Hellenic Telecommunications Organization S.A.

Ladies and gentlemen, thank you for standing by. I am Iota Yokorus, Call Operator. Welcome and thank you for joining the IOTA Conference Call and Live Webcast to present and discuss the fourth quarter and full year 2024 financial results. At this time, I would like to turn the conference over to Mr. Costas Nebis, CEO of OTE Group, Mr. Babis Mazarakis, Chief Financial Officer, Mr. Panagiotis Gavrilidis, Chief Marketing Officer, Consumer Segment, OTE Group, and Mr. Evrico Sarcentis, head of IR and M&A. Mr. Nebis, you may now proceed.

Thank you. So good morning or good afternoon to all. I'm pleased to be here with you today and to welcome you to OTES fourth quarter and full year 2024 results call. 2024 has been a strong year for OTES, marked by solid operational performance. We delivered on our strategic goals, reinforcing our leadership in the Greek telco market with sustained revenue growth and higher adjusted EBDA after leaders in Greece throughout the year, and actually a slight acceleration in the fourth quarter. Once again, we fully strengthened our network leadership, significantly enhancing the customer experience, while our fiber to the home, our 5G network, remained on track. Recently, we were the first in Greece to launch FWA services based on 5G standalone network slicing capabilities. In mobile, we maintain our network leadership with 99% 5G coverage, making us one of only three global networks certified as best in test for 10 consecutive years. In the fixed segment, in addition to achieving 140K record high FTTA net ads during 2024, The new demand coupons introduced late November will accelerate the transition and stronger monetization of our fiber infrastructure during 2025. In pay TV, we secured sports content selling partnership, boosting customer experience and driving pay TV goals, as highlighted in a strong pay TV trajectory in Q4, while we anticipate this to continue during 2025. In the B2B segment, we experienced substantial growth during last year on the back of our system solution business. This has been a key driver of our progress, actively supporting the digital transformation of Greece's economy and public sector services. We have intensified our efforts to reduce non-sale physical volumes across all channels, accelerate sales and customer care digitization and push forward with the transformation of our operating and production models. These initiatives are crucial to building a more efficient operating model, optimizing resources and delivering a more seamless digital experience for our customers. These achievements position us for sustained growth, ensuring that OTE remains at the forefront of technological advancement and innovation. Now, looking ahead in 2025, I'm confident that we will continue to build on our strengths, aiming for accelerated growth in the coming years. We have formulated our strategic priorities to support this growth, transformation and differentiation in the market. While we should not underestimate possible competitive pressures ahead, we have strong weapons to face off challenges, as we have been repeatedly proving in the Greek market. When it comes to our growth levers, Greece's low FTTH and pay TV penetration presents a major opportunity. Government-backed coupons with tangible benefits for the end customers will drive expansion and stronger monetization, while the anti-piracy legislation that was just adopted by the government, actually last week, will bring even more customers on legitimate pay TV subscriptions. Our FWA product lineup will also improve connectivity in fiber underserved areas, minimizing customer losses to alternative infrastructures like satellite or FMS. And we will continue with our positive trend in our mobile operations. Higher value prepaid offerings, pre-to-post migrations, and mobile data monetization and liberalization in post-paid provide a lot of room for further growth. Our ICT projects pipeline remains strong for 2025, both domestically and internationally, while our beyond core services are differentiating our value proposition in the market, while also contributing some growth to our revenues. We are aiming at progressively accelerating our growth, committed to providing superior customer experience, leading the way in gigabit networks, continue to drive the efficiency of our operations by leveraging the transformative power of technology, including data and AI technologies, as well as the global scale and strength of the Telecom Group, including the Telecom brand, one of the most valuable brands globally, ranking first among telcos. With these strengths and aspirations, I'm confident in our ability to create increasing value for our shareholders. Before handing over to Babis for an overview of the first quarter, I would like to briefly address the shareholders' remuneration. In developing a proposal for this year, we had to assume that Romania will remain part of the group for the remainder of the year, and we have factored in the related estimated cash flow requirements. Should the Romanian mobile disposal is finalized, and depending, of course, on the outcome, we will adjust the proposed amount for the shareholder remuneration accordingly. With that, I hand over to Babis.

