REG - Hellenic Telecomms - Q3 2024 Financial Results
14/11/2024 08:45
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RNS Number : 2548M Hellenic Telecomms Organization S A 14 November 2024
OTE GROUP REPORTS 2024 THIRD QUARTER RESULTS
Highlights
· Steady progress in Greece: Revenues up 2.5%, Adj. EBITDA (AL) up 1.5%
oMobile service revenues up 3%
§ Ongoing growth in postpaid customer base, up 7%
oFTTH subscribers at 355k, up 65% YoY; 1.49mn homes passed, utilization
reaching 26%
§ FTTH Gigabit voucher program available in Q4'24
§ FTTH wholesale agreement to support demand and utilization
oRecord additions of TV subscribers (+24k) reaching 710k, fueled by recent
sports content-sharing agreement
· Group Revenues up 1.8%, Adj. EBITDA (AL) up slightly (+0.4%) excluding
Romania one-offs
(€ mn) Q3'24 Q3'23 y-o-y 9M'24 9M'23 y-o-y
Revenues 897.2 881.0 +1.8% 2,685.5 2,538.7 +5.8%
Adjusted EBITDA (AL) 350.1 352.6 -0.7% 1,002.8 1,001.4 +0.1%
39.0% 40.0% -1pp 37.3% 39.4% -2.1pp
margin %
Operating profit before financial and investing activities 199.8 204.8 -2.4% 553.1 537.2 +3.0%
Profit to owners of the parent 153.6 150.0 +2.4% 414.3 397.2 +4.3%
Adj. Profit to owners of the parent 162.2 153.1 +5.9% 445.2 421.9 +5.5%
EPS (€) 0.3742 0.3553 +5.3% 1.0028 0.9334 +7.4%
Adjusted Capex 159.4 183.3 -13.0% 433.0 429.9 +0.7%
Free Cash Flow (AL) 95.2 27.0 - 343.5 397.1 -13.5%
Cash and cash equivalents 462.1 519.1 -11.0% 462.1 519.1 -11.0%
Net Debt 684.3 671.9 +1.8% 684.3 671.9 +1.8%
Note: The purpose and calculations of all 'Adjusted' data are detailed in the
Alternative Performance Measures Sectio (#APM) n (#APM)
Message from the Chairman & CEO, Kostas Nebis:
"In the third quarter, we extended our strong momentum in the Greek market,
with both revenues and EBITDA up. As our new, multi-faceted strategic
initiatives unfold, we are targeting an acceleration in our growth in the
coming years. We remain focused on investing in best-in class networks and
digital services for the benefit of consumers and society. And we remain
committed to delivering superior customer experience, leading in Gigabit
networks, and further transforming our operations.
"We aim to rank among Europe's top performing digital telecommunications
operators, elevating Greece to the forefront of digitalization in Europe,
connecting people to enjoy better lives and empowering businesses to grow,
while fostering an inspiring workplace where our people thrive. Prioritizing
sustainability across all our operations, and leveraging the strength and
scale of Telekom Group, we are looking forward to creating more value for
shareholders."
Outlook
For the remainder of the year, OTE will continue to strengthen its leadership
in Greece's network infrastructure, capitalizing on its competitive advantage
in FTTH and 5G coverage. The Company aims to pass over 1.7mn homes and
businesses with FTTH by the end of 2024, while also pursuing its investment
strategy in 5G mobile networks and the digitalization of its operations and
customer touchpoints. Barring further geopolitical pressure, OTE also expects
to continue benefiting from the positive macroeconomic outlook in Greece and
the ongoing deployment of the EU Recovery and Resilience Fund, which should
continue driving its ICT segment and support Greece's digital transformation.
Several significant developments are expected to further drive OTE's
performance in Greece:
Ø In broadband, the deployment of the Gigabit Voucher should promote
additional take-up of FTTH services.
Ø In TV, the sports content-sharing agreement with NOVA is accelerating
takeup of Pay-TV services, providing an effective policy to grow the market.
Ø In wholesale, the volume discount agreement in the FTTH wholesale market
should further promote transition towards fiber optic services and enhance the
monetization of this substantial investment.
2024 Guidance
From an operational standpoint, the company is on target to deliver its
full-year 2024 Free Cash Flow (FCF) guidance of €470mn. However, the recent
conclusion of a tax audit in Romania, resulting in an extraordinary ad hoc
payment of €33.5mn, will impact the year's reported FCF by an equivalent
amount and the expected outcome stands at approximately €435mn. The Group
expects 2024 capital expenditures (Capex) in a range of €600mn to €610mn,
an ongoing elevated level during the period of rapid FTTH deployment. In
Greece, for the balance of 2024 and based on current market dynamics, OTE
expects EBITDA trends consistent with the first nine months of the year. At
Group level, results should remain impacted by challenging conditions in
Romania.
2024 Shareholder Remuneration
OTE intends to allocate approximately €450mn for shareholder remuneration in
2024, consisting of €297mn in cash dividends, already paid out to
shareholders, and approximately €153mn in share buybacks.
· The approved dividend per share stands at €0.71, up 23% compared to
2023. The final dividend, paid out on July 10, 2024, stood at €0.7216 gross
per share, increased by the dividend corresponding to own shares that were
held by the Company on the ex-dividend date.
· Implementation of the Company's share buyback program, commenced on
February 26, 2024, is currently ongoing. As of the date of this release, the
Company had disbursed 80% of the amount earmarked for its total 2024 share
buyback program.
