipment and intangible assets. The Group presents free cash flow because it believes the measure assists users of the financial statements in understanding the Group's cash generating performance as well as availability for debt repayment, dividend distribution and own reserves.
(Euro million) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Net cash flows from operating activities | 269.7 | 253.0 | 6.6% | 432.1 | 438.0 | -1.3% |
Purchase of property, plant, equipment & intangible assets | (223.0) | (138.1) | 61.5% | (423.5) | (316.3) | +33.9% |
Free Cash Flow | 46.7 | 114.9 | -59.4% | 8.6 | 121.7 | -92.9% |
Adjusted Free Cash Flow
Adjusted Free Cash Flow facilitates comparability of Cash Flow generation with industry peers. Adjusted Free Cash Flow is useful in connection with discussions with the investment analyst community and debt rating agencies. Adjusted Free Cash Flow is calculated by excluding from the Free Cash Flow (defined earlier) the payments related to voluntary leave schemes, other restructuring plans and non-recurring litigation expenses and spectrum and adding the interest received.
(Euro million) | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Free Cash Flow | 46.7 | 114.9 | -59.4% | 8.6 | 121.7 | -92.9% |
Payment for voluntary leave schemes | 2.9 | 5.3 | -45.3% | 10.2 | 8.7 | +17.2% |
Payment for restructuring and non-recurring litigations | - | 4.4 | -100.0% | 3.6 | 4.4 | -18.2% |
Interest received | 0.3 | 0.7 | -57.1% | 0.7 | 1.3 | -46.2% |
Spectrum payments | - | - | - | 15.5 | 13.5 | +14.8% |
Adjusted FCF | 49.9 | 125.3 | -60.2% | 38.6 | 149.6 | -74.2% |
Adjusted Profit to owners of the parent
Adjusted Profit for the year attributable to owners of the parent is intended to provide useful information to analyze the Group's net profitability excluding the impact of significant non-recurring or irregularly recorded items in order to facilitate comparability with previous ongoing performance.Adjusted Profit for the year (attributable to owners of the parent) is calculated by adding back to the Profit of the year (attributable to owners of the parent) the impact upon it of the following items: costs related to voluntary leave schemes, net impact from impairments, reassessment of deferred tax, financial expenses for bond issue and bond buyback premium, other restructuring costs and non-recurring litigation expenses, as illustrated in the table below:
(Euro million) - After Tax imact | Q2 '17 | Q2 '16 | Change | 6M '17 | 6M '16 | Change |
Profit to owners of the parent (reported) | 31.1 | 33.6 | -7.4% | 67.5 | 67.5 | +0.0% |
Costs related to voluntary leave schemes | 6.9 | 4.0 | +72.5% | 8.7 | 6.1 | +42.6% |
Other restructuring and non-recurring litigations | 2.8 | 0.7 | - | 2.8 | 1.4 | +100.0% |
Adjusted Profit to owners of the parent | 40.8 | 38.3 | +6.5% | 79.0 | 75.0 | +5.3% |
II. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
(Euro million) | GROUP | |
30/06/2017 | 31/12/2016 | |
| ASSETS | ||
Property, plant and equipment | 2,829.4 | 2,852.5 |
Goodwill | 507.8 | 507.0 |
Telecommunication licenses | 468.4 | 491.3 |
Other intangible assets | 428.4 | 490.4 |
Investments | 0.1 | 0.1 |
Loans to pension funds | 84.1 | 85.6 |
Deferred tax assets | 318.8 | 316.5 |
Other non-current assets | 107.5 | 99.4 |
Total non - current assets | 4,744.5 | 4,842.8 |
Current assets | ||
Inventories | 101.5 | 95.9 |
Trade receivables | 745.7 | 730.5 |
Other financial assets | 5.9 | 5.6 |
Other current assets | 310.9 | 307.6 |
Restricted Cash | 3.7 | 3.6 |
Cash and cash equivalents | 1,508.5 | 1,585.6 |
Total current assets | 2,676.2 | 2,728.8 |
TOTAL ASSETS | 7,420.7 | 7,571.6 |
EQUITY AND LIABILITIES | ||
Equity attributable to owners of the parent | ||
Share capital | 1,387.1 | 1,387.1 |
