OTE Group Reports Group Third Quarter 2004 Results under US G.A.A.P. -Unaudited-.ATHENS Athens, city, Greece Athens (ăth`ĭnz), Gr. Athínai, city (1991 pop. 2,907,179; 1991 urban agglomeration pop. 3,072,922), capital of Greece, E central Greece, on the plain of Attica, between the Kifisós and , Greece Greece, Gr. Hellas or Ellas, republic (2005 est. pop. 10,668,000), 50,944 sq mi (131,945 sq km), SE Europe. It occupies the southernmost part of the Balkan Peninsula and borders on the Ionian Sea in the west, on the Mediterranean Sea in the south, on -- Hellenic Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Organization SA (ASE (Adaptive Server Enterprise) A relational DBMS from Sybase that runs on Windows NT/2000, Linux and a variety of Unix platforms. ASE is a comprehensive and robust data management product with a long history dating back to the late 1980s. :HTO HTO Tritiated Water HTO High Tibial Osteotomy HTO High Temperature Oxidation HTO Hostile Take Over HTO Happy to Oblige HTO Horizontal Take-Off HTO Hydrogen Tritium Oxygen HTO Hospital Transfer Order )(NYSE NYSE See: New York Stock Exchange :OTE OTE Chiefly Brit (esp. in job adverts) on target earnings: the minimum amount of money a salesman is expected to make OTE abbr (Comm) (= on-target earnings) → Einkommensziel nt ) --Operating revenues up on strong mobile (Cosmote, Globul GLOBUL (network code 284-05) is the second-largest Bulgarian GSM/UMTS operator. The company was founded in 2001 and is 100% owned by Greek telecommunications corporation Cosmote, which is active in five Balkan countries: Greece, Bulgaria, Romania, Macedonia and Albania. ), good RomTelecom Romtelecom is the largest telecommunications company in Romania; the majority of shares are held by the Greek telecommunications company OTE (54.01% of shares). The Romanian state also has a minority stake of 45.99% in the company. performance, slower Greek In desktop publishing, to display text in a representative form in which the actual letters are not discernible, because the screen resolution isn't high enough to display them properly. The software lets you set which font sizes should be greeked. fixed-line Refers to wired devices. For example, a fixed-line phone is a standard phone with the handset wired to the base unit in contrast to a portable phone or cellphone. revenue erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. --Further increase in Greek fixed-line operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ; restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan to be presented to unions, Greek authorities in December December: see month. Hellenic Telecommunications Organization SA, the Greek full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. telecommunications provider, today announced consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: unaudited results (prepared under US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) for the quarter ended September September: see month. 30, 2004. CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 IN ACCORDANCE WITH U.S. GAAP EUR million except per share % % data Q3 04 Q3 03 Change 9M 04 9M 03 Change ---------------- -------- -------- -------- -------- -------- -------- Operating Revenues 1,369.4 1,282.8 +6.8% 3,897.3 3,610.7 +7.9% Operating Income 194.5 273.9 -29.0% 553.2 757.5 -27.0% Pre-tax Income 136.5 262.0 -47.9% 444.7 703.7 -36.8% Net Income 19.3 122.0 -84.2% 112.4 332.3 -66.2% Operating Income before Depreciation & Amortization(1) 455.9 514.9 -11.5% 1,321.0 1,438.8 -8.2% Operating Income before Depreciation & Amortization as % of Operating Revenues(1) 33.3% 40.1% -6.8 pp 33.9% 39.8% -5.9 pp Basic EPS (EUR ) 0.0394 0.2489 -84.2% 0.2293 0.6778 -66.2% Cashflow from Operations 323.7 301.6 +7.3% 1,060.6 845.6 +25.4% CAPEX as % of Revenues 12.6% 17.5% -4.9 pp 16.5% 18.7% -2.2 pp (1) See notes Commenting on the quarter, Mr. Panagis Vourloumis, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , noted: "The third quarter was another period of mixed results for OTE. On the positive side, OTE achieved a flawless technical performance during the recent Olympics Olympics Sports medicine An international competition among (traditionally) nonprofessional athletes trained in a particular summer or winter sport, which is held every 4 yrs in a selected city. See Paralympics, Special Olympics, World Medical Games. , earning broad international recognition, which did not, however, translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. into any material financial gain. Our mobile operations as well as RomTelecom continued to turn in strong performances, while OTEnet OTEnet is a major internet service provider of Greece. OTEnet S.A. is an S.A. (corporation) providing Internet products and services. The major shareholder of OTEnet is OTE (94.58%). strengthened its position as the dominant internet provider Internet provider - Internet Service Provider in Greece. These achievements were once again overshadowed by the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of our core Greek fixed-line activities. While the rate of traffic erosion is slowing down and market share stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. , operating expenses rose sharply. And we continue to suffer from the lack of a coherent A version of Unix developed by Mark Williams Co., Northbrook, IL, that was noted for its conservative use of resources on Intel-based PCs. policy by the regulator regulator, n the mechanical part of a gas delivery system that controls gas pressure that allows a manageable flow of drug vapor to escape. regulator see reducing valve. , resulting in an unpredictable environment that is detrimental det·ri·men·tal adj. Causing damage or harm; injurious. det  ri·men to the entire
sector."Mr. Vourloumis added: "We are concentrating all our efforts on tackling our structural cost issues. The restructuring plan, which we will present to employee representatives and the Greek government in December, in line with schedule, will seek to obtain up to 6,000 voluntary departures in 2005, for a cost of about EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1 billion, generating significant future savings. In parallel, we are launching a major reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. Greek fixed-line operations. While OTE's performance in the short term will remain far from satisfactory, we remain steadfast in our objective to rebuild a strong and profitable organization." FINANCIAL HIGHLIGHTS Operating Revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. OTE Group Operating Revenues increased by 6.8% in the three months ended September 30, 2004. This is largely due to the continued strong performance in mobile telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. , both in Greece and abroad. Higher revenues from Cosmote and, to a lesser extent, Globul offset the decline in revenues from Greek fixed-line operations. The continuing decline in Greek fixed-line telephony revenues is due to the combined effect of lower traffic and prices as well as the decision by the telecommunications regulator (NTPC NTPC National Thermal Power Corporation (India) NTPC Northwest Territories Power Corporation NTPC Northwest Territories Power Corporation (Canada) NTPC Navy Training Plan Conference ) to impose reductions on leased lines A private communications channel leased from a common carrier. Most digital lines require four wires (two pairs) for full-duplex transmission. (communications, networking) leased line and interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. tariffs This is a list of tariffs and trade legislation:
% % EUR million Q3 04 Q3 03 Change 9M 04 9M 03 Change -------------------- -------- -------- ------ -------- -------- ------ Domestic Telephony 568.3 606.0 -6.2% 1,703.5 1,753.8 -2.9% International Telephony 105.6 100.7 4.9% 298.7 276.1 8.2% Mobile Telephony services 435.6 337.3 29.1% 1,163.2 888.8 30.9% Other 259.9 238.8 8.8% 731.9 692.0 5.8% Total 1,369.4 1,282.8 6.8% 3,897.3 3,610.7 7.9% Operating Expenses Payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. and Employee Benefits increased by 3.2% to EUR 289.0 million in the third quarter of 2004, compared to the third quarter of 2003. Voluntary Retirement Costs amounted to EUR 1.2 million in the third quarter of 2004, the total cost of which reached EUR 28.9 million for the nine months of 2004. Payments to International Operators increased by 2.2% to EUR 45.7 million. Payments to domestic telephony operators (Mobile and Fixed-line Operators) increased by 8.4% to EUR 178.5 million. These payments do not include payments to Cosmote, but include payments from Cosmote to other mobile operators. Depreciation and Amortization increased by 8.5%, to EUR 261.4 million in the third quarter of 2004. This increase reflects significant infrastructure investments completed in 2003 at Globul, CosmoFon Founded in 2003, Cosmofon was the second GSM mobile phone operator in Macedonia. The first call through the network of Cosmofon took place on May 16, 2003, and now it's network codes are 075 and 076. Cosmofon commenced its commercial operation on June 12, 2003. and HellasSat, as well as projects related to the 2004 Athens Olympic Games Olympic games, premier athletic meeting of ancient Greece, and, in modern times, series of international sports contests. The Olympics of Ancient Greece Although records cannot verify games earlier than 776 B.C. . Other Operating Expenses increased by 43.8% to EUR 399.1 million, reflecting significant increases in repairs & maintenance, advertising and provisions for doubtful accounts. A significant portion of the increase is due to costs incurred in relation with the Olympic Games, notably advertising -- reflecting both OTE's and Cosmote's roles as Grand Sponsors -- and a EUR 30 million provision to cover the dismantling dis·man·tle tr.v. dis·man·tled, dis·man·tling, dis·man·tles 1. a. To take apart; disassemble; tear down. b. and reduction of value of equipment used during the events. An analysis of Group Other Operating expenses follows: % % EUR million Q3 04 Q3 03 Change 9M 04 9M 03 Change -------------------------- ------ ------ ------ -------- ------ ------ Commission to dealers 37.8 31.0 21.9% 100.3 105.0 -4.5% Cost of equipment 31.4 34.3 -8.5% 82.7 94.5 -12.5% Repairs, maintenance, Cost of telecom materials 95.2 39.4 141.6% 205.5 115.7 77.6% Provision for doubtful accounts 30.0 21.3 40.8% 84.1 64.3 30.8% Advertising 48.3 16.2 198.1% 96.8 51.3 88.7% Taxes other than income taxes 7.9 4.5 75.6% 25.1 20.4 23.0% Other 148.5 130.9 13.4% 409.2 333.8 22.6% -Third party fees 44.3 38.1 16.3% 112.9 95.5 18.2% -Travel costs 5.4 3.0 80.0% 10.8 9.0 20.0% -Audiotex 9.6 15.3 -37.3% 48.8 40.5 20.5% -Telecards 9.0 8.3 8.4% 22.6 21.6 4.6% -Misc. 80.2 66.2 21.1% 214.1 167.2 28.1% TOTAL 399.1 277.6 43.8% 1,003.7 785.0 27.9% Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before depreciation and amortization For the third quarter of 2004, OTE Group Operating income before depreciation and amortization, amounted to EUR 455.9 million, or 33.3% of revenues. The drop in margin, from 40.1% in the comparable quarter last year, primary reflects the deterioration of operating performance in Greek fixed-line operations. Net Income Net Income for the three months ended September 30, 2004 reached EUR 19.3 million, down 84.2% from net income of EUR 122.0 million in last year's third quarter. This fall is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the decline in operating income, higher net financial expenses, and a provision for non-payment non-payment Noun failure to pay money owed non-payment n → Nichtzahlung f, Zahlungsverweigerung f non-payment n of the management fee related to Telecom Serbia Serbia (sûr`bēə), Serbian Srbija (sŭr`bēä), officially Republic of Serbia, republic (1995 est. pop. . Cash Flow Cash provided by operating activities amounted to EUR 323.7 million for the three months ended September 30, 2004.