OTE GROUP HIGHLIGHTS
ΟΤΕ's total Consolidated Revenues in Q3'24 were up 1.8% to €897.2mn,
driven by positive momentum in Greece. Revenues from Greek operations were up
2.5%, benefiting from growth in Mobile, Broadband, TV, and ICT services. In
Romania, revenues were down 6.6% in a highly competitive market, partly
reflecting the impact of mobile termination rate (MTR) cuts.
Total Group Operating Expenses, excluding depreciation, amortization,
impairment, additional charges from Romania tax audit, and charges related to
voluntary leave schemes and restructuring costs, amounted to €528.9mn in
Q3'24, up 2.7%, mainly reflecting higher direct costs, associated with higher
revenues, as well as higher energy costs.
Group Adjusted EBITDA (AL) stood at €350.1mn, as growth in Greek operations, up 1.5%, was offset by pressure on Romania's profitability. Excluding the impact of items related to the Romania tax audit, Group Adjusted EBITDA (AL) would have been up 0.4%. The Group's EBITDA (AL) margin for the quarter was 39.0%, as compared to 40.0% in Q3'23, due to a higher contribution from ICT revenues in the current quarter.
Capex in Q3'24 amounted to €159.4mn, down 13.0% from Q3'23, primarily due to
lower spending on TV sports content, compared to the same period last year,
following the UEFA broadcasting auction. Capex in Greece and Romania stood at
€152.2mn and €7.2mn, respectively.
Free Cash Flow (AL) stood at €95.2mn, compared to €27.0mn in Q3'23, mainly
reflecting lower income tax payments, Capex, and payments for voluntary leave
scheme during the quarter.
The Group's Net Debt stood at €684.3mn as of September 30, 2024, and the
ratio of net debt to 12-month Adjusted EBITDA (AL) stood at 0.5x. The Group
does not face any bond maturity until September 2026 (€500mn 0.875% Notes).
Revenues (€mn) Q3'24 Q3'23 y-o-y 9M'24 9M'23 y-o-y
Greece 832.5 811.8 +2.5% 2,490.9 2,334.6 +6.7%
Romania mobile 66.4 71.1 -6.6% 199.3 209.4 -4.8%
Eliminations (1.7) (1.9) -10.5% (4.7) (5.3) -11.3%
OTE GROUP 897.2 881.0 +1.8% 2,685.5 2,538.7 +5.8%
Adjusted EBITDA (AL) (€mn) Q3'24 Q3'23 y-o-y 9M'24 9M'23 y-o-y
Greece 353.1 348.0 +1.5% 1,003.1 988.5 +1.5%
margin (%) 42.4% 42.9% -0.5pp 40.3% 42.3% -2pp
Romania mobile (3.0) 4.6 - (0.3) 12.9 -
margin (%) -4.5% 6.5% - -0.2% 6.2% -
OTE GROUP 350.1 352.6 -0.7% 1,002.8 1,001.4 +0.1%
margin (%) 39.0% 40.0% -1pp 37.3% 39.4% -2.1pp
GREECE
OPERATIONAL HIGHLIGHTS
KPIs Q3'24 Q3'23 y-o-y y-o-y Q3'24 Net Adds
% diff.
Fixed line access 2,586,651 2,614,714 -1.1% (28,063) (15,390)
Broadband subscribers 2,400,015 2,391,803 +0.3% 8,212 (7,036)
1,592,178 1,524,463 +4.4% 67,715 10,741
Total Fiber (FTTx)
355,054 215,710 +64.6% 139,344 30,746
FTTH
TV subscribers 710,189 664,082 +6.9% 46,107 23,671
Mobile Subscribers 7,184,707 7,316,646 -1.8% (131,939) (4,551)
2,823,310 2,638,491 +7.0% 184,819 39,150
Postpaid
4,361,397 4,678,155 -6.8% (316,758) (43,701)
Prepaid
Note: All operational KPI's for 2024 and 2023 period have been reclassified.
Fixed, Broadband and TV operational data include only RGU. In the Mobile
segment reclassification refers to a certain shift between Postpaid and
Prepaid segment as well as between Postpaid and Broadband.
Fixed Segment
The Company remains focused on FTTH deployment and further expanded its FTTH
footprint in the quarter, reaching a total of 1.49mn homes as of the end of
September. OTE continues to lead the Greek market in FTTH infrastructure,
accounting for more than 70% of the country's total installed FTTH lines. It
aims to exceed 1.7mn homes and businesses passed by 2024-year end. This
includes the partly subsidized Ultra-Fast Broadband Infrastructure (UFBB)
investment to bring ultra-high Internet speeds of up to 1Gbps in semi-urban
and rural areas of the country.
The FTTH subscriber base posted another quarter of strong additions, at 31k,
raising the total number of FTTH subscribers to 355k, of which 85% utilize
OTE's FTTH network infrastructure. Moreover, approximately 39% of competitor
FTTH subscribers rely on OTE's infrastructure, up from 37% in the prior
quarter, reflecting the recent wholesale agreements between key players in the
market, following regulatory approval in July 2024. As a result, total
utilization on homes passed by OTE's infrastructure reached 26.1%, compared to
19.4% one year earlier.
