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Title of Each Class | Name of Each Exchange on Which Registered | |
American Depositary Shares, each representing one half of one Ordinary Share Ordinary Shares nominal value €2.39 per share* | New York Stock Exchange |
* | Listed on the New York Stock Exchange not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission. |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o |
U.S. GAAPo | International Financial Reporting Standards as issued by the International Accounting Standards Boardþ | Othero |
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• | in the case of the financial statements for the year ended December 31, 2007, by KPMG Certified Auditors A.E., an independent registered public accounting firm; and | |
• | in the case of the financial statements as of and for the years ended December 31, 2008 and 2009, by Ernst & Young (Hellas) Certified Auditors Accountants S.A., an independent registered public accounting firm. |
• | “U.S. Dollars”,“U.S. $”or“$”means the lawful currency of the United States; | |
• | “Euro”, “€”or“Eurocents”means the common currency of Member States of the European Union participating in the third stage of European Monetary Union; | |
• | “RON” or “Lei”means the lawful currency of the Republic of Romania; | |
• | “LEK”means the lawful currency of the Republic of Albania; and | |
• | “BGN”means the lawful currency of the Republic of Bulgaria. |
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• | statements regarding our results of operations, financial condition, future economic performance and plans regarding our tariffs and pricing policies; | |
• | statements regarding our competitive position and statements regarding competition in the Greek telecommunications industry and in other countries where we have significant operations, and regarding the effect of such competition on our results of operations; | |
• | statements of our plans, objectives or goals, including those related to our products or services; | |
• | statements of assumptions; | |
• | statements regarding our ongoing or anticipated investment and expansion programs; | |
• | statements regarding new services or products and anticipated customer demand for these services or products; | |
• | statements regarding our cost reduction programs; | |
• | statements regarding the impact of government policies or initiatives in areas in which we conduct business on our investment plans, business, financial condition and operations; | |
• | statements regarding the potential impact of regulatory actions on our business, financial condition and operations; and | |
• | statements regarding the possible effects of determinations in litigation, investigations, contested regulatory proceedings and other disputes. |
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• | risks and uncertainties relating to our international operations; | |
• | economic and political developments in the countries where we conduct operations, including as a result of the global economic downturn; | |
• | the effect of, and changes in, regulation and government policy; | |
• | the effects of competition and competitive activity resulting in changes in pricing and product offerings, higher customer acquisition costs, slower customer growth, or reduced customer retention; | |
• | regulatory developments, including changes to our permitted tariffs, the terms of access to our network, the terms of interconnection and other issues; | |
• | our ability to reduce costs and to realize synergies and productivity improvements; | |
• | loss of suppliers or disruption of supply chains; | |
• | our timely development and acceptance by the market of new products and services and our ability to secure the timely delivery of key products from suppliers; | |
• | the effects of technological changes in telecommunications and information technology and the possibility of rapid obsolescence of existing technology; | |
• | changes in the projected growth rates of the fixed and mobile telecommunications markets; | |
• | the possibility that new technologies and services will not perform according to expectations or that vendors’ performance will not meet our requirements; | |
• | the impact of legal, regulatory or other proceedings against us or our subsidiaries; and | |
• | our success at managing the foregoing and related risks. |
ITEM 1 | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2 | OFFER STATISTICS AND EXPECTED TIMETABLE |
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ITEM 3 | KEY INFORMATION |
• | in the case of the consolidated financial statements as of and for the years ended December 31, 2008 and 2009, were audited by Ernst & Young (Hellas) Certified Auditors Accountants S.A., an independent registered public accounting firm; | |
• | in the case of the consolidated financial statements for the years ended December 31, 2006 and 2007 were audited by KPMG Certified Auditors A.E., an independent registered public accounting firm; and | |
• | in the case of the consolidated financial statements as of and for the year ended December 31, 2005, were not audited, but are provided for comparison purposes. |
For the Year Ended December 31, | ||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | |||||||||||||||||||
(Euro) | (Euro) | (Euro) | (Euro) | (Euro) | (U.S. $)(1) | |||||||||||||||||||
(Unaudited) | (Audited) | (Audited) | (Audited) | (Audited) | (Unaudited) | |||||||||||||||||||
(Millions except shares and per share data) | ||||||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Domestic telephony(2) | 2,312.2 | 2,260.6 | 2,022.2 | 1,814.2 | 1,619.6 | 2,010.6 | ||||||||||||||||||
International telephony(3) | 391.0 | 346.9 | 304.5 | 286.9 | 251.1 | 311.7 | ||||||||||||||||||
Mobile telephony | 1,752.2 | 1,975.8 | 2,210.0 | 2,470.8 | 2,396.2 | 2,974.6 | ||||||||||||||||||
Other revenue(4) | 1,019.7 | 1,308.0 | 1,783.1 | 1,835.4 | 1,717.2 | 2,131.7 | ||||||||||||||||||
Total revenue | 5,475.1 | 5,891.3 | 6,319.8 | 6,407.3 | 5,984.1 | 7,428.6 | ||||||||||||||||||
Total operating expenses | (5,451.1 | ) | (4,803.0 | ) | (5,272.9 | ) | (5,349.6 | ) | (4,983.2 | ) | (6,186.1 | ) | ||||||||||||
Operating income before financial activities | 24.0 | 1,088.3 | 1,046.9 | 1,057.7 | 1,000.9 | 1,242.5 | ||||||||||||||||||
Total profit (loss) from financial activities | (20.7 | ) | (4.5 | ) | 107.9 | (213.7 | ) | (220.2 | ) | (273.4 | ) | |||||||||||||
Profit before tax | 3.3 | 1,083.8 | 1,154.8 | 844.0 | 780.7 | 969.1 | ||||||||||||||||||
Income tax | (19.8 | ) | (353.0 | ) | (381.8 | ) | (246.2 | ) | (410.0 | ) | (509.0 | ) | ||||||||||||
Profit for the year(5) | (16.5 | ) | 730.8 | 773.0 | 597.8 | 370.7 | 460.1 | |||||||||||||||||
Attributable to: | ||||||||||||||||||||||||
Owners of the parent | (216.8 | ) | 574.6 | 662.6 | 601.8 | 374.0 | 464.2 | |||||||||||||||||
Non-controlling interests | 200.3 | 156.2 | 110.4 | (4.0 | ) | (3.3 | ) | (4.1 | ) | |||||||||||||||
Basic earnings per share(6) | (0.4424 | ) | 1.1723 | 1.3518 | 1.2278 | 0.7630 | 0.9472 | |||||||||||||||||
Diluted earnings per share(6) | (0.4424 | ) | 1.1723 | 1.3518 | 1.2129 | 0.7630 | 0.9472 | |||||||||||||||||
Weighted average number of shares outstanding | 490,150,389.0 | 490,150,389.0 | 490,150,389.0 | 490,150,389.0 | 490,150,389.0 | |||||||||||||||||||
Dividend Information | ||||||||||||||||||||||||
Dividends per share(7) | 0.00 | 0.55 | 0.75 | 0.75 | 0.19 | 0.24 | ||||||||||||||||||
Dividends per American Depositary Share (in U.S. Dollars)(8) | 0.0 | 0.3746 | 0.5905 | 0.5229 | N/A | N/A | ||||||||||||||||||
Non-GAAP Financial Information (unaudited) | ||||||||||||||||||||||||
Operating income before depreciation and amortization)(9) | 1,131.4 | 2,216.8 | 2,218.7 | 2,270.7 | 2,156.2 | 2,676.7 | ||||||||||||||||||
Adjusted operating income before depreciation and amortization(9) | 2,071.0 | 2,167.0 | 2,240.8 | 2,320.9 | 2,125.9 | 2,639.1 |
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For the Year Ended December 31, | ||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | |||||||||||||||||||
(Euro) | (Euro) | (Euro) | (Euro) | (Euro) | (U.S. $) | |||||||||||||||||||
(Unaudited) | (Audited) | (Audited) | (Audited) | (Audited) | (Unaudited) | |||||||||||||||||||
(Millions) | ||||||||||||||||||||||||
Cash Flow Data | ||||||||||||||||||||||||
Total cash flows from operating activities | 1,532.8 | 1,786.2 | 1,450.7 | 1,757.6 | 1,418.0 | 1,760.3 | ||||||||||||||||||
Purchase of property, plant and equipment and intangible assets | (680.2 | ) | (962.4 | ) | (1,101.3 | ) | (964.0 | ) | (890.9 | ) | (1,106.0 | ) | ||||||||||||
Total cash flows used in investing activities | (877.5 | ) | (2,308.1 | ) | (2,780.2 | ) | (1,806.0 | ) | (958.6 | ) | (1,190.0 | ) | ||||||||||||
Total cash flows from (used in) financing activities | (13.4 | ) | 1,052.2 | 603.3 | 165.3 | (1,005.5 | ) | (1,248.2 | ) |
As of December 31, | ||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | |||||||||||||||||||
(Euro) | (Euro) | (Euro) | (Euro) | (Euro) | (U.S. $) | |||||||||||||||||||
(Unaudited) | (Audited) | (Audited) | (Audited) | (Audited) | (Unaudited) | |||||||||||||||||||