CONDENSED CASH-FLOW IN ACCORDANCE WITH U.S. GAAP
EUR million Q1 04 Q2 04 H1 04 Q3 04 9M 04 9M 03
--------------------- ------- ------- ------- ------- -------- -------
Cash and Cash
equivalents at
beginning of period 601.3 680.3 601.3 754.7 601.3 447.5
Net Cash provided by
Operating Activities 291.6 445.3 736.9 323.7 1,060.6 845.6
Net Cash used in
Investing Activities (177.9) (295.2) (473.1) (184.7) (657.8) (665.4)
Net Cash provided by
(used in) Financing
Activities (34.7) (75.7) (110.4) (169.0) (279.4) (296.6)
Net
Increase/(Decrease)
in Cash and Cash
Equivalents 79.0 74.4 153.4 (30.0) 123.4 (116.4)
------- ------- ------- ------- -------- -------
Cash and Cash
Equivalents at end
of period 680.3 754.7 754.7 724.7 724.7 331.1
Capital Expenditure Capital expenditure in the third quarter of 2004 totaled EUR 171.9 million, and EUR 645.0 million for the first nine months of 2004. Debt At September 30, 2004, OTE Group gross debt amounted to EUR 3,214.8 million, down 2.0% compared to December 31, 2003. The total amount of OTE debt outstanding breaks down as follows: EUR million Sep 30 2004 Dec 31 2003 % Change ------------------------------------ ----------- ----------- --------- Short-Term: -Bank loans 32.3 51.6 -37.4% Medium & Long-term: -Bonds 2,591.1 2,590.9 0.0% -Bank loans 556.1 598.2 -7.0% -Other loans 35.3 40.3 -12.4% Total Indebtedness 3,214.8 3,281.0 -2.0% BUSINESS OVERVIEW OTE's segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four is based on its legal structure. A reconciliation of intersegment revenues to total revenues is provided, as below:
SEGMENT FINANCIALS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
EUR million OTE(1) COSMOTE RomTelecom All Other Total
--------------- ---------- ---------- ---------- ---------- ----------
Revenues from
external
customers 1,973.1 1,040.5 614.9 268.8 3,897.3
Intersegment
revenues 164.7 161.8 3.4 149.2 479.1
Total revenues 2,137.8 1,202.3 618.3 418.0 4,376.4
Adjustments &
EUR million Eliminations Consolidated
------------------------------------------- ------------- ------------
Revenues from external customers - 3,897.3
Intersegment revenues (479.1)
Total revenues (479.1) 3,897.3
(1) For comparison purposes, OTE comprises the OTE parent company and
OTE Estate.
1. OTE FIXED-LINE
TRAFFIC STATISTICS FOR THE THIRD QUARTER OF 2004
Average Call
Call Service Calls, Duration Minutes, Split of
Category millions (minutes) millions minutes
--------------------------- --------- ------------- --------- --------
Local 1,106.4 2.5 2,721.8 39.2%
National Long-Distance 157.9 3.0 477.6 6.9%
International Long-Distance 26.7 3.6 95.3 1.4%
Internet 131.3 23.9 3,142.2 45.3%
Fixed-to-Mobile 333.8 1.4 451.8 6.5%
Special Calls 84.0 0.6 50.5 0.7%
Total 1,840.1 3.8 6,939.2 100.0%
OTE estimates that its share of the Greek fixed-line market, as measured in outgoing call minutes, stood at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 85% in September 2004, at the same levels compared to June June: see month. 2004. % % EUR million Q3 04 Q3 03 Change 9M 04 9M 03 Change ------------------ ------ ------ --------- -------- -------- --------- Operating Revenues 716.0 768.4 -6.8% 2,137.8 2,322.7 -8.0% Adjusted Operating Revenues(1) 716.0 768.4 -6.8% 2,137.8 2,313.0 -7.6% - Basic Monthly Rentals 156.3 153.0 2.2% 472.2 462.8 2.0% - Fixed to fixed calls 127.0 149.6 -15.1% 420.0 501.1 -16.2% - Fixed to mobile calls 103.7 126.3 -17.9% 298.8 381.9 -21.8% - International 62.4 65.7 -5.0% 175.6 196.4 -10.6% - Other 266.6 273.8 -2.6% 771.2 780.5 -1.2% Operating Profit/(Loss) (23.8) 125.5 -119.0% 55.8 406.1 -86.3% Operating income before depreciation and amortization 131.5 273.4 -51.9% 511.1 843.6 -39.4% Operating income before depreciation and amortization as % of Operating revenues 18.4% 35.6% -17.2 pp 23.9% 36.3% -12.4 pp Depreciation & Amortization 155.3 147.9 5.0% 455.3 437.5 4.1% (1) Up to January 31, 2003, OTE was billed by the mobile operators for substantially all its revenue from calls placed from its network to customers of the mobile operators. These charges were included in "Payments to mobile telephony operators" in Operating Expenses. Simultaneously, OTE charged the mobile operators an interconnection fee relating to such calls, which was included in "Interconnection charges" in Other Operating Revenues. Effective February 1, 2003, OTE, based on new arrangements made with the mobile operators, no longer charges an interconnection fee for such calls but pays a charge per minute at rates determined in the new agreements. Adjusted Operating Revenues eliminate the effect of that change. Fixed-line revenues dropped by 6.8% in the third quarter of 2004 to EUR 716.0 million. This decline is due to lower traffic volume and the new tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic structure introduced to meet heightened competition as well as lower leased-line and interconnection prices imposed by the Greek Telecommunications Regulator. The quarterly year-on-year decline in voice traffic, as measured in call minutes, slowed down during the period as compared to the second quarter of the year, from 10.0% to 6.8%, reflecting traffic during the Olympic Games, as well as the success of packages introduced over the past year. After several consecutive quarters of very strong growth, internet traffic Internet traffic is the flow of data around the Internet. It includes web traffic, which is the amount of that data that is related to the World Wide Web, along with the traffic from other major uses of the Internet, such as electronic mail and peer-to-peer networks. dropped slightly during the period reflecting both the shift of heavy users to ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line and increased competition. Despite fixed-to-mobile substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. , the total number of installed lines increased slightly in the third quarter of the year, as a 2.6% drop in PSTN (Public Switched Telephone Network) The worldwide voice telephone network. Once only an analog system, the heart of most telephone networks today is all digital. In the U.S. lines was more than offset by an increase of nearly 17.7% in ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. lines. In late June, OTE introduced a package targeting owners of vacation homes Vacation Home A home separate from an individual's primary residence that is used for recreational purposes and may also be rented out at unused times. Notes: For tax purposes, those who rent their vacation homes may result in a lower amount of allowable expense , aimed at reducing the switch to mobile phone use among seasonal residential users. OTE is addressing the delays that have affected the deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of its ADSL offering and taking steps to accelerate installation time and boost demand. The company expects to reach 40,000 ADSL customers by the end of 2004, and will make a significant push to raise broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). usage closer to levels recorded in other European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. countries. Other Operating Revenues have been reduced by a provision relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc decreased interconnection tariffs announced by the Regulator. The provision affects third quarter revenue and is related to the nine month period from January January: see month. 2004. Total Operating Expenses increased by 15.1% compared to the third quarter of 2003 reaching EUR 739.8 million, mainly influenced by the growth of Other Operating Expenses. An analysis of the OTE segment Other Operating Expenses follows: % % EUR million Q3 04 Q3 03 Change 9M 04 9M 03 Change --------------------------- ------ ------ ------- ------ ------ ------ Cost of equipment 25.3 24.9 1.6% 67.0 74.4 -9.9% Repairs, maintenance, Cost of telecom materials 56.8 3.9 1356.4% 102.6 43.5 135.9% Provision for doubtful accounts 24.9 16.8 48.2% 70.0 50.3 39.2% Advertising 11.5 2.9 296.6% 22.8 8.4 171.4% Taxes other than income taxes 3.3 1.0 230.0% 14.1 11.0 28.2% Other 118.8 102.1 16.4% 307.9 254.5 21.0% -Third party fees 46.0 24.8 85.5% 89.7 62.8 42.8% -Travel costs 4.5 1.6 181.3% 7.2 5.8 24.1% -Audiotex 7.6 13.7 -44.5% 43.1 37.6 14.6% -Telecards 3.1 3.8 -18.4% 7.5 10.0 -25.0% -Other 57.6 58.2 -1.0% 160.4 138.3 16.0% TOTAL 240.6 151.6 58.7% 584.4 442.1 32.2% The increase in Other Operating Expenses is mainly due to higher repairs and maintenance costs, increased advertising expenditures, as well as increased provisions for doubtful accounts and third party fees. Repairs, Maintenance and Cost of Telecom Materials for the quarter include a EUR 30 million provision to cover the dismantling and reduction of value of equipment used during the Olympic Games. In the nine months ended September 30, 2004, Net Working Capital for the Domestic Fixed-line business (including bad debt, excluding intra-group transactions and cash) continued to decline as a percentage of revenue compared to the same period of 2003, standing at 23.7% versus 26.2% last year (Greek GAAP). The decline in Net Working Capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. has thus continued for two consecutive quarters, confirming the lasting positive impact created by the efforts of the Domestic Fixed-line business for the past 18 months focused on improving receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and payables Payables Related: Accounts payable management, inventory utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and billing efficiency. In particular, Days Sales Outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (including VAT VAT See: Value-added tax VAT See value-added tax (VAT). ) have decreased to 100 from 105 last year and are now at the lowest point for over two years, Days Payables Outstanding have increased substantially from 93 last year to 122, while inventories have not only decreased by 1.5% since the same period last year, but more importantly have also declined by 16.4% since June 30, as the Olympic O·lym·pic adj. Of or relating to the Olympic Games. Olympic Adjective of the Olympic Games Adj. 1. Olympic - of or relating to the Olympic Games; "Olympic winners" 2. Projects moved on to completion. Net Working Capital is expected to remain at historically low levels through 2004 and decline even further in the coming months as the new credit and collections policies continue to roll out. EUR Million Q3 04 Q3 03 --------------------------------------------- ------------ ----------- Net Accounts Receivable 890.0 999.0 Net Working Capital 651.0 768.0 NWC/Sales (%) 23.7% 26.2% DSO (incl. VAT) 100 105 DPO (incl. VAT) 122 93 2. COSMOTE