In addition, the recently approved Gigabit Voucher should further support
takeup of FTTH connections. The plan will take the form of connectivity
voucher of up to €200 for speeds of at least 250Mbps during a 24-month
period and will be implemented in four stages, in parallel with the
in-building connection subsidy (Smart Readiness). As FTTH take-up typically
results in improved customer satisfaction and lower churn, as well as reduced
operating costs, expansion of the FTTH subscriber base is a critical step in
laying the foundation for long-term growth.
As of September, OTE's FTTH retail subscribers accounted for 15% of its total
broadband connections. While this represents an increase of 6 percentage
points compared to a year earlier, there remains significant potential for
future growth. Reflecting continuing demand for premium connectivity, FTTH
penetration among OTE customers on own homes passed now exceeds 44% while it
has already reached two-thirds of the households passed before the end of
2022. Out of total of 2.4mn broadband customers, only 1.6mn enjoy FTTx
connectivity, the rest relying on legacy copper speeds, a gap that provides
both a challenge and an opportunity to serve them with advanced
infrastructure.
OTE's TV segment reached 710k subscribers at the end of Q3'24, a year-on-year
increase of 7%. OTE achieved record additions of 24k TV subscribers, the
highest increase in over two years, demonstrating the benefits arising from
the recent OTE-NOVA sports content-sharing agreement. In addition to
significantly enhancing the Pay-TV content offering for all Greek consumers,
the agreement constitutes an effective method to offer incremental value to
subscribers and to combat piracy. It is expected to drive growth of the
overall Greek Pay-TV market.
Mobile Segment
Consistent with its strategy, OTE is making further progress in its postpaid
segment. Postpaid additions reached 39k in the quarter, bringing the total to
2.8mn subscribers, a 7.0% year-on-year increase. Ongoing customer additions
and upgrades from prepaid to postpaid plans were once again evident in the
quarter. Prepaid customers account for 61% of total mobile base, providing
room for further upgrades. This positive momentum is driven by OTE's strong
leadership in mobile network quality and its competitive advantage in customer
service excellence.
OTE's mobile network was recognized as "the Fastest Mobile Network in Greece"
at the Speedtest Awards(TM) by Ookla(®) for the eighth consecutive year and
won "Best in Test" by "umlaut" for the tenth consecutive year. Recognition of
OTE's network quality, supported by ongoing investment, drives positive
customer preferences and revenue growth.
Population coverage of OTE's 5G network now exceeds 99%, and OTE is the first
operator to carry out the commercial launch of a 5G+ network in Greece. The
next generation 5G Stand-Alone (SA) technology will further enhance customer
experience, gradually resulting in even higher download and upload speeds,
ultra-low latency, improved indoor coverage, moving ever closer to realization
of a "Gigabit Society".
The population coverage of OTE's 5G+ network has already exceeded 50% and will
be expanded to include additional areas across Greece, aiming to reach 60%
population coverage by the end of 2024.
OTE continues to promote data consumption over its networks with the average
data usage per month reaching 16.0GB in the quarter, up sharply from 14.2GB
one year earlier. The characteristics of OTE's network allow for continuous
expansion, maintaining the quality of its performance. OTE leverages the
growth of data consumption to strengthen its revenue base.
FINANCIAL HIGHLIGHTS
(€mn) Q3'24 Q3'23 +/- % 9M'24 9M'23 +/- %
Revenues 832.5 811.8 2.5% 2,490.9 2,334.6 6.7%
Retail Fixed Services 227.6 228.2 -0.3% 684.2 685.0 -0.1%
...Including Data Com. 251.9 252.5 -0.2% 754.0 753.6 +0.1%
Mobile Service Revenues 284.2 276.1 +2.9% 784.9 760.0 +3.3%
Wholesale Services 134.8 142.1 -5.1% 448.2 415.8 +7.8%
Other Revenues 185.9 165.4 +12.4% 573.6 473.8 +21.1%
…οut of which System Solutions 70.5 52.5 +34.3% 225.9 148.1 +52.5%
Adjusted EBITDA (AL) 353.1 348.0 +1.5% 1,003.1 988.5 +1.5%
margin (%) 42.4% 42.9% -0.5pp 40.3% 42.3% -2pp
Total revenues from Greek operations posted another quarter of growth, up 2.5%
to €832.5mn, reflecting the positive momentum in Mobile, Broadband, TV, and
ICT.
Retail fixed service revenues were nearly unchanged in the quarter. Ongoing
positive trends in Broadband, driven by upselling to FTTx, along with positive
momentum in TV services through incremental subscriber numbers, were offset by
a drop in legacy services and certain seasonal retention activities in the TV
segment, which will enable OTE to optimize the recent content agreement and
drive future growth.
Positive momentum in Mobile service revenues continued, with revenues up 2.9%
in the quarter. Both postpaid and prepaid revenues were up once again,
primarily reflecting ongoing customer transitions to higher-value services,
and certain initiatives implemented late in 2023. The significant reservoir of
prepaid subscribers, together with upside potential in data consumption,
provide further growth opportunities.
Wholesale revenues were down 5.1% in the quarter, due to lower revenues from
low-margin international transit traffic as well as a drop in the domestic
wholesale stream, mainly reflecting the infrastructure built by other
operators. The wholesale agreement with key market players should allow OTE to
partially mitigate the downside from this revenue stream over time.