Share premium | 496.3 | 496.2 |
Treasury shares | (14.6) | (14.3) |
Statutory reserve | 362.2 | 362.2 |
Foreign exchange and other reserves | (144.5) | (156.5) |
Changes in non-controlling interests | (3,314.1) | (3,314.1) |
Retained earnings | 3,581.7 | 3,595.4 |
Total equity attributable to owners of the Parent | 2,354.1 | 2,356.0 |
Non-controlling interests | 282.3 | 295.7 |
Total equity | 2,636.4 | 2,651.7 |
Non-current liabilities | ||
Long-term borrowings | 1,234.9 | 1,941.0 |
Provision for staff retirement indemnities | 228.6 | 227.6 |
Provision for youth account | 137.4 | 142.5 |
Deferred tax liabilities | 47.2 | 50.3 |
Other non - current liabilities | 80.6 | 118.3 |
Total non - current liabilities | 1,728.7 | 2,479.7 |
Current liabilities | ||
Trade accounts payable | 1,146.3 | 1,364.1 |
Short-term portion of long-term borrowings | 806.9 | 184.1 |
Income tax payable | 152.9 | 79.2 |
Deferred revenue | 138.1 | 152.1 |
Provision for voluntary leave schemes | 139.0 | 141.9 |
Dividends payable | 78.2 | 0.3 |
Other current liabilities | 594.2 | 518.5 |
Total current liabilities | 3,055.6 | 2,440.2 |
TOTAL EQUITY AND LIABILITIES | 7,420.7 | 7,571.6 |
III. CONSOLIDATED INCOME STATEMENT |
(Euro million) | Q2'17 | Q2'16 | % | 6M'17 | 6M'16 | % |
Total revenues | 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% |
Operating expenses | ||||||
Interconnection and roaming costs | (138.0) | (127.3) | +8.4% | (280.7) | (248.2) | +13.1% |
Provision for doubtful accounts | (22.5) | (22.5) | 0.0% | (46.8) | (43.8) | +6.8% |
Personnel costs | (161.0) | (167.8) | -4.1% | (318.5) | (329.6) | -3.4% |
Costs related to voluntary leave schemes | (8.2) | (4.8) | +70.8% | (10.7) | (7.7) | +39.0% |
Commission costs | (35.3) | (32.0) | +10.3% | (68.9) | (67.5) | +2.1% |
Merchandise costs | (62.0) | (65.5) | -5.3% | (131.3) | (127.1) | +3.3% |
Maintenance and repairs | (26.2) | (26.2) | 0.0% | (52.8) | (52.9) | -0.2% |
Marketing | (23.9) | (27.4) | -12.8% | (45.8) | (49.6) | -7.7% |
Other operating expenses | (165.0) | (183.5) | -10.1% | (326.2) | (362.4) | -10.0% |
Total operating expenses before depreciation, amortization and impairment | (642.1) | (657.0) | -2.3% | (1,281.7) | (1,288.8) | -0.6% |
Operating profit before financial and investing activities, depreciation, amortization and impairment | 305.7 | 305.1 | +0.2% | 607.3 | 610.5 | -0.5% |
Depreciation, amortization and impairment | (195.4) | (205.9) | -5.1% | (392.5) | (414.1) | -5.2% |
Operating profit before financial and investing activities | 110.3 | 99.2 | +11.2% | 214.8 | 196.4 | +9.4% |
Income and expense from financial and investing activities | ||||||
Interest and related expenses | (38.0) | (35.4) | +7.3% | (70.4) | (71.5) | -1.5% |
Interest income | 0.4 | 0.7 | -42.9% | 0.8 | 1.3 | -38.5% |
Foreign exchange differences, net | (13.1) | (1.8) | +627.8% | (10.2) | (0.3) | - |
Gains from investments and other financial assets - Impairment | 0.0 | 0.3 | - | 0.0 | 0.6 | - |
| Total loss from financial and investing activities | (50.7) | (36.2) | 40.1% | (79.8) | (69.9) | 14.2% |
Profit before tax | 59.6 | 63.0 | -5.4% | 135.0 | 126.5 | +6.7% |
Income tax | (39.8) | (40.4) | -1.5% | (82.7) | (77.8) | +6.3% |
Profit for the period | 19.8 | 22.6 | -12.4% | 52.3 | 48.7 | +7.4% |
Attributable to: | ||||||
Owners of the parent | 31.1 | 33.6 | -7.4% | 67.5 | 67.5 | 0.0% |
Non-controlling interests | (11.3) | (11.0) | +2.7% | (15.2) | (18.8) | -19.1% |
IV. GROUP REVENUES |
(Euro million) | Q2'17 | Q2'16 | % | 6M'17 | 6M'16 | % |
Revenue | ||||||
Fixed business: | ||||||
Retail services revenues | 297.3 | 299.2 | -0.6% | 595.3 | 598.2 | -0.5% |
Wholesale services revenues | 159.2 | 155.1 | +2.6% | 331.1 | 304.3 | +8.8% |