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
IN ACCORDANCE WITH U.S. GAAP (UNAUDITED)
% %
EUR millions Q3 04 Q3 03 Change 9m 04 9m 03 Change
---------------- ------ ------ -------- ---------- ---------- --------
Operating
Revenues 449.0 372.8 20.4% 1,202.3 997.1 20.6%
Monthly
service fees 66.8 47.2 41.5% 182.0 130.4 39.6%
Airtime
revenues 180.7 153.7 17.6% 491.0 414.4 18.5%
Inter-
connection
Revenues 125.1 103.7 20.6% 344.0 285.9 20.3%
Roaming
revenues 22.5 25.3 -11.1% 36.4 36.9 -1.4%
SMS revenues 36.3 35.0 3.7% 106.9 106.2 0.7%
Sales of
handsets/
accessories 14.4 6.5 121.5% 31.8 19.7 61.4%
Other
operating
revenues 3.2 1.4 128.6% 10.2 3.6 183.3%
Operating Income
before
Depreciation &
Amortization 194.1 161.6 20.1% 514.7 425.3 21.0%
Operating Income
before
Depreciation &
Amortization as
% of Operating
Revenues 43.2% 43.3% -0.1 pp 42.8% 42.7% 0.1 pp
Operating Profit
(EBIT) 144.3 119.4 20.9% 375.1 304.8 23.1%
Net Income 88.7 72.5 22.3% 233.7 187.2 24.8%
Net Income
Margin 19.8% 19.4% +0.4 pp 19.4% 18.8% +0,6 pp
Depreciation &
Amortization -49.7 -42.1 18.1% -139.6 -120.5 15.9%
Customers
(Greece) 4,091,173 4,051,548 1.0%
Contract 1,610,032 1,591,845 1.1%
Pre-Paid 2,481,141 2,459,703 0.9%
Customers
(Albania) 638,566 586,124 8.9%
Contract 15,586 13,746 13.4%
Pre-Paid 622,980 572,378 8.8%
Employees
(consolidated) 2,414 2,204 9.5%
ARPU blended
(Greece, Euro) 32.1 29.1 10.3%
AMOU blended
(Greece,
minutes) 131.0 108.0 21.3%
Cosmote operates in four countries of Southeastern south·east n. 1. Abbr. SE The direction or point on the mariner's compass halfway between due south and due east, or 135° east of due north. 2. An area or region lying in the southeast. 3. Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). : through
direct ownership in Greece (Cosmote) and Albania Albania (ălbā`nyə), Albanian Shqipëria or Shqipnija, officially Republic of Albania, republic (2005 est. pop. 3,563,000), 11,101 sq mi (28,752 sq km), SE Europe. (AMC (Advanced Mezzanine Card) See AdvancedTCA. ) and since January
2003, through management of companies owned by OTE in Bulgaria Bulgaria (bŭlgâr`ēə), Bulgarian Balgarija, officially Republic of Bulgaria, republic (2005 est. pop. 7,450,000), 42,823 sq mi (110,912 sq km), SE Europe, on the E Balkan Peninsula. (GLOBUL)
and F.Y.R. of Macedonia Macedonia, country, EuropeMacedonia (măs'ədō`nēə), Macedonian Makedonija, officially Republic of Macedonia, republic (2005 est. pop. 2,045,000), 9,930 sq mi (25,720 sq km), SE Europe. (CosmoFon). Cosmote group consolidated results incorporate the Greek and Albanian companies This is an initial and incomplete list of Albanian companies. This list is presently a business sector list. Banking Central Bank
Commercial Banks
n. 1. The time during which a radio or television station is broadcasting. Also called airspace. 2. The time at which a radio or television program is broadcast. revenues, a 41.5% increase in revenues from monthly service fees and a 20.6% increase in interconnection revenues. Revenues from sales of handsets & accessories, following the launch of i-mode service in early June and the introduction of new handsets, increased by 121.5%, while roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. revenues decreased by 11.1%. In total, revenues from telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. increased by 18.2%, representing approximately 96% of total revenues. The key driver behind the healthy revenue growth is the considerable increase in Cosmote's domestic operations traffic volumes that during the nine months ended September 30, 2004 increased by approximately 32% y-o-y, due to strong positive elasticity that offset any impact from previous years' tariff cuts and the introduction of the bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. packages. Data revenues (which include SMS (1) (Storage Management System) Software used to routinely back up and archive files. See HSM. (2) (Systems Management Server) Systems management software from Microsoft that runs on Windows NT Server. , MMS (Multimedia Messaging Service) An enhanced transmission service that enables graphics, video clips and sound files to be transmitted via cellphones. Developed as part of the 3GPP project, MMS phones are generally backward compatible with SMS and EMS. , and other "soft data" revenues from Value Added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. Services) represent approximately 11.5% of total telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. revenues and 11.7% of domestic operations during the nine months ended September 30, 2004. Roaming revenues during the nine months ended September 30, 2004 stood at EUR 36.4 million, slightly lower compared to the respective period of 2003 due to the significant drop in tourist (jargon) tourist - A guest on the system, especially one who generally logs in over a network from a remote location for comm mode, electronic mail, games and other trivial purposes. A tourist is one step below a luser. arrivals during the summer months, the highest recorded decrease in the last 3 years. During the third quarter of the year, Cosmote signed 4 additional roaming agreements bringing the total at September 2004 to 346, in 164 countries. In addition, since the launch of i-mode in June 2004, the Company has signed 27 GPRS (General Packet Radio Service) The first high-speed digital data service provided by cellular carriers that used the GSM technology. GPRS added a packet-switched channel to GSM, which uses dedicated, circuit-switched channels for voice conversations. roaming agreements in 20 countries. Operating Income before depreciation and amortization for the quarter increased by 20.1%, reaching EUR 194.1 million, representing a margin of 43.2%. Third quarter 2004 Cosmote Group Earnings amounted to EUR 88.7 million, up 22.3% compared to the third quarter of 2003. Consolidated Net Income margin reached 19.8%, the highest ever recorded to date. Contract customers at the end of the quarter reached 1,610,032 or 39.4% of total while prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. customers reached 2,481,141 or 60.6% of
total. At the same period, AMC's (Albania) customer base stood at
638,566 most of it consisting of prepaid customers.In June 2004, following the signing of a partnership agreement with NTT DoCoMo (NTT Mobile Communications Network, Inc., Japan) Founded in 1991, NTT DoCoMo is a spinoff of Japan's NTT (Nippon Telegraph and Telephone Corporation) which provides wireless services, including cellular, paging, satellite and maritime and in-flight telephone services. , Cosmote launched i-mode, the world's most popular mobile Internet Refers to gaining access to the Internet using a lightweight, handheld device. See Mobile IP, PDA, smartphone and mobile TV. service, in the Greek market. With i-mode, Cosmote aims to enhance its data offering portfolio and further boost service revenues and their overall contribution in the future revenue mix. Since launch, i-mode customer take up has exceeded initial expectations, as i-mode service activations currently have surpassed 90,000 (i-mode service activations at the end of September 2004 were over 52,000). 3. ROMTELECOM OTE, through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. OTE International Investments Ltd, holds a 54.01% interest in RomTelecom S.A., the incumbent Refers to an entity that is currently in power. For example, in politics, the "incumbent senator" is the person who holds that office today. An "incumbent company" is an organization that has been providing goods and services for some time. See ILEC. telecommunications operator in Romania Romania (rōmān`ēə, –yə) or Rumania (r  –), republic (v), 91,699 sq mi (237,500 sq km), SE Europe. . RomTelecom's key
financial figures are stated below:
ROMTELECOM CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER ENDED SEPTEMBER 3O, 2004 AND 2003
IN ACCORDANCE WITH U.S. GAAP (UNAUDITED)
% %
EUR Millions Q3 04 Q3 03 Change 9M 04 9M 03 Change
---------------- ------ ------ -------- ---------- ---------- --------
Operating
Revenues 217.5 201.1 8.2% 618.3 590.8 4.7%
Operating Income
before
Depreciation &
amortization 89.0 63.9 39.3% 210.5 114.4 84.0%
Operating Income
before
Depreciation &
Amortization as
% of Operating
Revenues 40.9% 31.8% 9.1 pp 34.0% 19.4% 14.6 pp
Operating Income 52.1 25.5 104.3% 96.9 (4.0) 2,522.5%
Net
Income/(Loss) 36.6 17.3 111.6% 56.0 (9.3) 702.2%
Net
Income/(Loss)
Margin 16.8% 8.6% 8.2 pp 9.1% -1.6% 10.7 pp
Increase/
(Decrease) in
Gross PP&E 46.4 14.3 224.5% 70.5 51.8 36.1%
Fixed Telephony,
Lines 4,332,001 4,302,942 0.7%
Mobile
Telephony,
Contract
customers 30,290 34,714 -12.7%
Mobile
Telephony,
Prepaid
customers 56,971 49,618 14.8%
Mobile
Telephony,
Total customers 87,261 84,332 3.5%
30.09.04 31.12.03
Cash and cash
equivalents 105.0 90.6 15.9%
Short-term
borrowings 30.1 40.7 -26.0%
Long-term debt 186.8 223.7 -16.5%
Net Financial
Debt 111.9 173.8 -35.6%
Comparative figures include EUR 60 million impairment charge taken by
RomTelecom in 2003 results, relating to the carrying value of
Cosmorom's fixed assets