Other revenues were up 12.4% in the quarter, mainly due to positive ICT
momentum, reflecting a 34.3% increase in revenues from systems solutions. The
strong growth partly reflects a favorable comparison base, as major projects
in Q3'23 were postponed to the fourth quarter, as a result of last year's
Greek elections. A higher comparison base in the next quarters should result
in a more subdued trend. ΟΤΕ acts as a major Systems Integrator for
businesses and the public sector, supporting digitalization with the provision
of state-of-the-art technology infrastructure, as well as innovative and
customized IT and cloud solutions. Recent agreements include the framework
contract with NATO Communications and Information Agency (NCIA) for the
development of modern technology infrastructure and the provision of
consulting services. OTE has also been awarded several contracts in the
private sector, including the provision of managed network services, ERP
systems, fiber optic infrastructure, etc.
Adjusted EBITDA (AL) in Greece increased by 1.5% to €353.1mn, consistent
with the trends evidenced in prior quarters, while the margin reached 42.4%.
Consistent growth in mobile revenue combined with effective cost management
more than offset lower revenue from the domestic wholesale segment and higher
energy costs of approximately €6mn in the quarter.
ROMANIA MOBILE
KPIs Q3'24 Q3'23 y-o-y y-o-y Q3'24 Net Adds
% diff.
Mobile Subscribers 3,547,121 3,899,095 -9.0% (351,974) (53,749)
1,959,927 1,882,952 +4.1% 76,975 8,776
Postpaid
1,587,194 2,016,143 -21.3% (428,949) (62,525)
Prepaid
(€mn) Q3'24 Q3'23 y-o-y 9M'24 9M'23 y-o-y
Revenues 66.4 71.1 -6.6% 199.3 209.4 -4.8%
Mobile Service Revenues 40.2 47.6 -15.5% 117.4 141.7 -17.1%
Other Revenues 26.2 23.5 +11.5% 81.9 67.7 +21.0%
Adjusted EBITDA (AL) (3.0) 4.6 - (0.3) 12.9 -
margin (%) -4.5% 6.5% - -0.2% 6.2% -
Total revenues from Telekom Romania Mobile (TKRM) amounted to €66.4mn in the
quarter, down 6.6% year on year. Mobile service revenues were impacted by
continuing challenging market dynamics, while overall operations in Romania
continue to suffer from the impact of mobile termination rate (MTR) cuts. An
additional 50% MTR cut has been implemented as of the beginning of 2024. Other
revenues were up in the quarter, mainly reflecting higher handset sales.
Ongoing positive customer additions on the postpaid segment continues, as the
postpaid base achieved a 4.1% year-on-year increase to a total of 1.96mn
subscribers. Net additions in the quarter stood at 9k.
In October 2024, the Romanian Tax Authority imposed additional tax charges of
€33.5mn on Telekom Romania Mobile in the context of a tax audit for fiscal
years 2017 to 2021. This amount is included in Q3'24 reporting figures but
does not impact Adjusted EBITDA (AL) or Adjusted Profit for the period (see
Alternative Performance Measures (#APM) ).
Adjusted EBITDA (AL) from Romanian operations was negative in the quarter, at
(€3.0)mn, reflecting the ongoing topline pressure and certain items
resulting from the tax audit. Adjusting for these items, Adjusted EBITDA (AL)
would have been approximately €1mn in the quarter.
SIGNIFICANT EVENTS OF THE QUARTER
OTE and NOVA TV sports agreement
On July 16, 2024, OTE and NOVA Telecommunications & Media S.A. ("the
Parties") have entered in a wholesale agreement regarding the cross-supply of
their sports channels, which so far were offered on an exclusive basis on each
party's platform. The agreement will enable each of the parties to offer
significantly enhanced Pay-TV services to Greek consumers, allowing them to
access more sports content in a single subscription. The agreement, which is
anticipated to drive growth in the total Pay-TV market, represents an
effective policy against piracy, which distorts the Pay-TV market, and impacts
revenue streams of content providers and the Greek State.
Share Buyback Program
The Company acquired 6,672,125 own shares during the period from February 26,
2024, to September 30, 2024, at an average price of €14.06 per share. Of
these shares, 3,381,933 own shares acquired during the period from February
26, 2024, to May 31, 2024, were cancelled and delisted on July 24, 2024, along
with 1,926,507 own shares awaiting cancellation acquired in the previous Share
Buyback Program. As of September 30, 2024, the Company held 3,290,192 own
shares.
The Romanian Tax Authority (ANAF) imposed €33.5mn in additional tax charges
for fiscal years 2017 to 2021.
On October 18, 2024, OTE announced that in the context of a tax audit of its
100% subsidiary Telekom Romania Mobile ("TKRM") for fiscal years 2017 to 2021,
the Romanian Tax Authority (ANAF) imposed €33.5 million in additional tax
charges, related to alleged VAT and Corporate Income Tax miscalculations. TKRM
proceeded with the corresponding payment and has successfully applied for
amnesty in the context of Ordinance 107/2024 of Romania, which provides for
the exemption from penalties, interest, and surcharges if the principal amount
is settled. At the same time, TKRM will also file for annulment of the tax
audit findings before the competent courts, in accordance with the applicable
legislation. These amounts refer to past fiscal years and have no impact on
the organic performance of the Group.
SUBSEQUENT EVENTS
Repayment of Notes
On October 24, 2024, the €40.0mn fixed-rate Notes under the Global
Medium-Term Note Program of OTE PLC, fully subscribed by Deutsche Telekom AG,
were fully repaid at maturity.
