Hellenic Telecommunication Organization SA (HLTOY) Q1 2025 Earnings Call Highlights: Solid ...

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Thu, May 15, 2025, 1:06 AM 4 min read

Group Revenue: Relatively stable with growth in Greece offset by pressure in Romanian operations.
Adjusted EBITDA (after leases): Up 1% for the group, supported by 1.8% growth in Greek operations.
Greece Total Revenue: Increased by 0.8% driven by growth in mobile, TV, broadband, and ICT services.
Greece EBITDA Growth: Achieved 1% growth; adjusted for sale impact, growth would have been 1.9%.
Retail Fixed Services Revenue: Nearly stable with a slight increase of 0.2% including data communication.
TV Revenue: Achieved double-digit growth at 14%, with a 7% increase in customer base.
Fiber To The Home (FTTH) Customer Additions: 36,000 new additions, total base at 430,000, a 50% year-on-year increase.
FTTH Network Utilization: Reached 29%, a 7 percentage point increase year-on-year.
Mobile Service Revenue: Increased by 1.2% in the quarter.
Post-paid Mobile Base: Grew by 6% with 43,000 net additions.
Data Usage: 15.8 gigabytes per user per month, a 32% year-on-year increase.
Operating Expenses (Greece): Declined by EUR2.2 million, with a focus on cost management.
Adjusted EBITDA Margin (Greece): Strong margin of 40.2%.
Romania Revenue: Down 8% in the quarter, reaching EUR61 million.
Free Cash Flow (after leases): EUR97 million for the quarter.
CapEx Guidance: Between EUR610 million and EUR620 million for the year.
Free Cash Flow Target: EUR460 million for the year.

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Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Hellenic Telecommunication Organization SA (HLTOY) reported a solid start to 2025 with increased revenues and EBITDA in Greece across core segments such as mobile, TV, broadband, and ICT.
The company continues to strengthen its market leadership in mobile services, supported by solid trends in service revenues and post-paid customer growth.
There are encouraging signs of stabilization in the fixed retail business, driven by strong adoption of fiber to the home services.
The ICT segment posted another strong quarter, supporting the digital transformation of Greece's economy and public services.
The TV segment achieved double-digit growth, supported by content partnerships and the anticipated implementation of anti-piracy legislation.

Negative Points

Revenues in Romania continue to face pressure, with an 8% decline in the quarter due to competitive challenges in the post-paid segment.
Wholesale revenues were down nearly 5% due to lower margins in international transit-traffic revenues and competition's network build-outs.
The company faces ongoing challenges with the disposal process of Telekom Mobile in Romania, which has been a headwind for several quarters.
Fixed broadband lines showed a slight decline, indicating potential market saturation or temporary factors impacting growth.
The company is dealing with procedural issues related to government coupons, which initially slowed broadband net additions.

Q & A Highlights

Q: Can you provide insights on Greece's mobile performance, recent price increases, and potential new market entrants? A: Kostas Nebis, CEO, explained that mobile service revenue is positively impacted by pre- to post-paid migrations and a recent increase in minimum top-up for prepaid services. The company is optimistic about revenue growth and is monitoring market developments to maintain a value-for-money service. A new MVNO, Volton, has entered the market, but its impact is expected to be minimal. The company is confident in achieving its 2% EBITDA growth guidance for Greece.

Q: What are the implications of the Romania disposal on shareholder remuneration and potential spectrum payments? A: Charalampos Mazarakis, CFO, stated that if the Romania sale concludes soon, the additional benefit will be calculated and communicated for distribution to shareholders. The current free cash flow target assumed Romania's operations for the whole year. Spectrum payments due in 2027 will not affect this year's decisions.

Q: Can you elaborate on the fixed broadband trends and the impact of government coupons? A: Kostas Nebis noted that initial procedural issues with government coupons affected broadband net additions early in the year. However, improvements have been made, and positive net additions are expected for the rest of the year. The introduction of fixed wireless access services has also helped address customers without fiber access.

Q: Why was the tax rate unusually low this quarter, and what about the tax receipts in the cash flow statement? A: Charalampos Mazarakis explained that the tax rate was temporarily lowered due to a EUR10 million return from the state, affecting the effective tax rate. This is reflected in both the P&L and cash flow statements.

Q: When will the anti-piracy law be fully implemented, and how effective is your bundling strategy against competition? A: Kostas Nebis expects the anti-piracy law to be fully implemented before the summer holidays. Regarding competition, the company has a comprehensive service portfolio, with 70% of its customer base using bundled services, which helps retain customers despite new market entrants.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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