untitled design

OTE: 7.2% increase in adjusted EBITDA in the second quarter

OTE Group announced today a 2.7% increase in second quarter consolidated revenues, while the Group’s adjusted EBITDA (AL) profitability increased by 7.2% and amounted to €332.8 million.

In particular, as the listed company announced today, in the second quarter of 2022, the consolidated revenues of the OTE Group increased by 2.7% and amounted to €849.6 million. In Greece, revenues increased by 1.9%, to € 773.1 million, reflecting the increased base of comparison due to sales of subsidized handsets made in Q2 2021. Strong performance in Mobile, TV and ICT services continued in the quarter, while roaming revenue rebounded. In Romania, revenue increased by 4.7% to €78.2m, as one-time revenue from MVNO services together with higher revenue from device sales more than offset the decline in mobile service revenue due to a reduction in fees termination (MTR).

The Group’s total operating expenses, excluding depreciation, impairments and charges related to restructuring costs (mainly Voluntary Severance Programs) and non-recurring legal cases, remained stable, despite the increase in energy costs.

The Group’s adjusted EBITDA (AL) profitability increased by 7.2% to €332.8 million, leading to a margin of 39.2%. In Greece, adjusted EBITDA (AL) increased 5.1% to €319.1 million, and EBITDA margin reached 41.3%, up 130 basis points. Mobile in Romania recorded adjusted EBITDA (AL) profitability of €13.7m, positively impacted by one-off adjustments.

The Group recorded pre-tax profits of €144.1m, down 1.6% compared to Q2 2021, reflecting costs related to the voluntary severance program in Greece during the quarter. Group income tax was €37.3m in Q2 2022, down 47.9% compared to Q2 2021, reflecting the impact on the deferred tax asset base due to the rate reduction income tax from 24% to 22% in Q2 2021.

Adjusted fixed asset investment was €167.8m, up 22.3% from Q2 2021, due to FTTH network rollout in full swing and TV content costs. Investments in Greece and in the Romanian mobile phone amounted to €162.3 million and €5.5 million respectively.

Adjusted free cash flow after leases was €159.9m in Q2 2022, down 1.8% year-on-year, while free cash flow was unchanged from last year’s quarter at €157 .2 million, as higher profitability in the quarter offset the increase in investments.

The Group’s adjusted net debt as at 30 June 2022 was €532.4 million, down 32.3% compared to 30 June 2021. The Group’s adjusted net debt corresponds to 0.4 times annual adjusted EBITDA (AL ).

M. Chamaz: Strong quarter in a difficult environment

“We have achieved another strong quarter, strengthening OTE’s momentum in a difficult environment, with geopolitical challenges and inflationary pressures”, says the group’s president and CEO, Michalis Chamaz, in his message on the occasion of the announcement of the results.

“In Greece, we strengthened revenues from mobile services, while in fixed we implemented a series of initiatives, such as the free upgrade of broadband speeds, giving more value to the services we provide and strengthening customer loyalty. EBITDA profitability in Greece increased for another quarter , despite the impact on our costs from higher prices, especially for energy, which we have absorbed without passing on our customers. In Romania, revenue and profitability increased as the company operates more efficiently as a mobile-only provider.” , says Mr. Chamaz and adds:

“For the second half of the year, we estimate that the recovery in tourism and roaming revenues, as well as cost containment in some areas, will help us face potential challenges in an increasingly uncertain environment. We continue to invest in FTTH and 5G, we have faith in our strategy, which we will continue to implement relentlessly, and confirm the goals we have set for the full year.”

Prospects

Current geopolitical challenges combined with rising global inflation are expected to impact the macroeconomic environment and consumer spending. OTE is partially protected from some inflationary risks, while it is expected to benefit from its strong investments in advanced network infrastructure, both fixed and mobile.

The development of the FTTH network together with the expansion of 5G allow the Company to offer even better services and focus on excellent customer experience, in a highly competitive environment. The Company’s initiative to upgrade broadband speeds where technically feasible, as well as the new mobile telephony plans, are expected to enhance the value of the services offered and customer loyalty. In addition, rich sports TV content, including most of the Greek Super League, is expected to support steady growth in TV subscribers.

With these data and in combination with the positive prospects for tourism in 2022, OTE estimates that it will continue its development course in the second half of the year, albeit at a milder pace, and that it will achieve strong revenue and profitability growth for the year 2022.

The implementation of the Recovery and Resilience Plan is a decisive factor both for the country’s economic prospects and for OTE’s activity in the ICT sector, whose contribution to the Group’s revenues is expected to increase significantly in the coming years.

OTE Management maintains the targets it has set for 2022. The Group’s adjusted investments are estimated to increase to around €620 million, while free cash flows are estimated to reach around €600 million. The total Shareholder Compensation for 2022 will amount to €500 million and will be divided equally into a proposed dividend corresponding to €0.558 per share, and a Share Purchase Program of approximately €250 million. The dividend was paid on July 7, 2022.

It is recalled that in June and July, OTE raised loan funds amounting to €300 million with two equal agreements of €150 million. The first through a bond within the existing Medium-Term Bond Issuance Program for one year and a yield of 0.67%. The second through a loan agreement with the EBRD, for eight years with an interest rate of 1.561%, in order to finance part of the Fiber to the Home (FTTH) network development plan in the Greek region. At the same time, OTE repaid a bond at maturity with a remaining balance of €375 million and a yield of 2.375%. OTE manages to reduce the cost of borrowing in the long term in a period of rising interest rates in the markets.

On June 9, 2022, the OTE Board of Directors approved the 2021 Single Sustainable Development Report, which reflects for another year the commitment of the OTE Group companies to Sustainability, as well as the progress made in 2021, with the aim of a world , better for everyone. With sustainable development at the heart of its business strategy and by integrating more and more ESG commitments into its business operation, the Group has a positive impact on the economy, society and the environment. The Report’s initiatives follow recognized international and national practices and guidelines, such as the Global Reporting Initiative (GRI) Guidelines, the Principles of the UN Global Compact and the ESG Information Disclosure Guide of the Athens Stock Exchange. For its writing, the guidelines of the TCFD- Task Force on Climate-related Financial Disclosures were also taken into account.

The important results recorded in the Report include the investments of more than €3 billion until 2027, implemented by the OTE Group focusing on new generation fixed and mobile networks, FTTH and 5G, the reduction by 88% of direct and indirect CO2 emissions from the consumption of energy (electricity, natural gas, diesel and gasoline) in the last five years, the achievement of zero waste from the provision of technology services* and the participation of the OTE Group for the second consecutive year in the “World’s Most Ethical Companies” list of the Ethisphere Institute.

* Sustainable management of the waste produced by the telecommunications network, the network of stores, buildings and data centers

Source: Capital

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights

 

Most popular