(Millions) | ||||||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||||||
Cash and cash equivalents at the end of the year | 1,512.2 | 2,042.5 | 1,316.3 | 1,427.8 | 868.8 | 1,078.5 | ||||||||||||||||||
Property, plant and equipment, net | 6,739.6 | 6,583.5 | 6,371.4 | 5,872.8 | 5,625.1 | 6,983.0 | ||||||||||||||||||
Telecommunications licenses | 393.0 | 384.2 | 396.2 | 329.5 | 362.2 | 449.6 | ||||||||||||||||||
Investments(10) | 159.3 | 158.7 | 158.4 | 156.6 | 157.0 | 194.9 | ||||||||||||||||||
Total assets | 11,107.6 | 12,715.3 | 11,699.2 | 11,425.2 | 10,294.0 | 12,779.0 | ||||||||||||||||||
Total current liabilities | 2,231.5 | 2,658.5 | 3,576.4 | 3,002.7 | 2,108.3 | 2,617.2 | ||||||||||||||||||
Total non-current liabilities(11) | 4,362.7 | 5,168.1 | 5,068.2 | 6,249.3 | 6,236.0 | 7,741.4 | ||||||||||||||||||
Total equity | 4,513.4 | 4,888.7 | 3,054.6 | 2,173.2 | 1,949.7 | 2,420.4 |
(1) | Solely for the convenience of the reader, Euro amounts have been translated into U.S. Dollars at the spot rate on May 24, 2010 of Euro 1.00 per U.S. $1.2414. | |
(2) | Includes revenues from monthly network service fees, revenues fromfixed-to-fixed andfixed-to-mobile calls and revenues from such services as operator assistance, connection and reconnection charges and paging services. | |
(3) | Includes revenues from incoming and outgoing, traffic, gross of amounts charged by foreign telephony operators, and payments from the unaffiliated domestic mobile telephony operators to us for international calls. The respective revenues from our consolidated subsidiaries providing mobile services are eliminated upon consolidation. | |
(4) | Includes revenues from prepaid cards, leased lines and data ATM telecommunications, provision for services, interconnection charges, internet services/ADSL, integrated services digital network(“ISDN”), sales of telecommunication equipment, collocation and local loop unbundling. | |
(5) | In 2005, we recorded an accounting charge of Euro 939.6 million, representing the cost of the Voluntary Retirement Scheme. Furthermore, we recorded a total gain of Euro 23.8 million relating to the extinguishment of suppliers’ liabilities, in addition to dividends totaling Euro 19.4 million from Telekom Srbija and Eutelsat, gains totaling Euro 25.1 million from the sale of certainavailable-for-sale marketable equity securities, and a gain from the sale of our participation in Eutelsat. In 2006, we recorded an income of Euro 49.8 million resulting from the reduction of the estimated cost for 2005 of the Voluntary Retirement Scheme, offset by a provision of Euro 63.1 million taken in connection with the interest rate (which was below market rates) that we charged on a loan of Euro 180 million granted to the Auxiliary Fund in connection with the Voluntary Retirement Scheme. Furthermore, a gain of Euro 160.2 million was recorded from the sale of ArmenTel. Finally, dividends totaling Euro 21.6 million from Telekom Srbija and gains of Euro 10.2 million from the sale of certainavailable-for-sale securities affected the year’s results. In 2007, we took a charge of Euro 22.1 million relating to the employees who participated in the early retirement program of 2007. In addition, in 2007, we recorded a pre-tax gain of Euro 244.7 million from the sale of INFOTE and received dividends totaling Euro 15.7 million from Telekom Srbija. In 2008, the Group took a charge of Euro 50.2 million relating to the employees who participated in RomTelecom’s and our early retirement programs of 2008 and we recorded a pre-tax gain of Euro 17.0 million from the sale of our investment in the Lofos-Palini real estate company. In addition, we received dividends totaling Euro 11.2 million from Telekom Srbija. In 2009, the Group’s profit for the year was affected by the costs of our and RomTelecom’s early retirement programs by a total amount of Euro 171.6 million, which was offset by Euro 201.9 million from the transfer of 4.0% of our share capital held by the Greek State to IKA-ETAM, resulting in a net gain of Euro 30.3 million. Furthermore, the 2009 income tax expense was affected by the new Law regarding a one-time special contribution of social responsibility of Euro 113.1 million, a tax on dividends of Euro 30.3 million and the result of OTE’s tax audit for the years2006-2008 of Euro 30.0 million. In addition, the Group recorded a pre-tax gain of Euro 23.6 million from the sale of its subsidiaries Cosmofon and Germanos Telecom AD Skopje and received dividends totalling Euro 9.3 million from Telekom Srbija. |
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(6) | Basic earnings per share are computed by dividing profit for the year attributable to the owners of the parent by the weighted average number of shares outstanding during the relevant period. Diluted earnings per share are computed by dividing profit for the year attributable to the owners of the parent by the weighted average number of shares outstanding during the year, adjusted for the impact of share-based payment. | |
(7) | Amounts as approved by, or proposed to, the respective general assemblies of our shareholders to be distributed from each year’s statutory profit. A dividend of Euro 0.19 per share for the year 2009 will be proposed for approval by our general assembly of June 16, 2010. | |
(8) | Because each American Depositary Share represents one-half of one ordinary share, the dividend per share has been divided by two to show the historical dividends declared per American Depositary Share and translated, solely for convenience, into U.S. Dollars at the spot rate reported by Bloomberg as of each dividend payment date, or on the following business day, if such date was not a business day in Greece or the United States. As a result, the U.S. Dollar amounts for the dividends to be paid with respect to the year 2009 are not available, as these dividends have not yet been paid as at the date of this Annual Report. These rates may differ from the rates used by the depositary to convert Euros to U.S. Dollars for the purpose of making payments to holders of ADSs. | |
(9) | Non-GAAP measures. Operating income before depreciation and amortization and adjusted operating income before depreciation and amortization) are non-GAAP financial measures that help us to evaluate our core business’ operating results, before the effect of our investing and financing activities, and before the effect of depreciation and amortization (which is our most significant non-cash item) and to compare our performance with that of our peer group, which mainly consists of other European incumbent telecommunications operators. Further to the use of these non-GAAP financial measures, we also evaluate our performance and results based on operating income and profit for the year attributable to the owners of the parent in order to take into consideration the effects of other recurring items such as interest income/expense, foreign exchange gains or losses, earnings/losses and impairments on equity-method investments, income taxes and non-controlling interests. You should not place undue reliance on these measures or consider them as alternatives to any other measure of performance under generally accepted accounting principles, as they may not be indicative of our historical operating results, nor are they meant to be predictive of our future results. Comparable measures, including EBITDA, are often calculated in different ways, can vary significantly depending upon accounting methods (particularly when acquisitions have occurred) or non-operating factors, and are used by different companies for different purposes, and therefore may not be comparable to similarly titled measures used by other companies. The following table provides a reconciliation of profit/loss for the year attributable to the owners of the parent to operating income before depreciation and amortization and adjusted operating income before depreciation and amortization (adjustments relate to the cost of our early retirement programs). |
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | |||||||||||||||||||
(Euro) | (Euro) | (Euro) | (Euro) | (Euro) | (U.S. $) | |||||||||||||||||||
(Millions) | ||||||||||||||||||||||||
Profit/loss for the year attributable to owners of the parent | (216.8 | ) | 574.6 | 662.6 | 601.8 | 374.0 | 464.3 | |||||||||||||||||
Plus: | ||||||||||||||||||||||||
Depreciation and amortization | 1,107.4 | 1,128.5 | 1,171.8 | 1,213.0 | 1,155.3 | 1,434.2 | ||||||||||||||||||
Total profit/(loss) from financial activities(a) | 20.7 | 4.5 | (107.9 | ) | 213.7 | 220.2 | 273.4 | |||||||||||||||||
Income taxes | 19.8 | 353.0 | 381.8 | 246.2 | 410.0 | 509.0 | ||||||||||||||||||
Non-controlling interests | 200.3 | 156.2 | 110.4 | (4.0 | ) | (3.3 | ) | (4.1 | ) | |||||||||||||||
Operating income before depreciation and amortization | 1,131.4 | 2,216.8 | 2,218.7 | 2,270.7 | 2,156.2 | 2,676.8 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Cost of early retirement programs(b) | 939.6 | (49.8 | ) | 22.1 | 50.2 | (30.3 | ) | (37.6 | ) | |||||||||||||||
Adjusted operating income before depreciation and amortization | 2,071.0 | 2,167.0 | 2,240.8 | 2,320.9 | 2,125.9 | 2,639.2 | ||||||||||||||||||
