What’s new? OTE published Q1 sales up 4.7% and clean EBITDA(L) +6% yoy (E319m*), with Greece +5% yoy (E314m); OTE cited the favorable base effect from last year and its more-for-more commercial strategy (BB, mobile) as the reasons for the good underlying performance.

This note is about investing, not trading or event-driven ideas. We believe our OI rated stocks will outperform the market on a risk-adjusted basis in the next 12-18 months. We recommend you own OPAP, Jumbo, PPC, Alpha Bank and ADMIE. We downgrade OTE given it is trading at our target price. We assume the pandemic will be less of a risk; we consider the end of free money and elevated costs and reiterate cash flow conversion as our #1 criterion.

What’s new? OTE announced it will be accelerating FTTH rollout by 2027, aiming to reach 3.0 million household and businesses or c. 60% of total (from 0.55m today). This will cost an extra E100m annual capex on top of the one committed so far, to be funded with own cash flow. We argue that…

OTE reiterated 2021 FY cash flow guidance E480m reported / 6.8% yield (E575m adjusted / 8.2% yield) which points to a cash dividend of E313m (65% – paid) and buy-back of E168m (35% – ongoing). These numbers do not include the proceeds from the sale of TR (paid by Q1 2022). Moreover, they do not include the E80m excess money generated in 2018-20, which OTE is saving (along with any excess amount in 2021) for shareholders when operations normalize from Covid. Without counting for this money, we project E545m of reported cash flow (7.7% yield) next year (2022) to be paid to shareholders via dividends and buy-backs on a 65%-35% split. OTE’s yield is enough reason to…

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