In the third quarter of 2004, RomTelecom posted revenues of EUR 217.5 million, up 8.2% from revenues of EUR 201.1 million in the same period last year. This positive result was achieved in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a EUR 8.9 million negative currency impact attributed to denomination Denomination The stated value found on financial instruments. Notes: This term applies to most financial instruments with monetary values. The denomination for bonds and securities would be face value or par value. of tariffs in local currency rather than Euro (until October October: see month. 2003). The revenue increase is due to higher tariffs and a 77% raise in interconnection traffic. Interconnection revenues increased significantly compared to the same period in 2003 (+46%). In 2004, RomTelecom regained a significant share of the inbound in·bound 1 adj. Bound inward; incoming: inbound commuter traffic. Adj. 1. inbound and outbound out·bound adj. Outward bound; headed away: outbound trains. Adj. 1. outbound - that is going out or leaving; "the departing train"; "an outward journey"; "outward-bound ships" international traffic of Mobile Operators, previously lost as a result of the 2003 market liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . . Also, in the same period, RomTelecom's inbound traffic Traffic originating in an area outside the continental United States destined for or moving in the general direction of the continental United States. to its own network increased significantly as a result of a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz a·ble·ness n. drop of the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of VOIP (Voice Over IP) A digital telephone service that uses the public Internet as well as private backbones instead of the traditional telephone network. Many companies, including Vonage, 8x8 and AT&T (CallVantage), typically offer calling within the country for a international traffic.Although the issue of tariff denomination was solved effective October 2, 2003, when the Romanian Regulator approved the conversion of RomTelecom's tariffs into Euros, revenues were still affected by the devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Romanian Lei (EUR 8.9 million of revenues lost in the third quarter of 2004). Higher rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. revenues offset the decrease due to currency devaluation Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. . Internet, Fixed to Mobile and Long Distance traffic decreased in comparison to the third quarter of 2003 due to substitution and competition from alternative carriers. Operating income before depreciation and amortization rose to 40.9 % of Operating Revenues in the third quarter of 2004, as compared to 31.8% in 2003, mainly due to higher revenues and decreased operating expenses. Operating expenses decreased also in the third quarter of 2004 as a result of the continuous efforts for efficiency improvement and cost cutting. Although a first step towards tariff rebalancing Rebalancing The process of realigning the weightings of one's portfolio of assets. Notes: For example, if your portfolio's proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting was achieved with the approval of new tariffs from ANRC ANRC Autoritatea Nationala de Reglementare in Comunicatii (Romania) ANRC American National Red Cross ANRC Alaska Native Regional Corporation ANRC Arkansas Natural Resources Commission (Little Rock, AR) (Romanian Regulatory Authority Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities ) in June 2004, the company is in the process of discussions with ANRC for further actions for a fully rebalanced environment concerning wholesale and retail tariffs. In addition, RomTelecom submitted to ANRC its LRAIC LRAIC Long Run Average Incremental Cost model based on which the cost of the interconnection services was calculated. Following a reconciliation process, new tariffs are expected by the first quarter of next year. RomTelecom's management is moving ahead with continued implementation of its "Transformation Plan": --Efficiency improved from 181 Lines per Employee at the end of fourth quarter of 2003, to 235 Lines per Employee at the end of the third quarter of 2004, an increase of 29.8%. --Headcount was reduced to 18,733 by the end of September 2004 from 23,869 at December 31, 2003. --Implementation of several projects continues successfully, notably the development of a new central Billing System replacing 20 existing systems, deployment of the Oracle Financial e-Business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. System, and opening of a Directory Assistance Call Center decreasing the cost per call by 25%. COSMOROM CosmoRom's operating revenues for the three months ended September 30, 2004 amounted to EUR 1.6 million, while net loss amounted to EUR 6.2 million. A proposal to relaunch Relaunch can refer to several things:
4. OTENET
OTENET
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 3O, 2004 AND 2003
IN ACCORDANCE WITH U.S. GAAP (UNAUDITED)
EUR Millions Q3 04 Q3 03 % Change 9M 04 9M 03 % Change
---------------------- ------ ------ --------- ------ ------ ---------
Operating Revenues 22.2 15.0 48.0% 68.2 45.6 49.6%
Operating Profit 4.3 1.5 186.7% 6.0 4.3 39.5%
Operating Income
before Depreciation &
amortization 5.6 2.7 107.4% 11.7 8.2 42.7%
Operating Income
before Depreciation &
Amortization as % of
Operating Revenues 25.2% 18.0% 7.2 pp 17.2% 18.0% -0.8 pp
Depreciation &
Amortization 1.3 1.2 8.3% 5.7 3.9 46.2%
OTEnet is the Internet and IP services OTE subsidiary (90.2% owned by OTE), offering Internet access See how to access the Internet. , IP telecom solutions and IT application development and hosting services using Internet technologies. OTEnet's consolidated operating revenues for the third quarter of 2004, increased by 48% to EUR 22.2 million. OTEnet's consolidated operating income before depreciation and amortization reached EUR 5.6 million, compared to EUR 2.7 million for the same period of 2003, increasing by 107.4%. OTEnet boosted its customer base significantly. As of September 30, 2004, OTEnet had over 287,700 active residential customers (including all dial up, OnDSL HOME and prepaid card customers). In addition, at September 30th, 2004, OTEnet had over 9,300 corporate customers (including all Leased Line, OnDSL OFFICE, VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. and Data Center customers). OTEnet continues to introduce and actively promote a series of new products and value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. while implementing efficient cost and investment control. The company's goals for the year 2004 are to promote the expansion of Internet penetration The successful unauthorized breach of a security perimeter. See penetration test. in Greece and to evolve Evolve may refer to several terms:
adj. Having several levels: a multilevel parking garage. Adj. 1. multilevel - of a building having more than one level IP Telecom Solutions and Internet Services Applications Provider. In addition, OTEnet's strategy is to expand its offerings to cover the full Internet value chain and to strengthen its brand name focusing on the two main market segments (corporate-consumer). 5. OTHER INTERNATIONAL INVESTMENTS TELECOM SERBIA For the third quarter of 2004, total operating revenues of Telecom Serbia amounted to EUR 142.1 million, up 5.2% from the third quarter of 2003. Net income amounted to EUR 13.5 million, 87.1% lower than in the third quarter of 2003. At September 30, 2004, Telecom Serbia had approximately 2.5 million fixed-line customers, up 3.1% from the third quarter of 2003, and nearly 2.2 million mobile customers, up 30.6 % from last year's quarter. The number of pre-paid customers increased by 27.1% and accounted for over 95% of the total, while the number of contract customers increased by 192.7%. During 2003 Telecom Italia Telecom Italia is formerly a partially state-owned Italian telco. It was once known as SIP, and it has the largest user base in Italy. Telecom Italia also owns shares in Telecom Argentina and Telecom Personal, fixed and cellular networks in Argentina. International sold its 29% interest in Telecom Serbia back to the Serbian Ser·bi·an n. 1. A native or inhabitant of Serbia; a Serb. 2. Serbo-Croatian as spoken in Serbia and adjacent regions, written in a Cyrillic alphabet. adj. Government. As a result, OTE lost its significant influence in Telecom Serbia, and therefore this investment is accounted for at cost. OTE is in the process of settling its disputes with Telecom Serbia, ending arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the proceedings, and securing a greater role in the company's management. ARMENTEL ArmenTel's Operating Revenues for the third quarter of 2004 amounted to EUR 23.5 million. Operating income before depreciation and amortization reached EUR 14.1 million, or 60%, of Operating revenues while net income reached EUR 5.2 million. GLOBUL Cosmo COSMO Consolidated Supercomputer Management Office (NASA) COSMO Coalition of Senior Membership Organizations COSMO Coalition of Self-Managed Operators COSMO Common Specifications for Mobile Bulgaria Mobile EAD EAD Ensino A Distancia (Brazil) EAD Encoded Archival Description (DTD for SGML) EAD Employment Authorization Document (US INS) EAD Exposure At Default is a 100%-owned OTE subsidiary, managed by Cosmote, operating a GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. 900 / 1800 mobile telephony license in Bulgaria. Operating Revenues of Cosmo Bulgaria Mobile EAD, which operates under the Globul brand, amounted to EUR 51 million for the third quarter of 2004, compared to EUR 27 million for the comparable quarter of 2003, an increase of 88.9%, while operating income before depreciation and amortization reached EUR 14.4 million in the third quarter of 2004, increasing by almost three times compared to the EUR 3.7 million of the respective quarter of 2003. The overall revenue increase reflects a 127% increase in monthly service revenues (including airtime revenue incorporated in the bundle To sell hardware and software as a combined product or to combine several software packages for sale as a single unit. Contrast with unbundle. See bundled software and bundling. packages), a 74% increase in airtime revenue, a 172% increase in SMS revenues and a 172% increase in roaming revenues. The key drivers behind the healthy revenue growth were: --A customer base that grew by 78.9% y-o-y, reaching a total of 1,442,236 customers. Pre-paid customers reached 947,109, while contract customers reached 495,127, providing a pre-paid/contract mix of 66%/34%. This increase was driven both by improved market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" and market share gains. Globul's market share stands now at 35%. --Stable pre-paid usage. --Further increases in contract usage. --Territorial coverage increased to 83% vs. 68% at the end of Q3 2003. --Population coverage increased to 98% vs. 91% at the end of Q3 2003. Roaming revenues posted an impressive growth as the company activated activated a state of being more than usually active. In biological systems this is usually brought about by chemical or electrical means. Commonly said of pharmaceutical and chemical products. more roaming agreements. The number of active roaming agreements at September 30, 2004 reached 247 operators in 115 countries. During the quarter, the company took a number of marketing initiatives such as: --July 5 -- decrease of per minute voice charges for B-connect customers by 25% and introduction of SMS tariff --Aug 2 -- introduction of Friends & Family service for B-connect customers, where a customer can select to call three Globul numbers and enjoy 50% tariff reduction against a monthly charge --Sep 20 -- relaunch of bundle minutes tariffs for residential customers and decrease of tariffs of up to 18% COSMOFON MOBILE TELECOMMUNICATIONS AD SKOPJE Skopje (skôp`yə) or Skoplje (skôp`əlyə), city (1994 pop. 444,760), capital of Macedonia, on the Vardar River. (MTS (1) See Microsoft Transaction Server. (2) (Modular TV System) The stereo channel added to the NTSC standard, which includes the SAP audio channel for special use. 1. MTS - Message Transport System. 