(a) | Total profit/(loss) from financial activities includes interest expense, interest income, foreign exchange differences, write down of investments, gains/(loss) from sale of investments and dividend income. |
(b) | Adjustments relate to the cost of our early retirement programs and the Voluntary Retirement Scheme. |
(10) | Includes investments in the amount of Euro 155.1 million, as of December 31, 2005, 2006, 2007, 2008 and 2009, in respect of our 20% interest in Telekom Srbija. | |
(11) | Net of current portion. |
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Period | Average | High | Low | Period-End | ||||||||||||
2005(1) | 1.2400 | 1.3476 | 1.1667 | 1.1842 | ||||||||||||
2006(1) | 1.2661 | 1.3327 | 1.1860 | 1.3197 | ||||||||||||
2007(1) | 1.3797 | 1.4862 | 1.2904 | 1.4603 | ||||||||||||
2008(1) | 1.4726 | 1.6010 | 1.2446 | 1.3919 | ||||||||||||
2009(2) | 1.3944 | 1.5094 | 1.2543 | 1.4331 | ||||||||||||
2009 November(2) | 1.4914 | 1.5081 | 1.4686 | 1.4976 | ||||||||||||
2009 December(2) | 1.4572 | 1.5094 | 1.4275 | 1.4331 | ||||||||||||
2010 January(2) | 1.4280 | 1.4510 | 1.3889 | 1.3889 | ||||||||||||
2010 February(2) | 1.3682 | 1.3958 | 1.3521 | 1.3602 | ||||||||||||
2010 March(2) | 1.3574 | 1.3776 | 1.3303 | 1.3533 | ||||||||||||
2010 April(2) | 1.3390 | 1.3663 | 1.3161 | 1.3272 | ||||||||||||
2010 May(2) | 1.2544 | 1.3199 | 1.2185 | 1.2295 |
(1) | The average noon buying rates on the last business day of each year until and including 2008, as certified for customs purposes by the Federal Reserve Bank of New York. | |
(2) | The rates for year 2009 and for each month are spot rates as reported by Bloomberg. |
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• | sufficient demand from our existing and potential customers to offset our past and anticipated investment in these services; | |
• | our success in identifying appropriate technologies that may allow us to respond efficiently to our customers’ needs and to our competitors’ alternative technologies and our ability to continue investing on an incremental basis with a view to securing increased capacity and better quality of service with our existing infrastructure; | |
• | our ability to compete effectively with other providers of these services; | |
• | our ability to timely reformulate our policies to conform to market conditions and needs; and | |
• | our ability to operate as a one-stop-shop, integrating telecommunications, hardware,and/or software services into a single offer, depending on different customer needs. |
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• | unanticipated changes in the legal or regulatory environment and licensing requirements; | |
• | tariffs, taxes, price, wage and exchange controls and other trade barriers; | |
• | other restrictions on, or costs of, repatriation of profits or capital; | |
• | political and social instability; | |
• | significant economic volatility; | |
• | strong inflationary pressures; and | |
• | interest rate and exchange rate fluctuations. |
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• | acquired businesses not delivering expected or appropriate returns; | |
• | difficulties in integrating and optimizing the use of managerial and operational resources; | |
• | potential disruptions of ongoing businesses and diversion of managerial resources; | |
• | difficulties in integrating technology or content and rights to products and properties and unanticipated expenses related to such integration; and | |
• | potential impairment of relationships with employees, customers and suppliers of our subsidiaries as a result of the integration of new businesses. |
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ITEM 4 | INFORMATION ON THE COMPANY |
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• | In December 1995, we were granted the right to provide mobile telephony services in Greece using GSM 1800 technology; in October 1996, we established Cosmote to provide mobile telephony services and, in April 1997, we transferred our GSM 1800 license to Cosmote. | |
• | In May 1996, we established OTENet, a majority-owned subsidiary, which developed from an internet service provider to offering a range of integratedIP-based voice and data telecommunications services, IT application development and hosting services using internet technologies. | |
• | In 1998, we acquired 35.0% of the share capital of RomTelecom S.A.(“RomTelecom”), the Romanian telecommunications operator, which in March 2003, we increased to 54.01%. | |
• | In August 2000, we established OTE International Solutions S.A.(“OTEGlobe”), our wholly-owned subsidiary responsible for the marketing and sales of our international wholesale voice and data services and the technical operation and commercial development of our international data/IP network. | |
• | On January 1, 2001, our exclusive right to provide fixed-line telephony services in Greece expired and the Greek fixed-line market was opened to competition. | |
• | In August 2001, Cosmote was awarded a license to provide 3G mobile telephony services, which it launched commercially in May 2004. | |
• | In August 2001, we established Hellas Sat Consortium Limited, our 99.05% satellite subsidiary which launched its own satellite, Hellas Sat-2, into orbit in May 2003. | |
• | In June 2003, we launched our asymmetrical digital subscriber line(“ADSL”) services. | |
• | In June 2005, we commenced implementing our Voluntary Retirement Scheme, which has facilitated the early retirement of 5,405 of our employees, as of December 31, 2009. | |
• | In July 2005, Cosmote subscribed for 70.0% of the share capital of S.C. Cosmote Romanian Mobile Telecommunications S.A.(“Cosmote Romania”), our mobile telephony subsidiary in Romania, through a share capital increase; in December 2005, Cosmote Romania re-launched commercial operations. | |
• | In the third quarter of 2005, we transferred to Cosmote the entire share capital of CosmoBulgaria Mobile EAD(“Globul”) and Cosmofon Mobile Telecommunications Services A.D. Skopje(“Cosmofon”) (our mobile telephony subsidiaries in Bulgaria and the FYROM, respectively). | |
• | Over the course of 2006 and 2007, Cosmote acquired an interest of approximately 100.0% in Germanos, a Greek-based international wholesale and retail distributor of technology and telecommunications products, for a total purchase price of Euro 1.3 billion. | |
• | In November 2006, we sold our 90.0% interest in ArmenTel, the Armenian public telephony operator, to JSC Vimpel-Communications for a sales price of Euro 341.9 million. | |
• | In November 2007, we launched a tender offer for the acquisition of the entire share capital of Cosmote. Since April 9, 2008, we have owned the entire share capital of Cosmote, which ceased trading on the Athens Exchange on April 1, 2008. | |
• | In December 2007, together with OTENet we sold the entire share capital of INFOTE, our directory services subsidiary, to Rhone Capital LLC and Zarkona Trading Limited for the sales price of Euro 300.2 million. | |
• | Beginning in the summer of 2007, Marfin Investment Group Holdings S.A.(“MIG”), a Greek private equity fund, increased its interest in our share capital to 20.0% in early 2008. On May 15, 2008, MIG transferred its 20.0% interest in our share capital to Deutsche Telekom. | |
• | On May 14, 2008, the Greek State and Deutsche Telekom signed a shareholders’ agreement relating to the governance of our Group and a share purchase agreement, pursuant to which the Greek State transferred a 3.03% interest in our share capital to Deutsche Telekom. As a result, the Greek State and Deutsche Telekom each subsequently held 25.0% of our share capital, plus one share. The Shareholders’ Agreement and the |
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Purchase Agreement were at the time of their signing subject to ratification by the Greek Parliament and approval by other relevant authorities; the Greek Parliament subsequently ratified both agreements on June 18, 2008. |
• | As of December 27, 2007, we acquired the entire share capital of OTENet and, on June 27, 2008, we merged with OTENet, following which we integrated its business and employees. | |
• | On May 12, 2009, Cosmote and Germanos sold the entire share capital of Cosmofon, the mobile subsidiary in FYROM, and Germanos Telecom AD Skopje to Telekom Slovenje for a consideration of Euro 185.8 million. | |
• | On July 31, 2009, the Greek State exercised a put option and sold 24,507,519 shares to Deutsche Telekom representing 5.0% of our share capital (this put option was granted to the Greek State under the share purchase agreement between Deutsche Telekom and the Greek State). | |
• | On October 31, 2009, Cosmote completed the acquisition of the entire share capital of Zapp in Romania for the purchase price of Euro 67.5 million. Cosmote also assumed debt and other liabilities of Zapp of Euro 129.6 million, mainly concerning 3G and CDMA network roll out. | |
• | On December 31, 2009, in accordance with the terms and provisions of a shareholders’ agreement between Cosmote and Mr. P. Germanos dated May 9, 2006, Cosmote acquired a 10.0% interest in Cosmoholding Cyprus Ltd, the parent company of Germanos, for a total amount of Euro 168.5 million. |
