Hellenic Telecommunications Organization S.A.

I am Gail, your chorus call operator. Welcome and thank you for joining the OTEC conference call and live webcast to present and discuss the second quarter and six months 2025 financial results. At this time, I would like to turn the conference over to Mr. Kostas Nebis, CEO of OTEC Group, Mr. Babis Mazarakis, Chief Financial Officer, Mr. Panagiotis Gavrilidis, Chief Marketing Officer, Consumer Segment OTEC Group, and Mr. Evriko Sesebis, Head of IR and M&A. Mr. Nebis, you may now proceed.

Greetings to everyone, and thank you for joining us today for our second quarter results review. Let me start with a very recent significant development regarding the disposal of our Romanian operations. A few days ago, we received the anticipated approval by the Romanian authorities, a key step in the completion of the same transaction that will allow us to optimize our portfolio and allot additional value for our shareholders. Thank you. I expect that we will be signing the required documentation with a counterparty shortly, leading to a possible completion of the transaction within the third quarter of 2025, subject of course to the approval of certain issues by ANCOM, the telecom regulator. Now, when it comes to our operations in Greece, I am pleased to confirm that the strategic pillars we introduced a year ago, when I stepped into this role, are already yielding meaningful outcomes. We have remained focused, disciplined and determined in building the foundations to achieve our vision. And today's results reflect the early benefits of these efforts. We delivered another solid quarter with both revenue and EBITDA increasing once again, supported by growth-based contribution across all segments. A strong commercial momentum, a comprehensive portfolio and continued operational discipline led to an improvement in EBITDA growth this quarter. A clear validation, I would say, of our strategy. In fixed retail, I'm particularly pleased to report a return to revenue growth after several quarters of muted performance. This turning point was driven by multiple key factors. Our network leadership remains unmatched. Our FTTH network, the country's largest, keeps expanding in both reach and customer penetration. As a result, our fiber-to-the-home services continued their strong momentum, reaching a new all-time high of customer submissions across both retail and wholesale, a clear testament to the growing demand for fiber connectivity and the trust customers place in our tech. Our success has been supported by the national fiber voucher scheme, stimulating higher adoption and penetration levels across the market. Broken subscriber trends also turned positive this quarter, fueled by the successful loans and progressive rollout of our fixed wireless access service. Fixed wireless access for 5G Wi-Fi, which is our commercial product name, is gaining traction, addressing customer needs for faster broadband speeds, in full copper-served networks as a bridging technology and until fiber infrastructure reaches them. And we have recently enhanced this product with full-hole service capabilities, further strengthening our proposition to better serve our customers' needs with the new alternative infrastructure solutions and providers. Our TV service remains a strong pillar within fixed retail. Our contact partnership with Nova delivers a compelling value proposition for both new and existing customers, driving roles in our customer base and our pool. Looking ahead, we expect that the implementation of the new anti-parish legislation, cleared by the common ministerial decision a couple of days ago, will further improve the pay TV environment, steering the market towards legitimate services. Turning to our mobile segment, our service revenue growth significantly accelerated this quarter, fueled by the strength and reliability of our network, combined with compelling commercial propositions and a broad, diversified range of services. The continuous migration of customers to contract plans, along with enhancement in our prepaid offerings, are supporting our growth and strengthening our long-term trajectory. Ongoing growth in the mobile business demonstrates the deep trust our customers place in OTEK and reflects our commitment to deliver superior mobile experience through continuous innovation and customer-centric solutions. We remain ahead of competition, operating Greece's only commercially available 5G standalone network. Our network excellence has once again been validated by OUKLA and OMLOU certifications for the best and fastest mobile network in the country. This suite of unrivaled retail services enables us to remain optimistic against competitive challenges while also fueling our growth targets for the future. The ICT business once again delivered another quarter of double-digit growth, underscoring our ability to support the digital transformation of businesses and the public sector across Greece. This quarter's performance underscores a strong track records, the value creation resulting from our strategic investments and the strength of our integrated services portfolio. With a comprehensive range of bundle offerings and network excellence, we consistently deliver superior customer connectivity, fostering deeper customer relationships, higher loyalty, and enhanced lifetime value. With these foundations in place, we remain committed to driving profitable growth and creating long-term value for our shareholders. You are well positioned to capitalize on future opportunities and continue to lead the market with confidence. Babis, on to you. Thank you Kostas and welcome to everyone on the call from me as well. Let's start with Romania. Following up on what Kostas mentioned regarding the upcoming sale of our Romanian operations, let me add that we are currently in the process of finalizing the relevant documentation with the parties involved. We are also awaiting regulatory approvals for certain key elements of the transaction, including the transfer of spectrum and prepaid customers. Once all these steps are completed, we will be in a position to conclude the deal, which we expect to happen within the third quarter of 2025. As we have stated previously, it is our intention to provide an extraordinary distribution to shareholders. However, as you can appreciate, The exact amount to be distributed remains contingent upon the final agreed consideration between the parties, along with several items to be considered, such as adjustments, expenses, provisions, etc. We need to focus now on the key priority, which is the completion of the transaction. Once this is achieved, we will provide the market with all necessary and relevant information. Let's now turn to our quarterly figures. For Greece. Total revenues increased by 1.1% in the quarter, supported by steady performance across mobile, TV, broadband, and ICT services. These gains offset the anticipated decline in wholesale revenues and lower handset sales. On the EBITDA front, we achieved sequential improvement, posting a 2% increase, which strengthens our confidence in