Thank you, Costas, and welcome to everyone on the call from me as well. Starting from where Costas left off, I would like to delve a bit deeper into our guidance and the shareholder remuneration. Our free cash flow projection for this year stands at €460 million, and this year incorporates the worst-case scenario for Romania, since, as we speak now, there is no final conclusion on the deposit. Therefore, our projection includes no sale for 2025, which means that there will be a negative free cash flow impact and no proceeds from the sale. This would reverse the more positive outlook for Greece. If a sale finally succeeds and assuming a reasonable upside to the fricasse flow of the group, then we can adjust our distribution either by increasing our proposed payout or as an extraordinary distribution. But we need to wait a bit more as we are in the middle of negotiations and approvals before having a clear view of the final outcome and its timing. We are raising our payout ratio this year from 95% to 98%, to deliver 451 million euros remuneration, translating to 0.7216 dividend per share, 0.7216 dividend per share, and 153 million euros for share buyback purchases. Now, let's turn on the quarterly figures. On a group level, revenues were down nearly 3%, as they were impacted mainly by low margin revenues and base effect increase while Romania continuing to face challenging operations. Adjusted EBITDA after leases was up 1%, driven by the 1.8% growth acceleration in our Greek operations. In Greece specifically, total revenues were down 1.4% in the quarter, primarily reflecting the drop in international wholesale, the low margin revenues, and the effect of the comparison base as several initiatives launched in late 2023 matured in the quarter. Excluding the impact from international wholesale, total revenues would be up by 0.7%. As a more notable development, our EBDA increase accelerated to 1.8% growth this quarter, supported by cost efficiencies, marking an improvement compared to previous quarters. Retail fixed service revenues were down by 1.4%, a downward trend compared to previous quarters due to the anniversary effect of the elimination of the one euro e-bill discount implemented at the end of 2023, along with the ongoing pressure on legacy voice. Our pay TV operations, however, continued on this strong revenue growth trajectory, up 11% as the content sharing agreement is now delivering the full benefits, driving both higher ARPU and higher customer base. Once again, customer additions were positive in the quarter, at 15,000, bringing strong full-year additions at 49,000. This positive momentum is set to continue and possible to accelerate following last week's parliamentary vote on the measures against piracy. Moving into our Fiber to the Home service, we achieved another record quarter, adding 39,000 subscribers, bringing the total base to 394,000. This represents a 57% increase from the year earlier level. Our retail FTTH customers account now for 17% of our total broadband base, marking a significant potential for growth. As we highlighted in our release, in areas where our infrastructure is available, the respective penetration of our customers has already exceeded 40%. And that highlights the ongoing demand for high-quality connectivity services. While the two fiber-to-the-home coupons available from the government since last November We expect an acceleration in customer migrations as we move into 2025. Supported by the wholesale agreement and ongoing deployment, we are seeing an increasing utilization of our infrastructure, further driving its monetization. The utilization rate exceeded 26% by year end, marking an increase of nearly 7 percentage points year over year. During the quarter, we made significant progress in the deployment of our fiber-to-the-home network, reaching 1.7 million homes passed, and now set a higher target for this year, 2025, at 2.1 million homes. The remaining parts of fixed revenues, as well as other revenues, were up 1.5% this quarter, with revenues from system solutions recording an increase of 1.1 percent as anticipated and communicated in previous releases. There was a deceleration in terms of this quarter since we are comparing with a particularly high base from last year. For the full year of 2024, system solutions recorded a huge growth of 34 percent. On wholesale, revenues were down 14 percent in the quarter. This downturn compared to the previous quarters is due to the erratic nature of international wholesale revenues, while the national wholesale stream continues to be impacted as anticipated by the network buildup of our competitors and the ongoing decline in legacy services. Excluding the impact of the international