• | in Greece, using GSM 900 and GSM 1800, and 3G and LMDS technology, through Cosmote, our wholly-owned subsidiary, which had 9,217,507 mobile customers in Greece on December 31, 2009, representing a market share of approximately 45.0% of contract and prepaid mobile customers; | |
• | in Albania, using GSM 900 and GSM 1800 technology, through AMC, in which Cosmote held an effective 95.0% interest as at December 31, 2009, had 1,908,987 mobile customers on December 31, 2009; | |
• | in Bulgaria, using GSM 900 and GSM 1800, and 3G and LMDS technology, through Cosmote’s wholly-owned subsidiary, Globul, which had 3,902,272 mobile customers in Bulgaria on December 31, 2009; and | |
• | in Romania, using GSM 900 and GSM 1800 technology, through Cosmote’s 70.0% owned subsidiary, Cosmote Romania (in which we effectively own an 86.2% interest), which had 6,920,816 customers in Romania on December 31, 2009, as well as using 3G and CDMA technologies through Cosmote’s newly acquired wholly-owned subsidiary, Zapp. |
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• | mobile telecommunications services; | |
• | Internet Protocol services and broadband, | |
• | expanding our backbone network capacity using DWDM; and | |
• | network dimensioning to maintain quality. |
• | Increasing customer satisfaction: |
• | retain our retail market share and create new sources of revenues (IPTV, satellite TV, ICT/Systems Integration); | |
• | improve customer support for both retail and wholesale services, enhance after-sales service (for example rationalization and transformation of call centers); | |
• | optimize distribution channels and develop alternative sales channels; and | |
• | further develop and expand our broadband-based offerings differentiated by customer segment. |
• | Gradually upgrading our network: |
• | gradually transform our network to NGN; | |
• | enhance our network and IT platforms to support higher broadband speeds and enable provision of new products; and | |
• | leverage existing infrastructure to better address wholesale market. |
• | Improving competitiveness: |
• | continue with our cost control action plan (for example through certain strategic projects); | |
• | optimize internal corporate procedures; | |
• | develop workforce capabilities and motivation; and | |
• | ensure fair regulatory treatment. |
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• | in Greece, through Cosmote: to increase market share, maximize revenues and enhance profitability over the medium term through increased usage, customer growth, promotion of new services and focused commercial policies; | |
• | in Albania, through AMC to maintain its leading position in the market, to increase its post-paid customer base and limit the impact of increased regulation and competition, while maintaining high profitability; | |
• | in Bulgaria, through Globul: to improve the company’s competitive position in the market and enhance cash generation; and | |
• | in Romania, through Cosmote Romania: to continue to increase the customer base and increase operating profitability, and, following the acquisition of Zapp, to offer mobile broadband services. |
• | defend our telephony customer base; | |
• | increase our revenues by expanding our market shares in broadband and television services; | |
• | provide reliable broadband services through existing ADSL technologies, as well as expand to more advanced technologies, including FTTH or VDSL, when economically feasible; | |
• | pilot and implement new platforms for IPTV services; | |
• | roll-out a CDMA network for fast and economic alternative dataand/or fixed wireless access solutions; | |
• | reduce operating expenses through a focus on efficiency; and | |
• | enhance capabilities to deliver quadruple-play services (voice, internet, IPTV and mobile telephony) together with Cosmote Romania. |
• | increasing broadband penetration; | |
• | defending our market share of fixed-line services; | |
• | maximizing our revenues from existing products and services; | |
• | increasing our penetration of innovative products and services (including IPTV); | |
• | strengthening the brand of our products and services; and | |
• | establishing a loyalty scheme to ensure that high-value, loyal customers are rewarded and low churn rates are achieved. |
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As of December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Number of PSTN access lines in service | 4,509 | 4,110 | 3,787 | |||||||||
Number of ISDN BRA lines in service | 580 | 548 | 517 | |||||||||
Number of ISDN PRA lines in service | 6 | 6 | 6 | |||||||||
Active ADSL lines (retail) | 475 | 864 | 1,060 | |||||||||
Active ADSL lines (wholesale)(1) | 334 | 94 | 53 |
(1) | Active lines of ADSL customers of alternative operators, supported by wholesale services provided by our company. Following our merger with OTENet in 2008, OTENet’s customers are included in the retail numbers for 2008, while, for previous years, OTENet’s customers are included in wholesale numbers. |
• | PSTN and ISDN access and traffic and value-added services; | |
• | ADSL (broadband) internet access and data services; | |
• | IPTV services; | |
• | IN services and premium rate services, including infotainment services; and | |
• | public telephone services. |
• | voice services including telephony and value-added services (PSTN, ISDN and IN services) and Voice over Internet Protocol services(“VoIP”); | |
• | broadband access connectivity and transport services; | |
• | VPN and network management and operation services; | |
• | system integration solutions which combine ICT, data center and corporate application services (includinge-banking, web services, portals and web sites); and | |
• | technical support and customer care services. |
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• | interconnection; | |
• | leased lines; | |
• | ADSL; | |
• | local loop unbundling; | |
• | Ethernet services; and | |
• | wholesale line rental (WLR). |
• | further developing and upgrading our access network; | |
• | expanding and upgrading the capacity of our DWDM transmission network; | |
• | supporting and enhancing the provision of IPTV services; | |
• | integrating our IP access network; | |
• | integrating our service platforms; | |
• | upgrading our IP core distribution systems; and | |
• | upgrading Metro Ethernet. |
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• | the regulatory framework, including developments in Greek and EU regulation of telecommunications services and infrastructure; | |
• | market demand and trends; | |
• | our ability to price our products, services and offering in a competitive manner in view of relevant regulatory constraints and pressures, and our ability to increase our operating efficiency and effectiveness, in order to |
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reduce the cost of providing these services, and, as a result, be allowed to reduce our cost-oriented tariffs for these services; |
• | the financial condition of our competitors, the extent to which they have developed their respective proprietary networks and the quality, attractiveness and pricing of their products and offerings; | |
• | our ability to maintain and improve the quality and reliability of our products and services and to continue to improve the quality, efficiency and responsiveness of our customer care services; | |
• | our ability to offer attractive new or innovative products, including bundles of products, competitive offerings or hybrid, or integrated products; | |
• | the continuing effectiveness of our commercial policies, including the strength and effectiveness of our marketing efforts; | |
• | governmental decisions with regard to infrastructure projects, including fiber optic infrastructure; and | |
• | the performance of our investments. |
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As of December 31, | ||||||||||||||||||||||||
2007 | % | 2008 | % | 2009 | % | |||||||||||||||||||
(Minutes in billions, except for percentages) | ||||||||||||||||||||||||
Outgoing calls | ||||||||||||||||||||||||
Local calls | 14.8 | 45.8 | % | 11.6 | 44.1 | % | 9.3 | 40.9 | % | |||||||||||||||
National Long-distance calls | 1.8 | 5.6 | % | 1.9 | 7.2 | % | 1.9 | 8.5 | % | |||||||||||||||
Calls to internet service providers | 4.6 | 14.2 | % | 2.4 | 9.1 | % | 1.2 | 5.3 | % | |||||||||||||||
Fixed-to-Mobile | 1.8 | 5.6 | % | 1.7 | 6.5 | % | 1.6 | 7.0 | % | |||||||||||||||
Calls from OTE to other fixed networks | 1.3 | 4.0 | % | 1.7 | 6.5 | % | 2.1 | 9.4 | % | |||||||||||||||
Special Calls | 0.2 | 0.6 | % | 0.2 | 0.8 | % | 0.1 | 0.4 | % | |||||||||||||||
Incoming calls | ||||||||||||||||||||||||
Calls to OTE from Fixed & Mobile operators | 7.8 | 24.2 | % | 6.8 | 25.8 | % | 6.5 | 28.5 | % | |||||||||||||||
Total | 32.3 | 100.0 | % | 26.3 | 100.0 | % | 22.7 | 100 | % | |||||||||||||||
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2007 | 2008 | 2009 | ||||||||||
(Euro) | ||||||||||||
Connection Charges | 29.34 | 29.34 | 29.34 | |||||||||
Monthly rental charges | 12.40 | 12.40 | 12.40 | |||||||||
Pulse charging (for the first 2 minutes) | 0.026 | 0.026 | 0.026 | |||||||||
