What’s new? OTE revised its shareholder remuneration policy, announced along FY 2021 results. The telecom operator will be paying 70%-100% of annual reported free cash flow (from 100% previously) while splitting the payment equally between cash dividend and buybacks (from 65%/35% previously). The payment for 2022 will be E500m (was E480m in 2021) out of reported cash flow of E600m (83% payout), out of which E250m as cash dividend and an equal amount via buybacks. The lower payout is explained by the need to save cash to smooth future payments, which will be burdened with FTTH capex. The higher buyback portion was not explained. We speculate it relates to DT raising its current 49.2% stake higher than under the previous policy.

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…

The Greek telco market has witnessed some interesting changes / developments in the last weeks. Some of which have been long speculated/flagged/communicated by market participants. We summarize these below, together with our thoughts and comments on what these might mean for the business performance of the different operators. It will take a while for the dust to settle. Until it does we can only speculate on the impact. As usual we will start with our conclusions: OTE’s investment case is not affected by recent developments. The incumbent is not a sitting duck. This means that our OI rating does not change. Combined with the special dividend this year from the sale of TR, OTE remains a compelling cash flow – dividend case, with a risk-reward profile making it a no-brainer for investor portfolios, in our view.

This is better than what we expected. OTE guides for E480m reported cash flow (8.5% yield) to be paid E313m in cash dividend (2/3; 5.5% yield) and E167m via buybacks (1/3; 3.0% yield). These numbers do not include the special dividend from TR sale. Assuming E100m out of E268m sale price, shareholders will pocket E580m total remuneration. We reiterate…