2. ) CosmoFon AD, the new corporate name of MTS, is a wholly owned subsidiary of OTE managed by Cosmote, operating the second mobile telephony license in the Former Yugoslav Republic of Macedonia (FYROM FYROM Former Yugoslavian Republic Of Macedonia ). The company launched commercially under the brand name CosmoFon in June 2003. Since then, the company has acquired more than 200,000 customers, while Operating revenues for the third quarter of 2004 reached EUR 7.2 million. 6. SUBSEQUENT EVENTS TRANSFER OF GLOBUL AND COSMOFON TO COSMOTE On November November: see month. 3, OTE and Cosmote announced that they had signed a Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. for the transfer of OTE's interests in the parent companies of Globul and CosmoFon to Cosmote. These two companies, which have been managed by Cosmote since January 2003, operate successful mobile telephony services in Bulgaria and F.Y.R. of Macedonia, respectively. Following valuations by two independent investment banks The following is a list of investment banks Financial conglomerates Large financial-services conglomerates combine commercial banking and investment banking, and sometimes insurance. and approval by Cosmote shareholders and regulatory authorities, this transaction will result in the issuance of new Cosmote shares to OTE. The transaction is expected to be completed in the first half of 2005. REGULATOR SETS NEW LEASED LINE AND INTERCONNECTION RATES FOR OTE On November 12, the Greek telecommunications regulator, NTPC, issued a press release announcing new leased line and interconnection rates for OTE. In late 2003, the regulator had imposed provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. prices on these services in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of its evaluation of OTE's cost-oriented model. Pursuant to the Regulator's November decision, the provisional leased line prices have been confirmed for 2004, while OTE will be provisionally pro·vi·sion·al adj. Provided or serving only for the time being. See Synonyms at temporary. n. 1. A person hired temporarily for a job, typically before having taken an examination qualifying the person for permanent allowed to raise its leased line tariffs going forward. OTE estimates that the 2004 revenue loss resulting from this decision is approximately EUR 100 million, the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. portion of which is already reflected in OTE's reported operating revenues. In addition, the regulator further lowered interconnection rates both retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin for the whole of 2004 and going forward. OTE is challenging these decisions. THE GOVERNMENT OF ARMENIA Armenia, country, Asia Armenia (ärmē`nēə), Armenian Hayastan, officially Republic of Armenia, republic (2005 est. pop. 2,983,000), 11,500 sq mi (29,785 sq km), in the S Caucasus. , OTE AND ARMENTEL SETTLE ALL DISPUTES On November 25, the Government of Armenia, OTE and ArmenTel announced that they had agreed a compromise settling all issues among the three parties. Pursuant to this settlement, ArmenTel will operate under an equitable equitable adj. 1) just, based on fairness and not legal technicalities. 2) refers to positive remedies (orders to do something, not money damages) employed by the courts to solve disputes or give relief. (See: equity) EQUITABLE. regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. framework, while Armenian Armenian Armenian Hay plural Hayk or Hayq Member of an Indo-European people first recognized in the early 7th century BC when they moved into areas of Transcaucasia, Anatolia, and the Middle East that came to be known as Armenia. consumers will benefit from high-quality technical solutions delivered in a competitive environment. 7. OUTLOOK As stated in its September 30, 2004 press release, OTE expects the decline in full-year operating revenues from its Greek fixed-line operations to be roughly in line with the level recorded so far this year. Lower revenues and sharp increases in Personnel Expenses and Other Operating Expenses, only partly attributable to the 2004 Olympic Games, should lead to a sharp reduction in Operating Income before Depreciation and Amortization as compared to full year 2003. In 2005, Greek fixed-line operating revenues should benefit partly from recent regulatory decisions as well as planned increases in monthly line rentals. The fixed-line restructuring and reorganization initiatives should result in significant personnel charges in 2005, while cost-reduction measures are not expected to have a material positive impact during the year. Operating revenues and profitability of all other Group activities are expected to continue to progress. Commenting on the Group's outlook, Mr. Vourloumis indicated: "In contrast to many of our peers, whose slimming slim adj. slim·mer, slim·mest 1. Small in girth or thickness in proportion to height or length; slender. 2. Small in quantity or amount; meager: slim chances of success. down is largely completed, OTE's restructuring is still ahead of us. We do not expect significant performance improvements in 2005, notably in view of recent regulatory decisions, while the implementation of our restructuring plan will entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary important cash outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. . To create the conditions to return money to shareholders in the future, I will therefore propose to the Board of Directors to eliminate the payment of a dividend for 2004." About OTE OTE is a provider of public, fixed switch domestic and international telephony services in Greece. With local, long distance and international communications services in addition to mobile telephony, internet services, and high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. , OTE provides consumers and businesses the ability to communicate globally through its extensive network infrastructure. In addition, OTE has a number of International investments in the South East European region and addresses a potential customer base of 60 million people. Listed on the Athens Stock Exchange Athens Stock Exchange Greece's only major securities market. Greek language only. Athens Stock Exchange (ASE) Greece's principal stock exchange. , the company trades under the ticker ticker An automated quotation system on which security transactions are reported after they occur on an exchange floor. Even though the newer systems are electronic and no longer actually tick, the name of the old mechanical device has stuck. HTO as well as on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker OTE. In the U.S., OTE's American Depository Receipts American Depository Receipt n. called in the banking trade an ADR, it is a receipt issued by American banks to Americans as a substitute for actual ownership of shares of foreign stocks. (ADR's) represents 1/2 ordinary share. Additional Information is also available on http://www.ote.gr. Forward-looking statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the Company's future financial results are discussed more fully in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 20-F for 2002 filed with the SEC on June 30, 2003. OTE assumes no obligation to update information in this release. NOTES --In line with SEC recommendations on the use of non-GAAP financial measures, OTE has decided to replace the caption "EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become " used in prior filings by "Operating income before depreciation and amortization". This item is the sum of "Operating income" and "Depreciation and amortization". Similarly, the previously used "EBITDA margin" caption is henceforth From this time forward. The term henceforth, when used in a legal document, statute, or other legal instrument, indicates that something will commence from the present time to the future, to the exclusion of the past. replaced by "Operating income before depreciation and amortization as a percentage (%) of Operating Revenues". --Following SEC recommendations regarding the application of EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 01-9 "Accounting for Consideration Given by a Vendor to a Customer", OTE reflects certain commissions relating to pre-paid cards as a reduction of the respective revenues rather than as operating expenses. All comparative quarterly data for 2003 and the first quarter of 2004 were restated accordingly. --Finally, 2003 comparative data and first quarter 2004 numbers have been restated to reflect the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of Cosmorom assets. While this impairment is effective February February: see month. 2003, its detailed modalities Modalities The factors and circumstances that cause a patient's symptoms to improve or worsen, including weather, time of day, effects of food, and similar factors. were not completed until the filing of OTE's 2003 Form 20-F on July July: see month. 15, 2004. All 2003 comparative data provided in this release is consistent with the 2003 Form 20-F.