(Eurocents | ) | |||||||||||
Charge per second (after the first 2 minutes) | ||||||||||||
Weekdays peak | 0.043333 | 0.043333 | 0.043333 | |||||||||
Saturdays/weekdays off-peak | 0.041667 | 0.041667 | 0.041667 | |||||||||
Sundays | 0.040000 | 0.040000 | 0.040000 |
(Euro) | ||||
Minimum charge per call(1) | ||||
First 25 seconds (weekdays peak hours) | 0.026 | |||
First 28 seconds (weekdays off-peak and Saturdays) | 0.026 |
(Eurocents per second) | ||||
Charge per second | ||||
Weekdays peak (after first 25 seconds) | 0.103 | |||
Weekdays off-peak and Saturdays | 0.092 |
(1) | On Sundays local call tariffs apply. |
Jan. 1, | ||||||||||||||||||||
June 1, 2007(2) to | Feb. 1(3) 2008 to | 2009(4) to | June 16, 2009(5) to | |||||||||||||||||
Jan. 1(1) to May 31, | Jan. 31, | Dec. 31, | June 15, | Dec. 31, | ||||||||||||||||
Mobile Operator | 2007 | 2008 | 2008 | 2009 | 2009 | |||||||||||||||
(Euro per minute) | ||||||||||||||||||||
Cosmote | 0.150 | 0.1393 | 0.1315 | 0.1113 | 0.1127 | |||||||||||||||
Vodafone | 0.150 | 0.1397 | 0.1317 | 0.1113 | 0.1127 | |||||||||||||||
Wind Hellas | 0.1585 | 0.1497 | 0.1367 | 0.1113 | 0.1127 | |||||||||||||||
Q-Telecom | 0.1585 | 0.1497 | 0.1367 | 0.1113 | 0.1127 |
(1) | As of January 1, 2007, we apply per second charging without a minimum call duration of 30 seconds, which has resulted in an increase in our retention fee from Euro 0.030 to Euro 0.0326 per minute. Moreover, termination fees of mobile operators were further reduced. |
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(2) | Charging per second still applies, and the retention fee remains unchanged. New prices were introduced due to reductions in the termination fee. | |
(3) | Charging per second still applies, and the retention fee remains unchanged. New prices were introduced due to reductions in the termination fee of mobile operators as of February 1, 2008. | |
(4) | Charging per second still applies, and the retention fee increased from Euro 0.0326 to Euro 0.0327 per minute, while the termination fee for all mobile operators was reduced to Euro 0.0786 per minute. New prices were introduced as of January 1, 2009. | |
(5) | Charging per second still applies, and the termination fee remains unchanged. New prices were introduced due to the increase in the retention fee from Euro 0.0327 to Euro 0.0341 per minute. |
• | packages offering unlimited nationwide free calls (OTE Unlimited); | |
• | discounted packages (OTE Discount Programs); | |
• | packages offering prepaid minutes of calling time (OTE Flat Rates) to nationwide andfixed-to-mobile calls; and | |
• | packages of bundled offerings, including monthly line rental fee, ADSL, internet connection, nationwide andfixed-to-mobile calls. |
• | OTE unlimited anytime: nationwide calls on fixed-line networks; | |
• | OTE unlimited evenings and weekends: nationwide calls during evenings and weekends on fixed-line networks; and | |
• | OTE unlimited 1-2-3 favorite numbers: nationwide calls to 1, 2 and 3 numbers on our network. |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Minutes in millions, | ||||||||||||
except for percentages) | ||||||||||||
Outgoing calls | ||||||||||||
OTE | 506.3 | 361.5 | 332.0 | |||||||||
Other | 417.6 | 536.6 | 537.4 | |||||||||
Total outgoing traffic | 923.9 | 898.1 | 869.4 | |||||||||
Growth (% per year) | 11.6 | (2.8 | ) | (3.2 | ) | |||||||
Incoming calls | ||||||||||||
OTE | 514.5 | 551.8 | 639.2 | |||||||||
Other | 303.8 | 346.0 | 420.3 | |||||||||
Total incoming traffic | 818.3 | 897.8 | 1,059.5 | |||||||||
Growth (% per year) | (2.7 | ) | 9.7 | 18.0 |
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ADSL Price Evolution (Conn-x)(1) | ||||||||||||||||||||
Date | 1 Mbps | 2 Mbps | 4 Mbps | 8 Mbps | Up to 24 Mbps | |||||||||||||||
(Euro) | ||||||||||||||||||||
December 31, 2007 | 16.50 | 19.50 | 22.50 | 26.90 | 29.90 | |||||||||||||||
December 31, 2008 | 16.50 | 19.50 | 22.50 | 26.90 | 29.90 | |||||||||||||||
December 31, 2009 until March 15, 2010 | — | 16.50 | — | 22.50 | 27.90 | |||||||||||||||
From March 16, 2010 and as of May 14, 2010 | — | 16.78 | — | — | 22.88 |
(1) | All prices shown above include VAT. Monthly rental of PSTN (Euro 14.8) or ISDN (Euro 18.9) lines is not included. On March 15, 2010, VAT in Greece increased from 19.0% to 21.0%. |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Revenues | 872.4 | 870.4 | 807.7 | |||||||||
Operating income/(loss) | 7.0 | (37.5 | ) | (15.3 | ) | |||||||
Profit/(loss) | (23.2 | ) | (48.7 | ) | (34.6 | ) | ||||||
Our share in RomTelecom’s profit/(loss) | (12.5 | ) | (26.3 | ) | (18.7 | ) |
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• | Wireless voice telephony: We offer a full range of wireless services with a variety of payment plans and packages, including payment on a contract and prepaid basis. | |
• | Enhanced calling features: We offer a number of services with enhanced calling features, such as voicemail, call divert, call barring by the customer, call waiting, conference call, caller line identification and detailed monthly bill. Subscribers may receive a number of these services bundled with basic voice services or as optional supplements to their basic voice service. | |
• | Wireless data transmission: We offer our customers the ability to use handsets for data transmission, including for SMS and MMS, which allow customers to send messages with images, photographs and sound. Subscribers may also receive selected information, such as news, sports, scores and stock quotes. We also provide wireless connectivity for devices such as laptops and Personal Digital Assistants(“PDAs”). Cosmote offers 3G services, video streaming and HSPA technology in Greece, Bulgaria and Romania. | |
• | Wireless internet access: This enables retail and corporate customers to send and receive emails, browse web pages, purchase goods and services ine-commerce transactions and use other data services. Cosmote was the first company in Greece to launch high-speed mobile broadband services and has continued to expand and upgrade the availability of wireless internet services throughout the country, utilizing its 3G coverage. In 2009, the deployment of HSPA and HSPA+ technologies permitted higher download speeds of up to 21.6 Mbps. | |
• | Corporate services: We provide business solutions, including wireless infrastructure in offices, private networking and VPNs. VPNs enable companies to define a private numbering plan (closed usergroup) for users within a single organization and to use value-added applications, including short dialing, call barring and favorable pricing within the VPN group. | |
• | International roaming: Wireless customers traveling abroad are able to make and receive calls while in the coverage area of a foreign operator’s mobile network and to be billed for this service by their home network operator. | |
• | Other value-added wireless services: Cosmote offers Blackberry® email solutions to its corporate and individual customers in Greece. We also offer vehicle fleet management services to customers in Greece and abroad in cooperation with Spacenet. In addition, we offer several other value-added services, including ring tones and mobile portal. |
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• | to further exploit its telecommunications and distribution network in Greece and abroad; | |
• | to benefit from the synergies with the Group by focusing on distribution and products in Greece and Romania; | |
• | to increase revenues from data and value-added services in Greece, Bulgaria and Romania; | |
• | to focus on providing improved customer experience through all customer facing channels (sales networks and customer service); | |
• | to further exploit market dynamics and develop new revenue streams in the Southeastern European markets; and | |
• | to maximize profitability and free cash flow generation on group level through economies of scale and capital expenditure savings. |
• | in Greece: to maintain its leading position in the market and enhance profitability through increased usage, customer growth, promotion of new services and focused commercial policies; | |
• | in Albania, through AMC: to maintain its leading position in the market to increase its post-paid customer base and limit the impact of increased regulation and competition, while maintaining high profitability. | |
• | in Bulgaria, through Globul: to improve the company’s competitive position in the market and enhance cash generation; and | |
• | in Romania, through Cosmote Romania: to continue increasing its market share and operating profitability utilizing its mobile broadband infrastructure through the acquisition of Zapp. |
• | standard voice services and voice call services; | |
• | messaging services, such as SMS and MMS; | |
• | international and roaming services; | |
• | value-added services, such as voicemail, call diversion and caller identification(“CLIP”), ring tones, mobile portal and video calling; | |
• | mobile internet browsing on the move through 3G, HSPA and GPRS technologies; and | |
• | advanced value-added services using WAP, SIM microbrowser, voice recognition and GPRS technologies. |
