OTE boss says restructuring plan afoot

Kathimerini, Greece
Sept 8 2004

Financial results will begin to improve in a year’s time, Vourloumis
says, adding that all company ventures abroad are now profitable

Restructuring is key to the future of OTE Telecom, its Chairman and
CEO Panayis Vourloumis said in a press conference in Thessaloniki
yesterday.

“(OTE’s) recovery will arrive through the restructuring we are planning
and which will affect a lot of activities. This (restructuring) is
not something unheard of, it is something other big fixed telephony
providers have undergone. Provided it starts immediately, it should
begin having an impact on the group’s financial results a year from
now,” Vourloumis said.

OTE, once the monopoly telecoms provider in Greece, has lost close
to 15 percent of the fixed telephony market since its deregulation
in 2000.

Mobile telephony started in 1993 and, while OTE was a late entrant
in the market, its subsidiary, CosmOTE, is a market leader.

OTE’s profits have been falling in recent years and management has
attributed this to three reasons: the competition that has naturally
risen in the fixed telephony segment; the low fees it says it has been
forced to charge its competitors for using its fixed-line network;
and extraordinary costs and write-offs in some of its acquisitions
abroad, especially in Romania.

Vourloumis estimated that profits from fixed telephony will continue
to be weak “for quite some time.”

Asked whether OTE will implement a voluntary retirement program,
Vourloumis replied that its plans for one are still at an early
stage and emphasized that the management will seek the employees’
consensus before proceeding with such a program.

Referring to OTE’s activities abroad, Vourloumis said that all
companies in which OTE participates, either as a majority or minority
shareholder, are profitable.

He referred to the legal tangles in Serbia, where OTE holds 20 percent
of Telekom Srbija, and Armenia, where it holds 90 percent of Armentel,
as “festering wounds.”

“Our strategy is to normalize our relations and to close the wounds
without a loss,” Vourloumis said. He appeared confident that a
solution will be found in Serbia, whereas he did not exclude an
eventual withdrawal from Armenia, where OTE has had to compete
with pirate telephony providers, but “on favorable terms and with
a big profit.” The mobile telecoms firms under CosmOTE’s management
in Albania, Bulgaria and the Former Yugoslav Republic of Macedonia
are “operating smoothly,” Vourloumis said. In Romania, according to
Vourloumis, “Romtelecom is doing well now but certainly OTE will not
recover its losses over the past few years soon.” He added that the
group is considering whether to reactivate their mobile telephony
subsidiary, Cosmorom.

“We must make a decision soon because, if we delay for a few more
months, there will be no place for us in the (Romanian) market,”
he said.

OTE’s chief said that the company’s successful handling of telecoms
services during the Olympic Games had imbued the company “with a new
self-esteem,” which must be used “to recover the ground we lost in
the past few years.”