meeting our full-year growth targets. Specifically, retail fixed service revenues marked a positive turnaround this quarter, posting a 0.6% decrease after several quarters of subdued performance. This growth mainly reflects a sustained solid momentum in the TV segment, the positive impact of the Gigabit Voucher program, and the expansion of the fixed wireless access services following the rollout earlier this year. Looking ahead, these drivers, alongside the ongoing expansion of our fiber to the home, now covering more than 1.9 million homes in Greece, are expected to continue supporting revenues in the fixed retail segment. On our TV business, we delivered another strong quarter of growth, with revenues up 16%, maintaining the double-digit growth trajectory. These trends reflect the full impact of our sports content agreement. Our customer base increased by 7%, with a positive net gain of 2,000 new customers, a positive outcome, particularly given that the second quarter is typically the weakest one due to the sports program season. Turning now to our Fiber to the Home service, we achieved record retail additions of 30,000 new customers this quarter, bringing our total FETH base to 470,000 and this represents a 45% year-on-year jump. Our retail fiber-to-the-home customers account for 20% of our overall broadband base versus 14% a year ago. This growth, together with continued wholesale demand on our infrastructure, is driving higher network utilization. The market responds to the coupons have gained strong momentum. We are now seeing consistent uptake, which is accelerating customers' migration. To date, more than 70,000 vouchers for connections have been utilized. Supported by the ongoing expansion of our fiber-to-the-home network and our hot-shade partnerships in place, our infrastructure is seeing increased utilization, now reaching a 31% rate, an increase of 7 percentage points, year on year. During the quarter, we passed over 100,000 new homes, bringing total coverage to approximately 1.9 million, and we remain on track to reach our target of 2.1 million homes by end of this year. Turning now to our mobile operations, we see a clear acceleration in service revenues, growing by 3.2%, reaffirming the strong momentum in this segment. Toward the end of the first quarter, we produced new pricing initiatives in the prepaid segment, with the introduction of €15 top-up instead of €15 across our physical channels. This adjustment is supporting our art revolution while also facilitates the ongoing and successful migration from prepaid to postpaid plans. Our postpaid base continues to grow, recording a 6% decrease in the quarter, with 46,000 positive net additions, driven by both conversions from prepaid and customer acquisition. Our position as a network leader remains a key differentiator, with 5G now covering more than 99% of the population and 5G+, surpassing 70%. Data usage was once again up, reaching 17.5 GB per user per month, representing a 33% year-on-year increase. In wholesale, revenues decreased by 3.3% this quarter, bringing the six-month impact to 12.7 million euros, of which the national wholesale revenue accounted for 7.4 million euros drop, which is largely in line with our full-year expectations. The drop is driven by lower international transit traffic, and the natural revolution in the national wholesale stream as competitors expand their own fiber networks. However, our existing wholesale agreements are generating higher wholesale volumes from competition with a record of 34,000 wholesale additions in Q2 that allow us to partially mitigate the downside and further increase the utilization rate of our fiber-to-the-home infrastructure. On the rest streams of the revenues, our system solution, the core part of our ICT segment, delivered a robust 17% growth in the quarter, continuing the strong momentum from prior periods. Building on these trends, we expect the strong growth in this segment to persist throughout the year. The growth in ICT partially offset the drop in the housing revenues, which is largely due to discontinuation of very low-margin activities. Total operating expenses, excluding depreciation and amortization and one loss in Greece, increased by €3.2 million in the quarter, broadly aligned with revenue trends. The majority of this increase is driven by costs directly linked to top-line growth, including third-party fees within other operating expenses related to the strong momentum in our ICT segment. We continue to exercise cross-control measures across the board, With on-going savings particularly evident in the personnel front, where we once more again experience the benefits from the voluntary exit schemes. While we are increasing spending in strategic areas and our commercial activities, our overall indirect costs declined by almost 2% in the quarter. As a result, adjusted VDA after leasing in Greece increased by 2% in the quarter, compared to 1.8% in prior quarter and 1.6% in the full year of 2024. This definitely reflects the continuation of positive momentum we have seen in the recent periods. Our EBITDA margin improved to 39%, up 40 basis points year-over-year, driven by retained services revenue growth, particularly mobile and TV, which never offset the expected declines in legal services and the national core sale, along with certain cost efficiencies that I just mentioned. Overall, this performance reinforces our confidence in achieving our full-year EBITDA objectives. A few words about the operations in Romania, which were down 8% in the quarter, reaching €61 million. This drop was primarily driven by ongoing pressure in post-paid segments. Our operations in Romania are still facing a demanding market environment, particularly in the post-paid where competition has further intensified. As a result, Telecom Romania Mobile's adjusted TPTA after leases was impacted by ongoing pressure on the top line. Let's now have a short look in the rest of the group items. Depreciation was up by 24.7% in the quarter, totally attributing to €40 million write-down, recuperating the quarter related to Telecom Romania Mobile. If we exclude the write-down depreciation, that would have been lowered by €2 million. Finally, a few words on the cash flow statement. TAPEX was up nearly 17% in the second quarter, largely reflecting the investments for the STTAs throughout and higher payments in the quarter related to TV. Previous low asset leases stood at $155 million compared to $121 million in the comparable quarter last year. The increase is primarily driven by lower income tax payments, which expect to be offset in the second half of 2025, when the corresponding tax payments by OTE are due. Now, regarding our guidance, as a last word, as we have released today, this remains unchanged, and pending the completion of the Romanian Disposal, when we will be in a position to adjust our key figures and our communication. Now, turning to operator, we are now available to provide any further clarification to your questions.

The first question is from the line of Drazioc Stamatis with Europe Bank Equities. Please go ahead.