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• | a network of commercial representatives/distributors; | |
• | 22 Cosmote-branded stores, including two in Athens and three in Thessaloniki; | |
• | 225 OTEShops throughout Greece; | |
• | 430 Germanos-branded stores, throughout Greece; | |
• | Cosmote’s corporate accounts sales forces; and | |
• | distributors of prepaid packages, prepaid airtime cards and prepaid airtime electronic cards. |
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• | Pay per use: The customer is charged for the total outgoing traffic. The monthly fixed cost, if applicable, does not include any call minutes. | |
• | Voice Bundles: Cosmote offers its customers a wide variety of rate plans and voice additional elements. The pricing scheme consists of a monthly fixed cost (including minutes with no additional charge) and additional charges for outgoing calls above the bundled minutes. Cosmote offers contract bundled plans, incorporating single rate tariffs for calls to all networks and monthly “rollover” of unused free call minutes. | |
• | Cost Control: Cosmote offers a hybrid (contract and prepaid) product (“Kartosymvolaio”), with minimum consumption and cost control features. | |
• | Family: Cosmote offers its customers a “family pack” which allows them to create a flexible and economical family scheme, combining post-pay, hybrid and prepay members of a family, as well as one fixed-line number. | |
• | Smart Play: Cosmote recently introduced the option to combine mobile telephony, mobile internet and fixed-line number under one program, with a discount on monthly fees for each service. |
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• | termination on each individual operator’s network constitutes a separate market, meaning that there are three separate markets for mobile voice call termination in Greece — the networks of Cosmote, Vodafone and Wind Hellas; | |
• | each operator holds significant market power in its respective market; and | |
• | a range of regulatory remedies should be imposed on each operator. |
• | cost-orientation, to be achieved through a “glide path” of phased reductions to the level of cost, as defined by a series of Long Run Incremental Cost(“LRIC”) models formulated by the EETT. The EETT’s decision in November 2008 defined the glide path, applicable equally to each operator, as follows: 7.86 Eurocents/minute, 6.24 Eurocents/minute and 4.95 Eurocents/minute as of January 1, 2009, 2010 and 2011, respectively; | |
• | provision of access; | |
• | transparency; | |
• | non-discrimination; | |
• | accounting separation (to be subject to a separate consultation exercise); and | |
• | publication of a Reference Interconnection Offer(“RIO”). |
From | From | From | From | |||||||||||||||||||||
Jan. 1, 2007 | June 1, 2007 | Feb. 1, 2008 | Jan. 1, 2009 | |||||||||||||||||||||
to May 31, | to Jan. 31, | to Dec. 31, | to Dec. 31, | From | ||||||||||||||||||||
2007 | 2008 | 2008 | 2009 | Jan. 1, 2010 | ||||||||||||||||||||
(Euro per minute) | ||||||||||||||||||||||||
Mobile operator | ||||||||||||||||||||||||
Vodafone | 0.1174 | 0.1067 | 0.0989 | 0.0786 | 0.0624 | |||||||||||||||||||
Wind Hellas(1) | 0.1174 | 0.1067 | 0.0989 | 0.0786 | 0.0624 |
Note: |
(1) | The same tariffs also apply to Q-Telecom, which merged with Wind Hellas in January 2007. |
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From | From | From | From | |||||||||||||||||
Jan. 1, 2007 | June 1, 2007 | Feb. 1, 2008 | Jan. 1, 2009 | |||||||||||||||||
to May 31, | to Jan. 31, | to Dec. 31, | to Dec. 31, | From | ||||||||||||||||
2007 | 2008 | 2008 | 2009 | Jan. 1, 2010 | ||||||||||||||||
(Euro per minute) | ||||||||||||||||||||
Mobile operator | ||||||||||||||||||||
Vodafone | 0.1174 | 0.1071 | 0.0991 | 0.0786 | 0.0624 | |||||||||||||||
Wind Hellas(1) | 0.1259 | 0.1171 | 0.1041 | 0.0786 | 0.0624 |
Note: |
(1) | As of January 2007, the same tariffs also apply to Q-Telecom, which merged with Wind Hellas in January 2007. |
From | From | From | From | |||||||||||||||||
Jan. 1, 2007 | June 1, 2007 | Feb. 1, 2008 | Jan. 1, 2009 | |||||||||||||||||
to May 31, | to Jan. 31, | to Dec. 31, | to Dec. 31, | From | ||||||||||||||||
2007 | 2008 | 2008 | 2009 | Jan. 1, 2010 | ||||||||||||||||
(Euro per minute) | ||||||||||||||||||||
Fixed Operator (OTE or other) | 0.1174 | 0.1067 | 0.0989 | 0.0786 | 0.0624 |
Weekdays | ||||||||||||||||
00:00 to 08:00 | ||||||||||||||||
Weekdays | and 20:00 | |||||||||||||||
08:00 to 20:00 | to 00:00 | Saturdays | Sundays | |||||||||||||
(Euro per minute) | ||||||||||||||||
Local/minute | 0.0048 | 0.0044 | 0.0044 | 0.0034 | ||||||||||||
Single transit/minute | 0.0082 | 0.0076 | 0.0076 | 0.0060 | ||||||||||||
Double transit/minute | 0.0107 | 0.0102 | 0.0102 | 0.0080 |
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For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Revenues | 176.2 | 191.3 | 145.7 | |||||||||
Operating Income | 84.6 | 100.3 | 61.8 | |||||||||
Profit | 60.9 | 94.9 | 87.8 |
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For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Revenues | 412.1 | 460.0 | 448.2 | |||||||||
Operating income | 73.4 | 99.8 | 84.5 | |||||||||
Profit | 53.2 | 83.2 | 67.7 |
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For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Revenues | 155.6 | 311.0 | 423.2 | |||||||||
Operating losses | (88.3 | ) | (52.8 | ) | (22.1 | ) | ||||||
Loss | (118.4 | ) | (111.3 | ) | (57.9 | ) |
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For the | ||||||||||||
For the Year Ended | Period | |||||||||||
December 31, | Ended May 12, | |||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Revenues | 62.2 | 66.2 | 19.1 | |||||||||
Operating income/(loss) | 2.8 | 1.7 | (4.3 | ) | ||||||||
Profit/(loss) | 0.1 | 0.2 | (6.2 | ) |
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• | establishing agreements with international carriers for the routing of international traffic and for applicable accounting rates; | |
• | negotiating wholesale tariffs with mobile operators for incoming and outgoing international traffic through our network; | |
• | negotiating wholesale tariffs with domestic alternative carriers for routing their international traffic through our network; and | |
• | planning, engineering and operating our International Voice Network. |
• | full,end-to-end, managed SDH digital circuits and wavelength (λ) capacity from Greece to London and other major European cities; | |
• | Ethernet transport services with speeds of up to 1 Gbps from Greece to Frankfurt and other major European cities; | |
• | IRU for long-term leasing of international circuits; and | |
• | international private leased circuits (half circuits). |
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• | clear channel; | |
• | internet transit for carriers; | |
• | MPLS, VPN and Ethernet services; and | |
• | carrier-grade VoIP and voice trunking. |
• | increasing its market share in the Southeastern European market and exploring opportunities in the markets of the Middle East and North Africa; | |
• | benefitting from the increase of broadband use and traffic in Greece, as well as demand for international VPN in the corporate market in Greece and the broader region, to maximize use of its network capacity; | |
• | improving its profitability from international voice services with the use of new technologies such as NGN Soft Switch; and | |
• | developing strategic partnerships and participating in infrastructure development projects in the region, in order to exploit new markets and create new revenue streams. |
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Weekdays | ||||||||||||||||
Weekdays | 00:00 to 08:00 | |||||||||||||||
08:00 to 20:00 | and 20:00 to 00:00 | Saturdays | Sundays | |||||||||||||
(Euro per minute) | ||||||||||||||||
Local/minute | 0.0048 | 0.0044 | 0.0044 | 0.0034 | ||||||||||||
Single transit/minute | 0.0082 | 0.0076 | 0.0076 | 0.0060 | ||||||||||||
Double transit/minute | 0.0107 | 0.0102 | 0.0102 | 0.0080 |
Weekdays | ||||||||||||||||
Weekdays | 00:00 to 08:00 | |||||||||||||||
08:00 to 20:00 | and 20:00 to 00:00 | Saturdays | Sundays | |||||||||||||
(Euro per minute) | ||||||||||||||||
Local/minute | 0.0042 | 0.0038 | 0.0038 | 0.0030 | ||||||||||||
Single transit/minute | 0.0071 | 0.0065 | 0.0065 | 0.0052 | ||||||||||||
Double transit/minute | 0.0088 | 0.0080 | 0.0080 | 0.0072 |
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• | voice services, including group calls, individual calls, broadcast calls, emergency calls, calls to fixed and mobile telephone networks; and | |
• | data services, including short data(“SDS”), and packet data (28.8 Kbps) services. |
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• | “134”, our sales and customer service channel for residential and small business customers; |
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• | “13818 OTEbusiness Customer Service”, provides both commercial customer care and technical support for enterprise and business customers; | |
• | “OTELINE”, our outbound telesales center, which offersone-to-one marketing for all of our products and services and customer programs; | |