Telekom Romania Mobile disposal
On October 31, 2024, OTE announced that it, has entered into negotiations for
the sale of Telekom Romania Mobile ("TKRM") with Digi Romania S.A and Vodafone
Romania S.A. The parties have signed a Memorandum of Understanding (MoU) and
are in the process of filing for approval with the Romanian competent
authorities (RCC, FDI, ANCOM). The MoU provides that certain assets of TKRM
would be acquired by Digi, while the remaining assets and the Company would be
acquired by Vodafone Romania. Completion of the transaction is subject to the
signing of a Share Purchase Agreement and transaction documentation, as well
as obtaining regulatory approvals.
Mobile Passive Infrastructure Spin-off
On November 13, 2024, the Board of Directors of OTE approved the initiation of
the spin-off procedure of the "Mobile Passive Infrastructure Sector" and the
establishment of a new company for this purpose. The spin-off will take place
in accordance with the provisions of laws 4601/2019, 4548/2018, 4172/2013 and
4483/2016. The 30(th) of November is designated as the Transformation Balance
Sheet date for the spin-off. The above decision aims to optimize the corporate
structure, operational efficiency and value creation in OTE Group. The
completion of the spin-off is subject to the required approvals by the Board
of Directors, the General Assembly of the Company's Shareholders and the
competent authorities.
About OTE
OTE Group is the largest telecommunications provider in the Greek market and
offers mobile telecommunications services in Romania. 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 activities, the Group is also involved in
electronic payments, delivery services, real estate, insurance distribution
and professional training.
Additional Information is also available on: https://www.cosmote.gr
(https://www.cosmote.gr)
Conference Call Details
Thursday, November 14, 2024
13:00pm (EET), 11:00am (GMT), 12:00pm (CET), 06:00am (EST)
Dial-in
Details
Greece +30 210 9460 800
Germany +49 (0) 69 2222 4493
UK & International +44 (0) 203 059 5872
USA +1 516 447 5632
We recommend that you call any of the above numbers 5 to 10 minutes before the
conference call is scheduled to start.
Live Webcast Details
The conference call will be webcast and you may join by linking at:
https://87399.themediaframe.eu/links/otegroup241114.html
(https://87399.themediaframe.eu/links/otegroup241114.html)
If you experience difficulty, please call + 30 210 9460803.
Investor Relations Contacts:
Evrikos Sarsentis - Head of Mergers, Acquisitions and Investor Relations
Tel: +30 210 611 1574, Email: esarsentis@ote.gr (mailto:esarsentis@ote.gr)
Sofia Ziavra - Deputy Director, Investor Relations
Tel: + 30 210 617 7628, Email: sziavra@ote.gr
Elena Boua - Manager Shareholder Services, Investor Relations
Tel: + 30 210 611 7364, Email: eboua@ote.gr (mailto:eboua@ote.gr)
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 statements 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:
I. Alternative Performance Measures "APMs"
II. Consolidated Statement of Financial Position as of
September 30, 2024 and December 31, 2023
III. Consolidated Income Statement for the quarter and nine
months ended September 30, 2024 and comparative 2023
IV. Consolidated Statement of Cash Flows for the quarter and nine
months ended September 30, 2024 and comparative 2023
I. 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. APMs provide additional insights and understanding
to the Group's underlying performance, financial condition and cash flow. APMs
and the respective adjusted measures are calculated by using the directly
reconcilable amounts of the Consolidated Statement of Financial Position
(Exhibit II), Consolidated Income Statement (Exhibit III) and Consolidated
Statement of Cash Flow (Exhibit ΙV) of the Group and the below items as well,
that due to their nature impacting comparability. As these costs or payments
are of significant size and of irregular timing, it is a common industry
practice to be excluded for the calculation of the APMs and the adjusted
figures, in order to facilitate comparability with industry peers and
facilitate the user to obtain a better understanding of the Group's
performance achieved from ongoing activity. The APMs should be read in
conjunction with and do not replace by any means the directly reconcilable
IFRS line items.
1. Costs or payments related to Voluntary Leave Schemes: Costs or
payments related to Voluntary Leave Schemes comprise 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 "payment for voluntary
leave schemes", respectively.
2. Costs or payments related to other restructuring plans: Other
restructuring costs comprise non-ongoing activity related costs arising from
significant changes in the way the Group conducts business. These costs are
mainly related to the Group's portfolio management restructuring.
3. Costs or payments related to Romania tax audit for fiscal years
2017-2021: Costs or payments related to Romania tax audit comprise the
additional tax charges related to alleged VAT and Corporate Income Tax
miscalculations, imposed by the Romanian Tax Authority (ANAF) after the tax
audit for fiscal years 2017-2021.
4. Spectrum acquisition payments: 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.
Definitions and Reconciliations of Alternative Performance Measures ("APMs")
Net Debt
Net Debt is used to evaluate the Group's capital structure and leverage. Net
Debt is defined as long-term borrowings plus short-term portion of long-term
borrowings plus short-term borrowings plus other financial liabilities less
cash and cash equivalents. Following the adoption of IFRS 16 financial
liabilities related to leases are included in the calculation of net debt.
