WOOD Flash – OTE: mobile earnings shine, FCF guidance maintained
OTE reported 2Q18 earnings that were in line with market consensus, and maintained its FY18E guidance for both capex (c.EUR 700m) and FCF (reported FCF of EUR 260m, and EUR 350m adjusted for voluntary leaver costs and spectrum payments). This quarter’s earnings were driven by robust growth in Romania mobile and a solid performance in Greece on data consumers and the conversion of pre-paid subscribers to post-paid. While we were surprised by the sharp divergence of the Romanian fixed and mobile businesses, on a Group level we see room for some small upside to our FY18E adjusted EBITDA target of EUR 1,312m (flat yoy) and consensus earnings (EUR 1,316m), but not enough of a growth dynamic, or reserves on the opex side to materially change our view on 2019-20E EBITDA or adjusted FCF. Rather, we expect a gradual improvement in shareholder remuneration as the current capex cycle winds down, converging with its EMEA peers over the next couple of years. Trading at an average 2018-19E EV/EBITDA of c.5x, the valuations are no longer super compelling (compared to 2015-16) and we remain HOLDers at current levels.Hellenic Telecommunications Organization is a full-service telecommunications group. Co. provides local, long-distance and international fixed-line telecommunications services in Greece and Romania, and mobile telephony services through its Cosmote subsidiary in Greece, as well as in Albania, Bulgaria, the Former Yugoslav Republic of Macedonia and Romania. Co. also provides internet access services and Internet Protocol (IP) -based telecommunications applications, as well as information technology application development and hosting services using IP technologies. Also, Co. provides several other telecommunications services, including value-added services and public telephone services.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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