• | “www.oteshop.gr”, our electronic shop, which had approximately 2.6 million visits and received approximately 21,000 orders in 2009; | |
• | “www.whitepages.gr”, our site for telephone directory services, which had 15 million visits in 2009; | |
• | “11888”, voice telephony directory services and entertainment information, which received approximately 33 million calls in 2009 and achieved over 97% customer satisfaction based on survey evidence; | |
• | OTE Tele-Information, our voice portal, offering weather forecasts, airplane, ship, rail and bus schedules, hospital and pharmacy information and sports results, which received approximately 17 million calls in 2009; | |
• | “1502”, our citizen service center; | |
• | “112”, the pan-European emergency call number; | |
• | www.otewholesale.gr, our electronic shop for wholesale services offered to other operators and ISPs; and | |
• | “1305”, our telecollections contact center. |
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• | supporting services for the restoration of cable damages, as well as for the construction of part of the new telephone connections/transfers and of ADSL and local loop cross connections in the distributors of the switches in Greece; | |
• | various structured cabling projects for private customers; | |
• | structured cabling projects on behalf of our Group; | |
• | development of cable networks and systems to corporate customers; | |
• | studies for the development of the urban network in addition to studies for backbone networks; | |
• | medical information systems for hospitals in the region of Thessalia, Greece; | |
• | new projects with our Group and also with customers of our Group; and | |
• | new projects from the public sector (development of broadband networks, supply and installation active and passive equipment). |
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• | a request for the suspension of HSSA’s obligations arising out of thePay-TV License as well as the concession agreement is addressed by HSSA to both the National Radio Telecommunications Council (NTRC) and the Ministry of the Interior; | |
• | a decision for the approval of the transfer of thePay-TV License requested by us is issued by the NRTC and any other competent authorities; and | |
• | a new concession agreement regarding the provision of high definitionPay-TV services via satellite to the Greek citizens is executed between us and the Ministry of the Interior. |
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• | the provision of Inmarsat satellite services through our land earth station in Thermopylae as well as any other service provided by Inmarsat through its own stations(“Fleet Broadband”); | |
• | the agreements with other Inmarsat land earth station operators for the ocean regions not covered by our satellite teleports, as well as with providers for other satellite systems, such as Iridium and VSAT; and | |
• | the whole range of satellite telecommunication and value-added services(“VAS”) portfolio and sales of relevant equipment for maritime, governmental and certain land mobile customers. |
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• | automatingend-to-end processes, designed to increase productivity and contain operating costs; | |
• | providing high quality IT services to both our internal users and end customers in order to support current, and obtain new, revenue sources, swift implementation of services, a high level of customer service and operational superiority over competition; | |
• | the development and operation of retail and wholesale integrated services and solutions for our customers, with an emphasis on broadband services, value-added services, content and ICT; | |
• | distributing and developing an in-depth understanding of the information regarding our customers and our operation in order to support the decision-making process at all management levels; | |
• | expanding the implementation of our information systems in the areas of wholesale support systems, OSS, CRM, security, BI, service delivery platform(“SDP”), supply chain management and ERP; and | |
• | improving the infrastructure of our information systems in order to continue providing high quality services and to ensure business continuity. |
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• | Directive 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities (the“Access Directive”); | |
• | Directive 2002/20/EC on the authorization of electronic communications networks and services (the“Authorization Directive”); | |
• | Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (the“Framework Directive”); | |
• | Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services (the“Universal Service Directive”); | |
• | Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in thee-commerce sector (the“Directive on Privacy and Electronic Communications”); and | |
• | Directive 2002/77/EC on competition in the markets for electronic networks and services. |
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• | the establishment of a right of appeal against the decision of a national regulatory authority; | |
• | the establishment of a consultation and transparency mechanism regarding actions by national regulatory authorities; | |
• | the encouragement of cooperation of national regulatory authorities with each other and with the European Commission; | |
• | the right of the European Commission to request a national regulatory authority to withdraw a measure under certain circumstances; and | |
• | the re-definition of the term “significant market power”. |
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• | Directive 2009/140/EC of the European Parliament and of the Council of November 25, 2009 amending Directives 2002/21/EC on a common regulatory framework for electronic communications networks and services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorization of electronic communications networks and services(“Better Regulation Directive”); | |
• | Directive 2009/136/EC of the European Parliament and of the Council of November 25, 2009 amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws(“Citizens’ Rights’ Directive”); and | |
• | Regulation (EC) No 1211/2009 of the European Parliament and of the Council of November 25, 2009 establishing the Body of European Regulators for Electronic Communications (BEREC) and the Office. |
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Number | Title | Official Gazette | ||
531/064/2009 | Approval of our amendments regarding Reference Offers for the provision of wholesale leased lines and the provision of partial circuits | 1552/B/28-7-2009 | ||
531/067/2009 | Amendment of the EETT Decision 451/010/2007 (“Approval of Code of Conduct for the provision of Multimedia Information Services”) | 1551/B/28-7-2009 | ||
528/075/2009 | Regulation for the definition of fees for rights of way and rights of use | 1375/B/10-7-2009 | ||
529/158/2009 | Decision on our pricing policy regarding wholesale leased lines services | 1489/B/23-7-2009 | ||
513/014/2009 | Amendment of the EETT Decision 390/3/13.6.2006 (“General Authorizations Regulation”) | 492/B/18-3-2009 | ||
506/037/2009 | Regulation for access and interconnection terms and provision requirements pursuant to articles 41, para3 and 42, para 3 of Law 3431/2006 | 369/B/3-3-2009 | ||
531/065/2009 | Market definition for wholesale unbundled access (comprising full and shared access) in metallic loops and subloops, designated operators with significant market power and their regulatory obligations (second round of analysis) | 1550/B/28-7-2009 | ||
531/066/2009 | Market definition for wholesale broadband access, designated operators with significant market power and their regulatory obligations (second round of analysis) | 1549/B/28-7-2009 | ||
521/32/2009 | Regulation about terms of use of separate radiofrequencies or zones of radiofrequencies | 1010/28-5-2009 | ||
512/24/2009 | Amendment of the EETT Decision 406/22/11.10.2006 (“Regulation about terrestrial antennae building permit, pursuant to Law 3431/2006”) | 517/20-3-2009 |
• | 12.0% for a monthly bill up to Euro 50; | |
• | 15.0% for a monthly bill from Euro 50.01 to Euro 100; | |
• | 18.0% for a monthly bill from Euro 100.01 to Euro 150; and | |
• | 20.0% for a monthly bill from Euro 150.01 and above. |
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• | analog transmitted TV program; | |
• | digital terrestrial TV; and | |
• | TV services provision over broadband networks. |
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Country of | Equity | |||||
Name | Incorporation | Participation | Type of Business | |||
OTE International Solutions S.A.(“OTEGlobe”) | Greece | 100.0% | Wholesale telephony services | |||
Voicenet S.A. | Greece | 100.0% | Telecommunication services | |||
OTE Estate S.A.(“OTE Estate”) | Greece | 100.0% | Real estate | |||
Hellascom International S.A.(“Hellascom”) | Greece | 100.0% | Telecommunication projects | |||
OTESAT-Maritel S.A. | Greece | 94.08% | Satellite and maritime telecommunications services | |||
OTE Insurance Agency S.A.(“OTE Insurance”) | Greece | 100.0% | Insurance brokerage services | |||
