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OTE (Hellenic Telecoms) | First thoughts: Q4 in line, 7% distribution yield, EBITDA acceleration in 2026

Q4 in line, Q4 EBITDA +2.3%, FY25 +2%; acceleration to +3% in FY26 – Q4 adj. EBITDAaL came in at €351m, +2.3% yoy and broadly in sync with consensus. Some key metrics seem to have accelerated, with mobile very robust (service revenues +5.2% from +2.7% in Q3; pre-to-post migration, pricing), retail fixed improving to +2.6% from +1.3% in Q3 (FTTH uptake, 2-digit growth in Pay TV), and ICT growing strongly. This brought FY25 adj. EBITDAaL to €1,374m, in line with mgt guidance (+2% yoy) and market estimates. Overall, the print aligned with consensus but, as in previous quarters, lacks the dynamism seen across EU telco peers, which continue to post 4-5% EBITDA growth (e.g. Telia, KPN) or higher (e.g. Telenor). That said, the profit outlook in 2026 looks rosier, with mgt guiding for 3% adj. EBITDAaL growth (market estimates near 2% we believe), presumably on strong mobile and opex control.

Cash returns – Mgt has amended the shareholder remuneration policy, now basing cash returns on actual FCF generation. As such, it has announced €532m distribution (c7% yield) for calendar 2026 (based on 2025 performance), comprising €355m dividend (€0.877/share) and €177m buybacks. The cash return is in line with our expectation, but given mgt comments for this year’s underlying FCF, we see scope for cash returns to increase in 2027e to c€570m (c8% yield). In essence, mgt expects FCF of €750m in 2026 (including the Romania-related tax benefit and favourable tax prepayment phasing), or €570-580m on an underlying basis. Given that tax savings will be set aside this year for the 2027 spectrum renewal, we see no reason why the full €570m should not be handed out to shareholders in 2027. On spectrum, we remind that the reserve prices included in the public consultation are materially lower than in the previous tender while embedding longer licence duration, thereby leaving room for residual liquidity from the Romania-related tax savings (potentially €0.10-0.12 per share), which could be used to top up shareholder returns in 2027e.

2026 outlook – Looking into 2026e, underlying drivers will be: 1) Pay-TV, underpinned by the abolition of the 10% subscription tax, 2) FTTH penetration, which should edge higher supported by the state voucher, and expanding network coverage, 3) ongoing momentum in mobile (supported by recent tariff adjustments and mix). That said, in fixed, PPC’s accelerated rollout ambitions and structurally aggressive pricing have reset the entry price ladder lower, capping ARPU upside and limiting scope for meaningful re-acceleration, in our view.

Valuation: sector rerating rather idiosyncratic – OTE has risen c13% in the last 6m, tracking the c19% gain of EU telcos. The sector rerating has been driven by a structural growth step-up among fibre-owning incumbents, where margin expansion is proving durable, alongside renewed optimism around EU-backed mobile consolidation and incremental ROIC upside. The digital infrastructure narrative has pushed sector multiples above 6x EV/EBITDA, with OTE moving in tandem. The stock remains at c15% discount vs peers, which we consider justified given its lower growth (c2.5% EBITDA CAGR vs mid-single-digit for EU telcos). That said, the c7–8% visible cash yield leaves the equity largely de-risked, and positions the stock as a credible income vehicle for yield-oriented investors.