Exhibits to follow:
-------------------
I. Condensed Consolidated Balance Sheets as of September 30, 2004
and December 31, 2003 (Under US GAAP)
II. Condensed Consolidated Statements of Operations for the nine
months and three months ended September 30, 2004 and 2003
(Under US GAAP)
III. Condensed Consolidated Statement of Cash Flows for the nine
months ended September 30, 2004 (Under US GAAP)
IV. Operating Revenues for the nine months and three months ended
September 30, 2004 and 2003 (Under US GAAP)
V. Segment Reporting based on the Company's legal structure
VI. International Assets
VII. Operational Highlights
EXHIBIT I - BALANCE SHEETS
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Prepared under U.S. GAAP
as of September 30, 2004 and December 31, 2003
(EUR million)
Sep 2004 Dec 2003
----------- -----------
Assets (Unaudited)
Current Assets
Cash and cash equivalents 724.7 601.3
Accounts receivable 1,149.6 1,292.0
Materials and supplies 141.1 150.2
Deferred income taxes 11.2 12.3
Other current assets 192.6 261.1
----------- -----------
2,219.2 2,316.9
----------- -----------
Other assets
Investments 208.6 228.8
Prepayment to EDEKT-OTE 219.3 239.0
Deferred income taxes 87.0 126.3
Other long-term assets 168.9 167.4
----------- -----------
683.8 761.5
----------- -----------
Telecommunication property,
Plant and equipment
Net of Accumulated depreciation 6,708.0 6,873.4
----------- -----------
Telecommunication licenses, net of
amortization 385.8 402.4
----------- -----------
Goodwill resulting from consolidated
subsidiaries, net of amortization 70.7 70.7
----------- -----------
10,067.5 10,424.9
=========== ===========
Sep 2004 Dec 2003
----------- -----------
Liabilities and Shareholders' Equity (Unaudited)
Current Liabilities
Short-term borrowings 32.3 51.6
Current maturities of long-term debt 58.3 74.8
Accounts payable 722.4 922.3
Accrued and other liabilities 571.5 597.7
Income taxes payable 105.8 155.7
Dividends payable 32.6 8.6
----------- -----------
1,522.9 1,810.7
----------- -----------
Long-Term Liabilities
Long-term debt, net of current maturities 3,124.2 3,154.6
Reserve for staff retirement indemnities 300.9 292.6
Reserve for Youth Account 332.2 331.5
Other long-term liabilities 207.7 252.6
----------- -----------
3,965.0 4,031.3
----------- -----------
Minority interests 1,053.6 992.6
----------- -----------
Shareholders' Equity
Share capital 1,174.1 1,204.7
Paid-in surplus 487.5 505.7
Treasury stock (15.1) (276.6)
Legal reserve 256.7 256.7
Retained earnings 1,685.3 1,957.2
Unaccrued compensation 0.0 (0.1)
Accumulated other comprehensive income (62.5) (57.3)
3,526.0 3,590.3
----------- -----------
10,067.5 10,424.9
=========== ===========
Movement in Shareholders' equity
------------------------------------------------------
2004
--------------------
Unaudited
Shareholders' equity, January 1 3,590.3
--------------------
Net Income for the period 112.4
Dividends declared (171.6)
Accumulated other comprehensive
income (5.2)
Unaccrued compensation 0.1
--------------------
(64.3)
--------------------
Shareholders' equity, September 30 3,526.0
====================
EXHIBIT II -- STATEMENTS OF OPERATIONS
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Prepared under U.S. GAAP
for the three months and nine months ended September 30, 2004 and 2003
(EUR million)
Q3 04 Q3 03
Unaudited Unaudited % Change
Operating Revenues:
Domestic Telephony 568.3 606.0 -6.2%
International Telephony 105.6 100.7 4.9%
Mobile telephony services 435.6 337.3 29.1%
Other 259.9 238.8 8.8%
--------- ---------
Total Operating Revenues 1,369.4 1,282.8 6.8%
========= =========
Operating Expenses:
Payroll and employee benefits (289.0) (280.1) 3.2%
Voluntary retirement costs (1.2) (0.9) 33.3%
Reversal of reserve for retirement
contributions 0.0 0.0
Payments to international operators (45.7) (44.7) 2.2%
Payments to domestic telephony
operators (178.5) (164.6) 8.4%
Depreciation and amortization (261.4) (241.0) 8.5%
Other operating expenses (399.1) (277.6) 43.8%
--------- ---------
Total Operating Expenses (1,174.9) (1,008.9) 16.5%
========= =========
Operating Income 194.5 273.9 -29.0%
Other income / (expense), net:
Interest income 10.1 13.2 -23.5%
Interest expense (40.8) (32.4) 25.9%
FX gain 3.4 20.8 -83.7%
FX loss (8.8) (19.5) -54.9%
Financial net (36.1) (17.9) 101.7%
Income/loss from affiliates (1.2) 0.3 -500.0%
Provision for management fee related to
Telecom Serbia (21.3) 0.0 N/A
Other, net 0.6 5.7 -89.5%
--------- ---------
Total Other income / (expense), net (58.0) (11.9) 387.4%
========= =========
Income before provision for income taxes
and minority interests 136.5 262.0 -47.9%
========= =========
Provision for income taxes (62.0) (100.4) -38.2%
--------- ---------
Income before minority interests 74.5 161.6 -53.9%
Minority Interests (55.2) (39.6) 39.4%
--------- ---------
Net Income 19.3 122.0 -84.2%
========= =========
9M 04 9M 03
Unaudited Unaudited % Change
Operating Revenues:
Domestic Telephony 1,703.5 1,753.8 -2.9%
International Telephony 298.7 276.1 8.2%
Mobile telephony services 1,163.2 888.8 30.9%
Other 731.9 692.0 5.8%
--------- ---------
Total Operating Revenues 3,897.3 3,610.7 7.9%
========= =========
Operating Expenses:
Payroll and employee benefits (919.7) (826.7) 11.2%
Voluntary retirement costs (28.9) (26.4) 9.5%
Reversal of reserve for retirement
contributions 0.0 54.6
Payments to international operators (129.7) (134.3) -3.4%
Payments to domestic telephony
operators (494.3) (454.1) 8.9%
Depreciation and amortization (767.8) (681.3) 12.7%
Other operating expenses (1,003.7) (785.0) 27.9%
--------- ---------
Total Operating Expenses (3,344.1) (2,853.2) 17.2%
========= =========
Operating Income 553.2 757.5 -27.0%
Other income / (expense), net:
Interest income 34.7 34.8 -0.3%
Interest expense (116.2) (95.6) 21.5%
FX gain 26.4 84.7 -68.8%
FX loss (34.0) (65.8) -48.3%
Financial net (89.1) (41.9) 112.6%
Income/loss from affiliates 1.7 (11.0) -115.5%
Provision for management fee related to
Telecom Serbia (21.3) 0.0 N/A
Other, net 0.2 (0.9) -122.2%
--------- ---------
Total Other income / (expense), net (108.5) (53.8) 101.7%
========= =========
Income before provision for income taxes
and minority interests 444.7 703.7 -36.8%
========= =========
Provision for income taxes (203.6) (270.6) -24.8%
--------- ---------
Income before minority interests 241.1 433.1 -44.3%
Minority Interests (128.7) (100.8) 27.7%
--------- ---------
Net Income 112.4 332.3 -66.2%
========= =========
EXHIBIT III -- STATEMENT OF CASH FLOWS
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Prepared under U.S. GAAP
for the three, six and nine months
ended September 30, 2004 is as follows:
(EUR million)
Q1 04 Q2 04 H1 04 Q3 04 9M 04
Unaudited Unaudited Unaudited Unaudited Unaudited
Cash Flows from
Operating
Activities:
Net income 48.1 45.0 93.1 19.3 112.4
Adjustments to
reconcile to net
cash provided by
operating
activities:
Depreciation and
amortization 248.8 257.6 506.4 261.4 767.8
Provision for
doubtful accounts 26.0 28.1 54.1 30.0 84.1
Provision for
staff retirement
indemnities and
youth account 20.0 21.3 41.3 19.5 60.8
Provision for
management fees