part, wholesale revenues would be down in line with prior quarterly trends. However, our existing wholesale agreements allow us to partially mitigate the downside from this revenue stream. Now let's move on to our mobile operations, where we had another positive quarter in Greek mobile, with service revenues increasing by 1.4%. Mobile remains on a positive trend, with 2025 continuing to be promising. As Kostas mentioned, we have several growth enablers in the mobile segment, that should help us maintain the positive momentum and accelerate it beyond Q4 levels. We recently announced price initiatives in the prepaid segment set to begin soon, mid-March, in our physical channels. Additionally, we continue to see strong migration from prepaid to postpaid in Q4 through both conversions and customer acquisitions, we recorded net additions of 34,000 subscribers to our post-pay segment. We attribute our achievements to our market leadership in both network and service quality, which obviously have been recognized for several consecutive years. Data usage was once again up, reaching 15.3 gigabytes per user per month, a 21% year-on-year increase, while our 5G and 5G Plus network has already reached 99% and 60% population coverage, respectively. Turning now to our operating expenses, we are excluding depreciation and amortization in the one-off increase. They dropped 2.5% in the quarter. As we continue to focus on cost containment, While some of the decrease is tied to the top-line and direct costs, we saw significant savings in key areas, such as personnel expenses, which ended the full year with a benefit of close to €20 million. Maintenance, marketing, and several other cost lines were reduced this quarter, more than offsetting the higher energy costs of approximately €7 million. Let me add a word on energy. As we have communicated sometimes in the past, this cost line has been a headwind in 2024 due to favorable past contracts, which were terminated at the end of 2023. However, for current year, we expect a tailwind. As a rough estimate, we could see savings of about €5 million in 2025 versus 2024. Adjusted EBITDA increase increased by 1.6% in the full year, maintaining a strong margin of 40%, with an acceleration in the fourth quarter, which recorded a 1.8% growth. Our guidance released this morning reflects a continuing growth in Greece, supported by the key drivers that Kostas highlighted. We now expect around 2% adjusted EBITDA after leases growth in Greece for the total 2025. Finally, a few words in Romania. In Romania, starting from the sales process, we are proceeding with the negotiations as planned, working closely with all the world parties and the Romanian authorities. And we estimate that if it all goes well, then we could finalize towards the end of the first half. On the quarter, total revenues were down 17% in the quarter, reaching 64 million euros. Revenues are still impacted by mobile termination cuts In the highly competitive environment, while in the comparable quarter of 2023, we had approximately 5 million euros. That was the latest revenue and the final revenue from the ICT services. Excluding the impact from MTR, the mobile termination rates, and ICT, revenues would be down by approximately 6 million euros or 9.5%. As a result, Telecom Romania Mobile's adjusted EBITDA after leases was 1.4 million euros this quarter, deflecting the on-coin top-line pressure, along with the effects from the new tax on revenues which was introduced in 2024. Note that in Q4, cash flow in Romania was impacted by a 33 million euros extraordinary tax charge for the period 2017 and 2021. Let's take a look now at the rest of the group items. Depreciation was up by 42.7% in the quarter, totally attributed to a €90 million impairment loss recognized in the quarter as a result of the impairment test performed for Telecom Romania Mobile. As for the cash flow statement, adjusted capex was down 13% in the fourth quarter, largely reflecting lower TV sports content payments reaching in total 600 million euros in the full year, in line with our guidance. For 2025, we will continue investing in our fiber networks, planning to pass as additionally 400,000 houses, and we expect capex in the range of 610 to 620 million euros. Frequent flow of releases was 101 million euros in the fourth quarter, reflecting the additional €33.5 million tax charges related to the Romanian mobile tax audit, which was paid during the fourth quarter of 2024. For the full year, free cash flow totaled €444 million, and adjusting for this extra one-off in Romania stood at €478 million, broadly in line with our initial guidance. Now, operator, we are now available to provide any further clarification to the questions. Operator?