than €500 million per year. Their turnover
received a major boost in the past three years,
mainly from the provision of combined services
(e.g. telephony and Internet) through the
unbundling of the local loop. And, undercutting
OTE’s rates, they managed to control 50% of
broadband connections.
The main advantage of OTE’s competitors lies in
the comparatively lower prices they offer. Being
the incumbent, OTE has its prices regulated by
the EETT, and is rarely in a position to match its
competitors’ rates. In the past few years, this led
to incessant squabbles between OTE and the
EETT, with the former accusing the latter of put-
ting obstacles in its commercial policy, and the
regulator responding that it merely enforces EU
and national law. In some cases, both sides used
bitter words to describe each other’s role in the
telecoms market.
However, although the rivals of OTE have taken
many steps forward, the landscape in this sector
remains vague. In an effort to capture market
shares, the larger alternative providers (Forthnet,
Hellas Online) continue to make loss-making
offers. Moreover, they are heavily indebted. The
alternative providers’ annual losses for the period
2008-09 exceeded €150 million, and are expect-
ed to rise in 2010. Nonetheless, these losses
were primarily caused by the increased amortiza-
tion that resulted from the heavy investments
these companies made during the period 2007-
2009, in order to go up a rung on the investment
ladder of the Greek telecommunications market.
The year 2010
Although the final data for 2010 have not been
published yet, everything points to the fact that
last year was the sector’s worst. As a result of the
debt crisis that hit the country in 2009, combined
with the harsh austerity program that the govern-
ment
implemented
after signing
the
Memorandum with the IMF, the ECB and the EU,
the sector’s fundamentals are dipping to new
lows. The drop in the sector’s turnover is larger
than that of the GDP, which in 2010 has already
been estimated by the Eurostat at 4.5%.
The results announced by OTE for 2010 under-
lined the sector’s problems. Fixed and mobile
telephony revenues dropped by 10% in Greece,
while the decrease in profits was even steeper.
The Group’s earnings before interest, taxes,
depreciation and amortization (EBITDA) fell by
40%, while net earnings fell by 90%. However,
the nose-dive of OTE’s profitability is also attrib-
uted to a series of external factors, such as the
one-off tax contribution imposed by the govern-
ment on corporate profits for 2009, the impair-
ment of the group’s subsidiaries’ assets etc. That
said, the substantial decrease in profits under-
lines the difficulties faced by the operator.
However, OTE’s competitors are also facing
severe problems. Wind Hellas, which in 12
months carried out two debt restructurings, writ-
ing off loans of €3 billion, is expected to report a
€1 billion loss for 2010. This huge loss is to a
great extent due to the impairment of the compa-
ny’s assets, and only partly due to operating loss-
es. At the same time, the company’s revenues
took a plunge, which in 2010 (based on the 9-
month results) is expected to reach 30%.
Wind’s main rival, Vodafone, also saw its rev-
enues and earnings plummet during 2010. The
company’s revenues for the first half of the fiscal
year ended last September (the company’s fiscal
year begins on April 4) is down by 16% and its
EBITDA are down by a dazzling 60%. In 2010, the
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