related to
Telecom Serbia 0.0 0.0 0.0 21.3 21.3
Minority interests 34.1 39.4 73.5 55.2 128.7
Working capital
movement and
other related
movements (85.4) 53.9 (31.5) (83.0) (114.5)
========= ========= ========= ========= =========
Net Cash provided by
Operating
Activities 291.6 445.3 736.9 323.7 1,060.6
--------- --------- --------- --------- ---------
Cash Flows from
Investing
Activities:
Capital
expenditures (177.9) (295.2) (473.1) (171.9) (645.0)
Acquisition of
additional share
in consolidated
subsidiary 0.0 0.0 0.0 (12.8) (12.8)
========= ========= ========= ========= =========
Net Cash used in
Investing
Activities (177.9) (295.2) (473.1) (184.7) (657.8)
--------- --------- --------- --------- ---------
Cash Flows from
Financing
Activities:
Net change in
short-term and
long-term debt (34.1) (5.5) (39.6) (23.9) (63.5)
Dividends paid (0.6) (1.9) (2.5) (145.1) (147.6)
Dividends paid to
minority
shareholders 0.0 (68.3) (68.3) 0.0 (68.3)
========= ========= ========= ========= =========
Net Cash provided by
Financing
Activities (34.7) (75.7) (110.4) (169.0) (279.4)
--------- --------- --------- --------- ---------
Net
Increase/(Decrease)
in Cash and Cash
Equivalents 79.0 74.4 153.4 (30.0) 123.4
Cash and Cash
equivalents at
beginning of period 601.3 680.3 601.3 754.7 601.3
--------- --------- --------- --------- ---------
Cash and Cash
Equivalents at end
of period 680.3 754.7 754.7 724.7 724.7
========= ========= ========= ========= =========
EXHIBIT IV -- OPERATING REVENUES
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE) AND SUBSIDIARIES
Consolidated Operating Revenues
Prepared under U.S. GAAP
for the three months and nine months ended September 30, 2004 and 2003
(EUR million)
Q3 04 Q3 03 9M 04 9M 03
Unaudited Unaudited Change Unaudited Unaudited Change
--------- ---------
Domestic
Telephony:
Basic monthly
rentals 209.1 205.3 1.9% 634.8 582.1 9.1%
Local and long
distance calls
-Fixed to
fixed 188.3 202.5 -7.0% 582.4 619.8 -6.0%
-Fixed to
mobile 153.9 169.6 -9.3% 421.0 476.3 -11.6%
--------- --------- ---------- ----------
342.2 372.1 -8.0% 1,003.4 1,096.1 -8.5%
========= ========= ========== ==========
Other 17.0 28.6 -40.6% 65.3 75.6 -13.6%
--------- --------- ---------- ----------
Total Domestic
Telephony 568.3 606.0 -6.2% 1,703.5 1,753.8 -2.9%
========= ========= ========== ==========
International
Telephony:
International
traffic 45.0 48.3 -6.8% 132.7 142.5 -6.9%
Payments from
mobile
operators 12.2 12.4 -1.6% 27.9 28.2 -1.1%
--------- --------- ---------- ----------
57.2 60.7 -5.8% 160.6 170.7 -5.9%
========= ========= ========== ==========
Payments from
International
operators 48.4 40.0 21.0% 138.1 105.4 31.0%
Total
International
Telephony 105.6 100.7 4.9% 298.7 276.1 8.2%
========= ========= ========== ==========
Mobile Telephony
Services: 435.6 337.3 29.1% 1,163.2 888.8 30.9%
========= ========= ========== ==========
Other Operating
Revenues:
Traditional
Services:
Telecards 44.1 41.3 6.8% 116.2 104.6 11.1%
Directories 13.5 12.3 9.8% 41.1 36.4 12.9%
Radio
communications 4.5 6.1 -26.2% 14.3 16.9 -15.4%
Audiotex 14.2 20.1 -29.4% 65.0 52.3 24.3%
Telex and
telegraphy 1.7 1.6 6.2% 5.8 5.6 3.6%
--------- --------- ---------- ----------
78.0 81.4 -4.2% 242.4 215.8 12.3%
========= ========= ========== ==========
New Business:
Leased lines
and data
communications 56.9 54.6 4.2% 101.7 173.2 -41.3%
ISDN,
connection &
monthly
charges 29.7 23.3 27.5% 83.9 66.5 26.2%
Sales of tele-
communication
equipment 32.4 25.8 25.6% 85.3 64.3 32.7%
Internet
services 17.0 13.6 25.0% 45.0 36.9 22.0%
ATM 6.6 4.2 57.1% 18.1 14.0 29.3%
--------- --------- ---------- ----------
142.6 121.5 17.4% 334.0 354.9 -5.9%
========= ========= ========== ==========
Other:
Services
rendered 17.4 13.7 27.0% 66.0 53.3 23.8%
Interconnection
charges 8.7 18.6 -53.2% 57.0 57.5 -0.9%
Miscellaneous 13.2 3.6 266.7% 32.5 10.5 209.5%
--------- --------- ---------- ----------
39.3 35.9 9.5% 155.5 121.3 28.2%
========= ========= ========== ==========
Total Other
Operating
Revenues 259.9 238.8 8.8% 731.9 692.0 5.8%
========= ========= ========== ==========
========= ========= ========== ==========
Total Operating
Revenues 1,369.4 1,282.8 6.8% 3,897.3 3,610.7 7.9%
========= ========= ========== ==========
EXHIBIT V -- SEGMENT REPORTING
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (OTE)
AND SUBSIDIARIES
Segment Reporting
Prepared under U.S. GAAP
for the nine months ended September 30, 2004
(In millions of Euro)
All
OTE Cosmote RomTelecom Other Total
Operating Revenues:
Domestic Telephony 1,242.4 438.4 23.3 1,704.1
International
Telephony 175.6 103.0 23.8 302.4
Mobile telephony
services 1,167.3 5.2 150.2 1,322.7
Other 719.8 35.0 71.7 220.7 1,047.2
Total Operating
Revenues 2,137.8 1,202.3 618.3 418.0 4,376.4
--------- -------- ---------- ------- ----------
Intersegment Revenues (164.7) (161.8) (3.4) (149.2) (479.1)
Revenue from External
Customers 1,973.1 1,040.5 614.9 268.8 3,897.3
--------- -------- ---------- ------- ----------
Operating Expenses:
Payroll and employee
benefits (614.7) (56.0) (196.6) (55.5) (922.8)
Voluntary retirement
costs (28.9) (28.9)
Total (643.6) (56.0) (196.6) (55.5) (951.7)
Payments to
international
operators (89.6) (16.7) (18.9) (7.0) (132.2)
Payments to domestic
telephony operators (309.1) (231.0) (68.5) (33.2) (641.8)
Depreciation and
amortization (455.3) (139.6) (99.9) (74.5) (769.3)
Other operating
expenses (584.4) (383.9) (123.9) (242.8) (1,335.0)
--------- -------- ---------- ------- ----------
Total Operating
Expenses (2,082.0) (827.2) (507.8) (413.0) (3,830.0)
--------- -------- ---------- ------- ----------
--------- -------- ---------- ------- ----------
Operating Income 55.8 375.1 110.5 5.0 546.4
--------- -------- ---------- ------- ----------
Operating income
before depreciation
and amortization 511.1 514.7 210.4 79.5 1,315.7
------------------------------- -------- ---------- ------- ----------
Operating income
before depreciation
and amortization as %
of Operating revenues 23.9% 42.8% 34.0% 19.0% 30.1%
Adjustments &
Eliminations Consolidated
Operating Revenues:
Domestic Telephony
International Telephony
Mobile telephony services
Other
Total Operating Revenues (479.1) 3,897.3
------------- ------------
Intersegment Revenues
Revenue from External Customers 3,897.3
------------- ------------
Operating Expenses:
Payroll and employee benefits 3.1 (919.7)
Voluntary retirement costs (28.9)
Total 3.1 (948.6)
Payments to international operators 2.5 (129.7)
Payments to domestic telephony operators 147.5 (494.3)
Depreciation and amortization 1.5 (767.8)
Other operating expenses 331.3 (1,003.7)
------------- ------------
Total Operating Expenses 485.9 (3,344.1)
------------- ------------
------------- ------------
Operating Income 6.8 553.2
------------- ------------
Operating income before depreciation and
amortization 5.3 1,321.0
--------------------------------------------------------- ------------
Operating income before depreciation and
amortization as % of Operating revenues -1.1% 33.9%
EXHIBIT VI -- INTERNATIONAL ASSETS
ROMTELECOM
OTE has a 54.01% stake in RomTelecom, which has been fully
consolidated since March 2003.