Other revenues | 72.3 | 69.8 | +3.6% | 143.1 | 144.8 | -1.2% |
Total revenues from fixed business | 528.8 | 524.1 | +0.9% | 1,069.5 | 1,047.3 | +2.1% |
Mobile business: | ||||||
Service revenues | 326.6 | 326.2 | +0.1% | 631.4 | 639.6 | -1.3% |
Handset revenues | 47.6 | 51.5 | -7.6% | 97.7 | 102.6 | -4.8% |
Other revenues | 4.8 | 5.5 | -12.7% | 8.4 | 10.0 | -16.0% |
Total revenues from mobile business | 379.0 | 383.2 | -1.1% | 737.5 | 752.2 | -2.0% |
Miscellaneous other revenues | 31.0 | 47.4 | -34.6% | 60.8 | 83.7 | -27.4% |
Total revenues | 938.8 | 954.7 | -1.7% | 1,867.8 | 1,883.2 | -0.8% |
V. CONSOLIDATEDSTATEMENT OF CASH FLOWS |
Amounts in € millions | Q2 '16 | Q3 '16 | Q4 '16 | Q1 '17 | Q2 '17 |
Cash flows from operating activities | |||||
Profit before tax | 63.0 | 97.4 | 28.5 | 75.4 | 59.6 |
Adjustments for: | |||||
Depreciation, amortization and impairment | 205.9 | 201.1 | 266.2 | 197.1 | 195.4 |
Costs related to voluntary leave schemes | 4.8 | 35.8 | 6.1 | 2.5 | 8.2 |
Provision for staff retirement indemnities | 2.8 | 2.8 | 3.4 | 2.7 | 2.8 |
Provision for youth account | 0.7 | 0.8 | (0.5) | 0.7 | 0.7 |
Provision for doubtful accounts | 22.5 | 24.9 | 21.2 | 24.3 | 22.5 |
Foreign exchange differences, net | 1.8 | (0.4) | 4.4 | (2.9) | 13.1 |
Interest income | (0.7) | (0.5) | (0.4) | (0.4) | (0.4) |
| (Gains) / losses from investments and financial assets - Impairment | (0.3) | (18.6) | 0.9 | - | - |
Interest and related expenses | 35.4 | 41.3 | 36.6 | 32.4 | 38.0 |
Working capital adjustments: | (36.2) | (72.1) | 110.9 | (114.1) | (58.5) |
Decrease / (increase) in inventories | (5.8) | (0.2) | 14.6 | 1.7 | (7.5) |
Decrease / (increase) in receivables | (87.9) | (23.2) | (12.9) | (12.2) | (63.4) |
(Decrease) / increase in liabilities (except borrowings) | 57.5 | (48.7) | 109.2 | (103.6) | 12.4 |
Plus /(Minus): | |||||
Payment for voluntary leave schemes | (5.3) | (35.2) | (10.0) | (7.3) | (2.9) |
| Payment of staff retirement indemnities and youth account, net of employees' contributions | (3.5) | (3.7) | (4.1) | (3.1) | (2.9) |
Interest and related expenses paid | (24.8) | (58.5) | (21.3) | (33.6) | (3.7) |
Income taxes paid | (13.1) | (41.4) | (28.5) | (11.3) | (2.2) |
Net cash flows from operating activities | 253.0 | 173.7 | 413.4 | 162.4 | 269.7 |
Cash flows from investing activities | |||||
Sale or maturity of financial assets | - | 0.5 | 1.7 | 0.2 | - |
Repayment of loans receivable | 1.7 | 1.7 | 2.2 | 1.0 | 1.7 |
Purchase of property plant and equipment and intangible assets | (138.1) | (183.7) | (153.0) | (200.5) | (223.0) |
Movement in restricted cash | (0.4) | (0.1) | 0.2 | (0.1) | - |
Payments related to disposal of subsidiaries / investments | - | (4.9) | - | - | - |
Interest received | 0.7 | 0.5 | 0.4 | 0.4 | 0.3 |
Net cash flows used in investing activities | (136.1) | (186.0) | (148.5) | (199.0) | (221.0) |
Cash flows from financing activities | |||||
Share option plans | (0.2) | - | 0.2 | - | (0.3) |
Proceeds from loans granted and issued | - | 389.0 | - | - | - |
Repayment of loans | (411.9) | - | (42.6) | (64.8) | (22.6) |
Dividends paid to Company's owners | (0.3) | (48.6) | - | - | (0.3) |
| Net cash flows from / (used in) financing activities | (412.4) | 340.4 | (42.4) | (64.8) | (23.2) |
Net increase / (decrease) in cash & cash equivalents | (295.5) | 328.1 | 222.5 | (101.4) | 25.5 |
Cash and cash equivalents, at the beginning of the period | 1,329.7 | 1,035.4 | 1,364.9 | 1,585.6 | 1,483.8 |
Net foreign exchange differences | 1.2 | 1.4 | (1.8) | (0.4) | (0.8) |
Cash and cash equivalents, at the end of the period | 1,035.4 | 1,364.9 | 1,585.6 | 1,483.8 | 1,508.5 |
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 08:23:06 UTC.
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