What’s new? OTE published Q4/FY results with Q4 revenues/adj EBITDA(L)/adj net income at +5.1%/+2.8%/+20.2% yoy. Much better sequential growth rates, thanks to Greece (+1.6% yoy EBITDAL) and Romania (E4m from E0m). But also lower financials (-E16m) and depreciation (-E3m). FY 2023 cash flow of E500m came in line with guidance (E104m in Q4).
The negative surprise was the lower cash flow guided for 2024, at E470m, attributed to higher cash taxes; and which OTE sweetened with a higher payout ratio (96% from 84%), distributing E450m (from E425m), via a higher cash mix (66% from 59%), resulting to higher DPS (E0.71 from E0.58) but a lower buy-back (E153m from E175m).

OTE published Q3 results with revenues/adj EBITDA(L)/adj net income at -2.6%/-1.5%/-6.4% yoy. Growth and business trends are the same with Q2, so we have little to add for this quarter. The big news is lower capex for 2023 (from E640m to E620m) with FCFE unchanged at E500m. This implies a lower L4L cash flow number. Which combined with the competitive landscape affecting revenues, is weighing negatively on the investment case.

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…

What’s new? Q1 revenues/EBITDA(L)/net income stood at -2%/0%/+4% yoy. Results failed to improve our visibility on the investment case. It is positive that cash flow guidance was reiterated at E500m (and E425m remuneration). The same goes for competition hardening going forward. Q1 numbers do not reflect the impact from the 8%-26% price cuts last February, given the gradual re-pricing of the customer base. It is positive OTE is not losing market share, with postpaid subs and BB lines up qoq.

What’s new? OTE reported Q3 adjusted EBITDA(L) growth of +1.6% yoy, down from +7.2% in Q2 and +8.0% in Q1. The deterioration was not due to moderate sales growth in H2, as management had predicted back in Q2 results, as sales grew by +3.9% yoy compared to +3.7% in H1. It came mainly on a combination of lower margin sales (ICT, handsets) and higher costs (seasonal personnel provisions).
Cash flow guidance reiterated at E600m (reported), despite higher capex (+E20m to E640m) to support increased FTTH spending. Which demonstrates OTE cash flow management ability, in our view. Out of the E500m in annual remuneration to shareholders, E250m has already been paid in cash and E210m in buybacks. We will repeat our Q2 comment that, notwithstanding a reversal in working capital during Q4, OTE’s E600m cash flow can be reconciled only via lower cash vs. accounting taxes.
Conclusion: we fine tune our 2022-2024 adjusted EBITDA(L) estimates to account for the weaker fixed retail revenues (-4.5% yoy) reflecting the expiry of state subsidies (fast internet) and/or the migration from voice to data.