ROMTELECOM
CONSOLIDATED AND STAND ALONE CONDENSED BALANCE SHEETS
As of September 30, 2004, in accordance with US GAAP
(EUR thousand)
Consolidated Stand-Alone
(Unaudited) (Unaudited)
Property, plant and equipment 1,643,872 1,608,169
Intangible assets 13,710 11,141
Investments and other long-term assets 44,147 44,147
Fixed assets investments 0 168,220
Long-term assets 1,701,729 1,831,677
Inventories 68,771 65,846
Trade and other receivables 135,163 130,065
Cash and cash equivalents 105,050 102,042
Current assets 308,984 297,953
Total assets 2,010,713 2,129,630
Shareholders' Equity 1,344,450 1,593,601
Borrowings 147,109 147,109
Other long-term liabilities 138,991 138,988
Long-term liabilities 286,100 286,097
Trade payables and other current liabilities 310,405 210,287
Borrowings 69,758 39,645
Current liabilities 380,163 249,932
Total liabilities 666,263 536,029
Total liabilities and shareholders' equity 2,010,713 2,129,630
ROMTELECOM
CONSOLIDATED and STAND ALONE INCOME STATEMENT
For the nine months ended September 30, 2004, in accordance with US
GAAP
(EUR thousand)
Consolidated Stand-Alone
(Unaudited) (Unaudited)
Basic monthly rentals 155,682 155,682
Domestic Telephony calls 282,722 283,704
------------- -------------
Domestic Telephony 438,404 439,386
International Telephony 102,989 102,989
Mobile Telephony 5,178
Other Revenues 71,723 76,765
------------- -------------
Total Operating Revenues 618,294 619,140
Personnel (inc Voluntary Redundancy) (196,637) (192,812)
Other operating expenses (211,300) (207,177)
Depreciation and Amortization (113,598) (109,353)
Total Operating expenses (521,535) (509,342)
Operating income 96,759 109,798
Financial, net (14,437) (14,484)
Income before provision for income taxes 82,322 95,314
Provision for Income taxes (26,450) (26,420)
Net income 55,872 68,894
TELECOM SERBIA
OTE has a 20% equity investment in Telecom Serbia that, since the
third quarter of 2003 is accounted for at cost. Telecom Serbia's key
financial figures are stated below:
TELECOM SERBIA
Statement of Operations
Prepared under U.S. GAAP
for the three months and nine months ended September 30, 2004 and 2003
(Unaudited)
% %
EUR Millions Q3 04 Q3 03 Change 9M 04 9M 03 Change
------------------- ----- ------ -------- --------- --------- --------
Operating Revenues 142.1 135.1 5.2% 417.3 383.7 8.8%
Operating Income
before Depreciation
& amortization 62.1 69.8 -11.0% 191.7 192.1 -0.2%
Operating Income
before Depreciation
& Amortization as %
of Operating
Revenues 43.7% 51.7% -8.0 pp 45.9% 50.1% -4.2 pp
Operating Income 20.3 29.4 -31.0% 73.4 81.8 -10.3%
Net Income/(Loss) 13.5 104.7 -87.1% 67.3 140.9 -52.2%
Net Income/(Loss)
Margin 9.5% 77.5% -68.0 pp 16.1% 36.7% -20.6 pp
Increase/(Decrease)
in Gross PP&E 68.0 31.3 117.3% 124.3 99.0 25.6%
Fixed Telephony,
Lines 2,467,276 2,393,284 3.1%
Mobile Telephony,
Contract customers 101,424 34,656 192.7%
Mobile Telephony,
Prepaid customers 2,065,940 1,625,237 27.1%
Mobile Telephony,
Total customers 2,167,364 1,659,893 30.6%
30.09.04 31.12.03
Cash and cash
equivalents 68.8 95.4 -27.9%
Long-term debt 40.1 59.1 -32.1%
Net Financial Debt (28.7) (36.3) 20.9%
ARMENTEL
OTE has a 90% stake in ArmenTel, which is fully consolidated.
ArmenTel's key financial figures are stated below:
ARMENTEL
Statement of Operations
Prepared under U.S. GAAP
for the three months and nine months ended September 30, 2004 and 2003
(Unaudited)
% %
EUR Millions Q3 04 Q3 03 Change 9M 04 9M 03 Change
---------------------- ----- ----- -------- -------- -------- --------
Operating Revenues 23.5 18.5 27.0% 62.2 51.7 20.3%
Operating Income before
Depreciation &
amortization 14.1 9.4 50.0% 35.8 24.3 47.3%
Operating Income before
Depreciation &
Amortization as % of
Operating Revenues 60.0% 50.8% 9.2 pp 57.6% 47.0% 10.6 pp
Operating Income 8.2 3.9 110.3% 18.1 7.9 129.1%
Net Income/(Loss) 5.2 2.7 92.6% 13.9 8.6 61.6%
Net Income/(Loss)
Margin 22.1% 14.6% 7.5 pp 22.3% 16.6% 5.7 pp
Increase/(Decrease) in
Gross PP&E 19.3 11.8 63.6%
Fixed Telephony, Lines 574,662 558,245 2.9%
Mobile Telephony,
Contract customers 48,996 34,916 40.3%
Mobile Telephony,
Prepaid customers 129,597 40,972 216.3%
Mobile Telephony, Total
customers 178,593 75,888 135.3%
30.09.04 31.12.03
Cash and cash
equivalents 14.2 2.3 517.4%
Short-term borrowings 0.0 13.1 -100.0%
Long-term debt 74.9 62.6 19.6%
Net Financial Debt 60.7 73.4 -17.3%
COSMOBULGARIA
OTE has a 100% stake in CosmoBulgaria, which is fully consolidated.
CosmoBulgaria is a company offering mobile telephony services in
Bulgaria under the brand name Globul. Globul's key financial figures
are stated below:
COSMOBULGARIA
Statement of Operations
Prepared under U.S. GAAP
for the three months and nine months ended September 30, 2004 and 2003
(Unaudited)
EUR Millions Q3 04 Q3 03 % Change 9M 04 9M 03 % Change
------------------- ------ ------ -------- --------- -------- --------
Operating Revenues 51.0 27.0 88.9% 124.7 66.5 87.5%
Operating Income
before Depreciation
& amortization 14.4 3.7 289.2% 29.0 5.5 427.3%
Operating Income
before Depreciation
& Amortization as %
of Operating
Revenues 28.2% 13.7% 14.5 pp 23.3% 8.3% 15.0 pp
Operating Income 3.5 (3.7) 194.6% (0.2) (14.9) 98.7%
Net Income/(Loss) (3.3) (4.9) 32.7% (10.2) (15.2) 32.9%
Net Income/(Loss)
Margin -6.5% -18.1% 11.6 pp -8.2% -22.9% 14.7 pp
Increase/(Decrease)
in Gross PP&E 18.9 27.9 -32.3% 63.2 57.9 9.2%
Mobile Telephony,
Contract customers 495,127 310,590 59.4%
Mobile Telephony,
Prepaid customers 947,109 495,355 91.2%
Mobile Telephony,
Total customers 1,442,236 805,945 78.9%
30.09.04 31.12.03
Cash and cash
equivalents 9.7 10.1 -4.0%
Short-term borrowings 11.8 0.0 N/A
Long-term debt 200.0 155.0 29.0%
Net Financial Debt 202.1 144.9 39.5%
CosmoFon
CosmoFon, a company owned by OTE and managed by Cosmote, on June 11,
2003 launched the commercial operations of CosmoFon, in Skopje
(FYROM), as the new mobile operator in the country. CosmoFon is fully
consolidated. Its key financial figures are below:
COSMOFON
Statement of Operations
Prepared under U.S. GAAP
for the three months and nine months ended September 30, 2004
(Unaudited)
EUR Millions Q3 04 9M 04
-------------------------------------------------- --------- ---------
Operating Revenues 7.2 16.8
Operating Income before Depreciation &
amortization (0.9) (5.1)
Operating Income before Depreciation &
Amortization as % of Operating Revenues -12.5% -30.4%
Operating Income (4.0) (13.5)
Net Income/(Loss) (4.5) (15.1)
Net Income/(Loss) Margin -62.5% -89.9%
Increase/(Decrease) in Gross PP&E 5.7 15.4
Mobile Telephony, Contract customers 14,572
Mobile Telephony, Prepaid customers 185,680
Mobile Telephony, Total customers 200,252
30.09.04
Cash and cash equivalents 19.2
Short-term borrowings 0.0
Long-term debt 22.0
Net Financial Debt 2.8
EXHIBIT VII -- OPERATIONAL HIGHLIGHTS
Operational Highlights for the quarters
ended September 30, 2004 and 2003
----------------------------------------------------------------------
OTE Q3 04 Q3 03 % Change
PSTN lines 5,104,804 5,240,336 -2.6%
ISDN, 64kb equiv. lines 1,222,512 1,038,526 17.7%
Total lines 6,327,316 6,278,862 0.8%
ADSL subscribers 28,500 3,150 804.8%
COSMOTE (Greece)
Pre-paid sub. 2,481,141 2,459,705 0.9%
Contract sub. 1,610,032 1,591,845 1.1%
OTE net
Dial up clients 287,673 187,350 53.5%
Business customers 9,306 5,343 74.2%
Employees:
-OTE 16,606 17,099 -2.9%
-of which: at other subsidiaries 421 514 -18.1%
-Subsidiaries (Greece) 1,650 956 72.6%
-COSMOTE 2,047 1,843 11.1%
-RomTelecom 18,412 26,218 -29.8%
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