OTE Group (€ mn) 30/09/2024 30/09/2023
Long-term borrowings 848.3 859.0
Short-term portion of long-term borrowings - 23.1
Short-term borrowings 40.0 80.0
Lease liabilities (long-term portion) 185.2 168.3
Lease liabilities (short-term portion) 64.1 57.3
Financial liabilities related to digital wallets 8.8 3.3
Cash and cash equivalents (462.1) (519.1)
Net Debt 684.3 671.9
EBITDA - Adjusted EBITDA - Adjusted EBITDA After Lease (AL)
· EBITDA is derived directly from the Financial Statements of the Group,
line "Operating profit before financial and investing activities,
depreciation, amortization and impairment" of the Income Statement. EBITDA is
defined as total revenues plus other operating income less total operating
expenses before depreciation, amortization and impairment. EBITDA is intended
to provide useful information to analyze the Group's operating performance.
· Adjusted EBITDA is calculated by excluding the impact of costs related
to voluntary leave schemes, other restructuring costs and costs related to
Romania 2017-2021 tax audit.
· Adjusted EBITDA After Lease (AL): Following the adoption of IFRS 16
related to leases, it is a common industry practice to use the EBITDA After
Lease (AL) or Adjusted EBITDA After Lease (AL) in order to facilitate
comparability with industry peers and historical comparison as well. Adjusted
EBITDA (AL) is defined as Adjusted EBITDA deducting the amortization and
interest expense related to leases.
EBITDA, Adjusted EBITDA and Adjusted EBITDA (AL) margin (%) is defined as the
respective EBITDA divided by total revenues.
Q3'24 (€ mn) OTE Group Greece Romania
Q3'24 Q3'23 Q3'24 Q3'23 Q3'24 Q3'23
Revenues 897.2 881.0 832.5 811.8 66.4 71.1
Other Operating Income 1.4 4.4 0.9 2.6 0.4 1.8
Total Operating Expenses (before Depreciation, amortization and impairment) (553.3) (519.1) (469.7) (456.3) (85.2) (64.7)
EBITDA 345.3 366.3 363.7 358.1 (18.4) 8.2
Costs related to voluntary leave schemes 2.7 3.9 2.5 3.9 0.2 -
Other restructuring costs 2.0 - 1.0 - 1.0 -
Costs related to Romania 2017-2021 tax audit 19.7 - - - 19.7 -
Adjusted EBITDA 369.7 370.2 367.2 362.0 2.5 8.2
Amortization of lessee use rights to leased assets (17.1) (15.5) (12.3) (12.2) (4.8) (3.3)
Interest expense on leases (2.5) (2.1) (1.8) (1.8) (0.7) (0.3)
Adjusted EBITDA (AL) 350.1 352.6 353.1 348.0 (3.0) 4.6
margin % 39.0% 40.0% 42.4% 42.9% -4.5% 6.5%
9M'24 (€ mn) OTE Group Greece Romania
9M'24 9M'23 9M'24 9M'23 9M'24 9M'23
Revenues 2,685.5 2,538.7 2,490.9 2,334.6 199.3 209.4
Other Operating Income 5.4 8.6 4.0 5.5 1.4 3.1
Total Operating Expenses (before Depreciation, amortization and impairment) (1,681.7) (1,516.8) (1,482.1) (1,339.0) (204.3) (183.1)
EBITDA 1,009.2 1,030.5 1,012.8 1,001.1 (3.6) 29.4
Costs related to voluntary leave schemes 31.3 30.5 31.1 30.1 0.2 0.4
Other restructuring costs 2.0 0.8 1.0 - 1.0 0.8
Costs related to Romania 2017-2021 tax audit 19.7 - - - 19.7 -
Adjusted EBITDA 1,062.2 1,061.8 1,044.9 1,031.2 17.3 30.6
Amortization of lessee use rights to leased assets (52.0) (53.8) (36.3) (37.5) (15.7) (16.3)
Interest expense on leases (7.4) (6.6) (5.5) (5.2) (1.9) (1.4)
Adjusted EBITDA (AL) 1,002.8 1,001.4 1,003.1 988.5 (0.3) 12.9
margin % 37.3% 39.4% 40.3% 42.3% -0.2% 6.2%
Capital expenditure (Capex) and Adjusted Capex
Capital expenditure is derived directly from the Financial Statements of the
Group, line "Purchase of property, plant and equipment and intangible assets"
of the Cash Flow Statement. The Group uses Capex to ensure that the cash
spending is in line with its overall strategy for the use of cash. Adjusted
Capex is defined as Capex excluding spectrum payments.
OTE Group (€ mn) Q3'24 Q3'23 9M'24 9M'23
Purchase of property plant and equipment and intangible assets - Capex (159.4) (183.3) (433.0) (429.9)
Spectrum Payments - - - -
Adjusted CAPEX (159.4) (183.3) (433.0) (429.9)
Free Cash Flow (FCF)- Free Cash Flow After Lease (AL)
· Free Cash Flow is defined as net cash flows from operating activities,
after payments for purchase of property, plant and equipment and intangible
assets (Capex) and adding the interest received. Free Cash Flow After Lease
(AL) is defined as Free Cash Flow after lease repayments.
FCF After Lease (AL) is intended to measure the cash generation from the
Group's business activities while facilitate the understanding the Group's
cash generating performance as well as availability for debt repayment,
dividend distribution and own reserves.
