OTE reported an overall weak set of Q2'10 results with sales in-line with consensus estimates (after adjustment for some restatements) and below in operating profitability.
Performance in mobile operations as a whole was a touch better than expected, whereas Greek fixed was below expectations and Romanian fixed disappointed, particularly in profitability. Overall, KPIs continued to deteriorate, especially in OTE, while management does not seem particularly confident in a recovery in the short-term.
Group Revenues for Q2'10 reached €1,359m, 2% above consensus. Reported EBITDA was up 23.7% y-o-y to €467.3m, courtesy of a VRS cost reversal, while excluding redundancies, comparable EBITDA was down 13% y-o-y (we were looking for a 9% decrease).
Net loss amounted to €60.8m from profit of €6.4m in Q2'09, missing our call by c€27.4m (-€62.1m from consensus) on the back of elevated financial expenses with approximately half of the divergence coming from interest expense and the remaining from one-offs (currency and investment sale loss). As expected, taxes surged due to the crisis levy and the 10% charged to intra-group dividends.
CAPEX was reduced by 8.5% y-o-y to €201.3m or 15.2% of revenues (versus 14.9% in Q2'09), reflecting a decrease in Greek and Romanian fixed-line. Operating cash flow for the first six months of 2010 was significantly reduced to €378m from €717.3m in the respective period last year