€800 million in 2009. Net earnings fell from
almost €1 billion in 2006 to less than €200 in
2009. Moreover, in 2010 the sector is very likely
to go into the red, given that many operators suf-
fered heavy losses during the year (based on the
nine-month results for 2010).
That said, the decrease in revenues and profits is
not only due to the huge debts that the operators
are now required to repay. Since 2007, when the
real opening of the telecoms market began,
providers have been engaged in a relentless
price and offer war, in their effort to capture mar-
ket shares. This war escalated in early 2009, as
mobile operators started barraging consumers
with very tempting offers. The companies were, in
fact, offering unlimited on-net calls (i.e. to sub-
scribers of the same network) at almost zero cost.
This mobile telephony war had rather adverse
effects on the results for 2009 and 2010. It is esti-
mated that, only in 2009, mobile operators lost
operating profits of almost €500 million, while the
decrease in EBIT during the entire two-year period
(2009-10) is expected to exceed €800 million.
This trend was aggravated by a series of deci-
sions made by the government and the regulator
(EETT). According to estimates, the decision
reached by EETT in 2008, which imposed a grad-
ual reduction of up to 60% in termination fees, will
deprive mobile operators of revenues of almost
€450 million during the three-year period 2009-
2011. However, the aim of this decision was to
bring Greek termination fees in line with those
applicable in the European Union.
On the other hand, it is reckoned that the govern-
ment’s decision to raise the tax duty on mobile
connection bills in the summer of 2009 put new
pressure on consumers. According to the Greek
Mobile Operators Association (EEKT), taxes
account for 40% of the average mobile telephony
bill, as a result of increased telephony duties and
value added tax (VAT) rates. Quite reasonably,
the Association claimed that mobile phones are
taxed like luxury goods.
Fixed communications
Fixed telephony and internet providers are in con-
tinuous decline, as a result of the reduction in call
volumes and costs; nevertheless, their funda-
mentals are deteriorating slower than those of
mobile operators. The drop in this market was
cushioned by the development of broadband,
which in four years (2007-2010) sowed almost
2.5 million broadband connections all over
Greece. These sales revived the revenues of the
sector’s companies, mostly to the benefit of alter-
native providers. Today, the few remaining alter-
native providers are controlling a market of more
market started to fall. In 2009, the market shrank
to €7.8 billion, while, according to estimates, this
trend accelerated in 2010 ―for which no official
data yet exist― with the market falling to €7.0-
€7.2 billion. All major operators (OTE, Cosmote,
Vodafone, and Wind Hellas) have seen their rev-
enues decrease, and only certain alternative serv-
ice providers have seen positive revenue growth
rates. It is the former, though, that determine,
thanks to their size, the course of the market.
The sector’s woes are also reflected in profitabili-
ty. The sector’s earnings before interest & taxes
(ΕΒΙΤ) plunged from almost €1.4 billion in 2006 to
Trade with Greece
123