OTE Group (€ mn) Q3'24 Q3'23 9M'24 9M'23
Net cash flows from operating activities 268.3 227.2 818.3 881.5
Purchase of property, plant, equipment and intangible assets (159.4) (183.3) (433.0) (429.9)
Interest received 2.4 1.9 9.8 7.2
Free Cash Flow 111.3 45.8 395.1 458.8
Lease repayments (16.1) (18.8) (51.6) (61.7)
Free Cash Flow After Lease (AL) 95.2 27.0 343.5 397.1
Adjusted Profit to owners of the parent
Adjusted Profit for the period 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. For the respective period of 2024 and the comparable period of
2023, Profit to owners of the parent was impacted by costs related to
voluntary leave schemes, other restructuring costs, costs related to Romania
2017-2021 tax audit, loss from the sale of investment, reversal of provision
related to Assets sales and income tax effect due to Romania 2017-2021 tax
audit.
OTE Group (€ mn) Q3'24 Q3'23 9M'24 9M'23
Profit to owners of the Parent 153.6 150.0 414.3 397.2
Costs related to voluntary leave schemes 2.2 3.1 24.5 23.9
Other restructuring costs 1.8 - 1.8 0.8
Costs related to Romania 2017-2021 tax audit 19.7 - 19.7 -
Loss from the sale of investment 1.9 - 1.9 -
Reversal of provision related to Assets Sales (30.8) - (30.8) -
Income tax effect due to Romania 2017-2021 tax audit 13.8 - 13.8 -
Adjusted Profit to owners of the parent 162.2 153.1 445.2 421.9
II. ΟΤΕ GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(€ mn) 30/09/2024 31/12/2023
ASSETS
Non - current assets
Property, plant and equipment 2,241.5 2,188.3
Right-of-use assets 259.7 258.4
Goodwill 376.6 376.6
Telecommunication licenses 239.8 264.0
Other intangible assets 288.5 263.1
Investments 0.1 0.1
Loans to pension funds 57.6 60.7
Deferred tax assets 184.5 185.0
Contract costs 25.1 28.7
Other non-current assets 76.3 77.3
Total non - current assets 3,749.7 3,702.2
Current assets
Inventories 54.3 58.9
Trade receivables 588.2 537.6
Other financial assets 7.2 5.6
Contract assets 70.4 63.9
Other current assets 117.9 103.7
Restricted cash 0.7 0.6
Cash and cash equivalents 462.1 463.9
Total current assets 1,300.8 1,234.2
TOTAL ASSETS 5,050.5 4,936.4
EQUITY AND LIABILITIES
Equity attributable to owners of the Parent
Share capital 1,167.9 1,182.9
Share premium 416.5 422.8
Treasury shares (46.9) (25.3)
Statutory reserve 440.7 440.7
Foreign exchange and other reserves (147.4) (148.2)
Retained earnings 136.0 70.4
Total equity attributable to owners of the Parent 1,966.8 1,943.3
Non-controlling interests - 0.5
Total equity 1,966.8 1,943.8
Non-current liabilities
Long-term borrowings 848.3 847.7
Provision for staff retirement indemnities 99.3 107.0
Provision for youth account 71.0 75.9
Contract liabilities 84.6 84.9
Lease liabilities 185.2 184.9
Deferred tax liabilities 0.5 0.4
Other non - current liabilities 75.8 43.0
Total non - current liabilities 1,364.7 1,343.8
Current liabilities
Trade accounts payable 812.8 866.4
Short-term borrowings 40.0 -
Income tax payable 126.3 95.2
Contract liabilities 235.6 223.9
Lease liabilities 64.1 60.8
Dividends payable 2.9 2.5
Other current liabilities 437.3 400.0
Total current liabilities 1,719.0 1,648.8
TOTAL EQUITY AND LIABILITIES 5,050.5 4,936.4
III. OTE GROUP CONSOLIDATED INCOME STATEMENT
(€ mn) Q3'24 Q3'23 y-o-y 9M'24 9M'23 y-o-y
Fixed business:
Retail services revenues 227.6 228.2 -0.3% 684.2 685.0 -0.1%
Wholesale services revenues 134.8 142.0 -5.1% 448.1 415.7 +7.8%
Other revenues 104.1 87.2 +19.4% 327.6 248.0 +32.1%
Total revenues from fixed business 466.5 457.4 +2.0% 1,459.9 1,348.7 +8.2%
Mobile business:
Service revenues 324.1 323.4 +0.2% 901.9 901.2 +0.1%
Handset revenues 77.6 72.9 +6.4% 228.0 207.0 +10.1%
Other revenues 5.1 4.3 +18.6% 15.8 12.0 +31.7%
Total revenues from mobile business 406.8 400.6 +1.5% 1,145.7 1,120.2 +2.3%
Miscellaneous other revenues 23.9 23.0 +3.9% 79.9 69.8 +14.5%
Total revenues 897.2 881.0 +1.8% 2,685.5 2,538.7 +5.8%
Other operating income 1.4 4.4 -68.2% 5.4 8.6 -37.2%
Operating expenses
Interconnection and roaming costs (100.8) (110.6) -8.9% (344.0) (315.6) +9.0%
Provision for expected credit losses (8.2) (9.8) -16.3% (26.9) (28.7) -6.3%
Personnel costs (99.3) (103.5) -4.1% (306.7) (321.6) -4.6%
Costs related to voluntary leave schemes (2.7) (3.9) -30.8% (31.3) (30.5) +2.6%
Commission costs (23.6) (22.4) +5.4% (70.2) (65.2) +7.7%
Merchandise costs (84.3) (92.4) -8.8% (278.9) (250.1) +11.5%
Maintenance and repairs (27.6) (25.2) +9.5% (71.8) (69.4) +3.5%
Marketing (22.0) (23.5) -6.4% (56.2) (53.8) +4.5%
Other operating expenses (184.8) (127.8) +44.6% (495.7) (381.9) +29.8%
Total operating expenses before depreciation, amortization and impairment (553.3) (519.1) +6.6% (1,681.7) (1,516.8) +10.9%
Operating profit before financial and investing activities, depreciation, 345.3 366.3 -5.7% 1,009.2 1,030.5 -2.1%
amortization and impairment
Depreciation, amortization and impairment (145.5) (161.5) -9.9% (456.1) (493.3) -7.5%
Operating profit before financial and investing activities 199.8 204.8 -2.4% 553.1 537.2 +3.0%
Income and expense from financial and investing activities
Finance income and costs (9.3) (6.7) +38.8% (16.7) (17.9) -6.7%
Foreign exchange differences, net 0.2 0.7 -71.4% 0.7 2.6 -73.1%
Gains / (losses) from investments and other financial assets - Impairment 29.1 (0.2) - 29.4 0.4 -
Total gain/ (loss) from financial and investing activities 20.0 (6.2) - 13.4 (14.9) -
Profit before tax 219.8 198.6 +10.7% 566.5 522.3 +8.5%
Income tax (66.2) (48.6) +36.2% (152.2) (125.1) +21.7%
Profit for the period 153.6 150.0 +2.4% 414.3 397.2 +4.3%
Attributable to:
Owners of the parent 153.6 150.0 +2.4% 414.3 397.2 +4.3%
Non-controlling interests - - - - - -
IV. GROUP CONSOLIDATED STATEMENT OF CASH FLOW
(€ mn) Q3'24 Q3'23 y-o-y 9M'24 9M'23 y-o-y
Cash flows from operating activities
Profit before tax 219.8 198.6 +10.7% 566.5 522.3 +8.5%
Adjustments for:
Depreciation, amortization and impairment 145.5 161.5 -9.9% 456.1 493.3 -7.5%
Costs related to voluntary leave schemes 2.7 3.9 -30.8% 31.3 30.5 +2.6%
Provision for staff retirement indemnities 0.6 6.9 -91.3% 1.6 3.1 -48.4%
Provision for youth account - - - - (2.4) -100.0%
Foreign exchange differences, net (0.2) (0.7) -71.4% (0.7) (2.6) -73.1%
(Gains) / losses from investments and other financial assets- Impairment (29.1) 0.2 - (29.4) (0.4) -
Finance costs, net 9.3 6.7 +38.8% 16.7 17.9 -6.7%
Working capital adjustments: 0.9 (18.3) - (41.2) (40.4) +2.0%
Decrease / (increase) in inventories 4.4 1.7 +158.8% 2.2 2.9 -24.1%
Decrease / (increase) in receivables 16.1 (27.2) - (80.3) (74.6) +7.6%
(Decrease) / increase in liabilities (except borrowings) (19.6) 7.2 - 36.9 31.3 +17.9%
Payment for voluntary leave schemes (7.8) (23.7) -67.1% (34.1) (28.7) +18.8%
Payment of staff retirement indemnities and youth account, net of employees' (1.9) (2.0) -5.0% (8.6) (6.6) +30.3%
contributions
Interest and related expenses paid (except leases) (7.6) (8.4) -9.5% (13.8) (17.0) -18.8%
Interest paid for leases (2.5) (2.1) +19.0% (7.4) (6.6) +12.1%
Income tax paid (61.4) (95.4) -35.6% (118.7) (80.9) +46.7%
Net cash flows from operating activities 268.3 227.2 +18.1% 818.3 881.5 -7.2%
Cash flows from investing activities
Purchase of financial assets (0.4) (0.1) - (0.7) (0.8) -12.5%
Proceeds/(Payments) related to disposal of subsidiaries/investments 7.5 (0.2) - (1.2) (0.2) -
Cash and cash equivalents of subsidiaries disposed (2.4) - - (2.4) - -
Repayment of loans receivable 2.4 1.8 +33.3% 6.0 5.4 +11.1%
Purchase of property, plant and equipment and intangible assets (159.4) (183.3) -13.0% (433.0) (429.9) +0.7%
Movement in restricted cash - 0.1 - - - -
Interest received 2.4 1.9 +26.3% 9.8 7.2 +36.1%
Net cash flows used in investing activities (149.9) (179.8) -16.6% (421.5) (418.3) +0.8%
Cash flows from financing activities
Acquisition of treasury shares (31.3) (69.9) -55.2% (93.6) (129.0) -27.4%
Proceeds from loans - - - 40.0 80.0 -50.0%
Repayment of loans - (11.6) -100.0% - (173.1) -100.0%
Lease repayments (16.1) (18.8) -14.4% (51.6) (61.7) -16.4%
Financial liabilities related to digital wallets 1.9 0.3 - 3.5 (0.7) -
Dividends paid to Company's owners (296.4) (249.7) +18.7% (296.4) (249.9) +18.6%
Net cash flows used in financing activities (341.9) (349.7) -2.2% (398.1) (534.4) -25.5%
Net increase/ (decrease) in cash and cash equivalents (223.5) (302.3) -26.1% (1.3) (71.2) -98.2%
Cash and cash equivalents, at the beginning of the period 686.0 821.1 -16.5% 463.9 590.1 -21.4%
Net foreign exchange differences (0.4) 0.3 - (0.5) 0.2 -
Cash and cash equivalents, at the end of the period 462.1 519.1 -11.0% 462.1 519.1 -11.0%
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