Multicom S.A. | Greece | 50.0%(1) | Internet and IT | |||
CosmoONE Hellas Market Site S.A. | Greece | 61.74%(2) | E-commerce services | |||
EDEKT — OTE S.A. | Greece | 40.0% | Administration of contribution to pension fund | |||
OTE International Investments Limited | Greece | 100.0% | Investment holding company | |||
Albanian Mobile Communications Sh.a(“AMC”) | Albania | 95.03%(3) | Mobile telecommunications services | |||
Trans Jordan Telecommunications Services Company Ltd. | Jordan | 50.0%(4) | Telephony services provided including telecards | |||
Yemen Public Payphone | Yemen | 37.5%(5) | Payphone operator/consulting services | |||
OTE Investment Services S.A. | Greece | 100.0%(6) | Investment holding company | |||
Hellas Sat Consortium Limited(“Hellas Sat”) | Cyprus | 99.05% | Satellite communications | |||
Hellas Sat S.A. | Greece | 99.05% | Satellite communications | |||
OTE Plc | United Kingdom | 100.0% | Financing services | |||
CosmoBulgaria Mobile EAD(“Globul”) | Bulgaria | 100.0(7) | Mobile telecommunications services |
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Country of | Equity | |||||
Name | Incorporation | Participation | Type of Business | |||
S.C. Cosmote Romanian Mobile Telecommunications S.A.(“Cosmote Romania”) | Romania | 86.2%(8) | Mobile telecommunications services | |||
HATWAVEHellenic-American Telecommunications Wave Ltd. | Cyprus | 52.67% | Investment holding company | |||
OTEplus Technical and Business Solutions S.A.(“OTEplus”) | Greece | 100.0% | Consulting services | |||
OTEplus Bulgaria EAD | Bulgaria | 0%(9) | Consulting services | |||
DIERGASIA Interim Employment S.A. | Greece | 100.0%(10) | Interim employment services | |||
OTE ACADEMY S.A.(“OTE Academy”) | Greece | 100.0% | Training services | |||
Germanos S.A.(“Germanos”) | Greece | 100.0%(11) | Retail services | |||
E-Value S.A. | Greece | 100.0%(12) | Marketing services | |||
Germanos Telecom Romania S.A(“Germanos Romania”) | Romania | 100.0%(12) | Retail services | |||
Sunlight Romania SRL — Filiala | Romania | 100.0%(12) | Retail services | |||
Germanos Telecom Bulgaria A.D. | Bulgaria | 100.0%(12) | Retail services | |||
OTE PROPERTIES | Greece | 100.0%(13) | Real estate | |||
Telekom Srbija | Serbia | 20.0% | Public telephony operator — fixed and mobile telephony, ISP, multimedia services | |||
Cosmoholding Romania Ltd. | Cyprus | 100%(14) | Investment holding company | |||
Telemobil S.A.(“Zapp”) | Romania | 99.9% | Mobile Telecommunication services | |||
E-Value Debtors Awareness One Person Ltd.(“E-Value Ltd”) | Greece | 100%(15) | Overdue accounts | |||
Mobilbeeep Ltd. | Greece | 100.0%(16) | Retail services | |||
Cosmoholding Cyprus Ltd.(“Cosmoholding Cyprus”) | Cyprus | 100.0%(17) | Investment holding company | |||
Cosmo-Holding Albania S.A.(“CHA”) | Greece | 97.0% | Investment holding company | |||
Cosmomegala Katastimata S.A. | Greece | 40%(1) | Provision of services |
(1) | Under liquidation. | |
(2) | We and Cosmote each hold a 30.87% equity interest. | |
(3) | Effective interest of 95.03% held through Cosmote and its 97% -owned subsidiary CHA. | |
(4) | Under liquidation; we hold a direct interest of 40.0% and an indirect interest of 10.0% through Hellascom. | |
(5) | Under liquidation; we hold a direct interest of 10.0% and an indirect interest of 27.5% through Hellascom and Trans Jordan Telecommunications Services Company Ltd, respectively. | |
(6) | Subsidiary of OTE International Investments Limited. | |
(7) | Our effective interest is 100% through Cosmote. | |
(8) | Our effective interest is 86.2% (70.0% is owned by Cosmote and 30% is owned by RomTelecom). | |
(9) | Was liquidated, dissolved and unregistered from the Commercial Registry of Sofia on January 11, 2010. Our effective interest until that date was 100% (100% owned by OTEplus). | |
(10) | Our effective interest is 100% (100% is owned by OTEplus). | |
(11) | We own these interests indirectly, through Cosmote. | |
(12) | These companies are owned by Germanos. | |
(13) | Subsidiary of OTE Estate. |
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(14) | Cosmoholding Romania Ltd was established on August 6, 2009 and by October 30, 2009 acquired Zapp. We own these interests indirectly through Cosmote. | |
(15) | E-Value One Person Ltd was established byE-Value S.A. in October 2009. | |
(16) | Subsidiary of Cosmoholding Cyprus. | |
(17) | Cosmoholding Cyprus holds 99.998% of the share capital of Germanos, while the remaining 0.002%, or 1,490 shares, is held by minority shareholders (these shares were not included in the squeeze-out process which was completed on April 10, 2007). |
ITEM 5 | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
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(i) | have submitted a written application to participate in the Voluntary Retirement Scheme, within the deadlines defined in par.2, article 74 of Law 3371/2005; and | |
(ii) | do not submit an irrevocable application withdrawing the original application within one month from the enactment of that Law; |
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As of December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Number of PSTN access lines in service | 4,509 | 4,110 | 3,787 | |||||||||
Number of ISDN BRA lines in service | 580 | 548 | 517 | |||||||||
Number of ISDN PRA lines in service | 6 | 6 | 6 | |||||||||
Active ADSL lines (retail) | 475 | 864 | 1,060 | |||||||||
Active ADSL lines (wholesale)(1) | 334 | 94 | 53 |
(1) | Active lines of ADSL customers of alternative operators, supported by wholesale services provided by our company. Following our merger with OTENet in 2008, OTENet’s customers are included in the retail numbers for 2008, while, for previous years, OTENet’s customers are included in wholesale numbers. |
As of December 31, | ||||||||||||||||||||||||
2007 | % | 2008 | % | 2009 | % | |||||||||||||||||||
(Minutes in billions, except for percentages) | ||||||||||||||||||||||||
Outgoing calls | ||||||||||||||||||||||||
Local calls | 14.8 | 45.8 | % | 11.6 | 44.1 | % | 9.3 | 40.9 | % | |||||||||||||||
National Long-distance calls | 1.8 | 5.6 | % | 1.9 | 7.2 | % | 1.9 | 8.5 | % | |||||||||||||||
Calls to internet service providers | 4.6 | 14.2 | % | 2.4 | 9.1 | % | 1.2 | 5.3 | % | |||||||||||||||
Fixed-to-Mobile | 1.8 | 5.6 | % | 1.7 | 6.5 | % | 1.6 | 7.0 | % | |||||||||||||||
Calls from OTE to other fixed networks | 1.3 | 4.0 | % | 1.7 | 6.5 | % | 2.1 | 9.4 | % | |||||||||||||||
Special Calls | 0.2 | 0.6 | % | 0.2 | 0.8 | % | 0.1 | 0.4 | % | |||||||||||||||
Incoming calls | ||||||||||||||||||||||||
Calls to OTE from Fixed & Mobile operators | 7.8 | 24.2 | % | 6.8 | 25.8 | % | 6.5 | 28.5 | % | |||||||||||||||
Total | 32.3 | 100.0 | % | 26.3 | 100.0 | % | 22.7 | 100 | % | |||||||||||||||
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Minutes in millions, except | ||||||||||||
for percentages) | ||||||||||||
Outgoing calls | ||||||||||||
OTE | 506.3 | 361.5 | 332.0 | |||||||||
Other | 417.6 | 536.6 | 537.4 | |||||||||
Total outgoing traffic | 923.9 | 898.1 | 869.4 | |||||||||
Growth (% per year) | 11.6 | (2.8 | ) | (3.2 | ) | |||||||
Incoming calls | ||||||||||||
OTE | 514.5 | 551.8 | 639.2 | |||||||||
Other | 303.8 | 346.0 | 420.3 | |||||||||
Total incoming traffic | 818.3 | 897.8 | 1,059.5 | |||||||||
Growth (% per year) | (2.7 | ) | 9.7 | 18.0 |
• | in Albania, AMC, Cosmote’s 95.03% indirectly-owned subsidiary, had 1,908,987 mobile customers; | |
• | in Bulgaria, Globul, Cosmote’s 100% directly-owned subsidiary, had 3,902,272 mobile customers; and | |
• | in Romania, Cosmote Romania, Cosmote’s 70%-owned subsidiary, had 6,920,816 customers. |
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2007 | 2008 | 2009 | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Euro | Revenues | Euro | Revenues | Euro | Revenues | |||||||||||||||||||
(Millions, other than percentages) | ||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Domestic telephony(1) | 2,022.2 | 32.0 | 1,814.2 | 28.3 | 1,619.6 | 27.1 | ||||||||||||||||||
International telephony(2) | 304.5 | 4.8 | 286.9 | 4.5 | 251.1 | 4.2 | ||||||||||||||||||
Mobile telephony | 2,210.0 | 35.0 | 2,470.8 | 38.6 | 2,396.2 | 40.0 | ||||||||||||||||||
Other revenue(3) | 1,783.1 | 28.2 | 1,835.4 | 28.6 | 1,717.2 | 28.7 | ||||||||||||||||||
Total revenue | 6,319.8 | 100.0 | 6,407.3 | 100.0 | 5,984.1 | 100.0 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Payroll and employee benefits | (1,149.0 | ) | (18.2 | ) | (1,168.4 | ) | (18.2 | ) | (1,190.8 | ) | (19.9 | ) | ||||||||||||
Provision for staff retirement indemnities and youth account | (92.3 | ) | (1.5 | ) | (112.6 | ) | (1.8 | ) | (95.5 | ) | (1.6 | ) | ||||||||||||
Cost of early retirement program | (22.1 | ) | (0.3 | ) | (50.2 | ) | (0.8 | ) | 30.3 | 0.5 | ||||||||||||||
Charges from international operators | (182.7 | ) | (2.9 | ) | (173.9 | ) | (2.7 | ) | (184.0 | ) | (3.1 | ) | ||||||||||||
Charges from domestic operators | (655.3 | ) | (10.4 | ) | (642.3 | ) | (10.0 | ) | (516.3 | ) | (8.6 | ) | ||||||||||||
Depreciation and amortization | (1,171.8 | ) | (18.5 | ) | (1,213.0 | ) | (18.9 | ) | (1,155.3 | ) | (19.3 | ) | ||||||||||||
Cost of telecommunications equipment | (672.8 | ) | (10.6 | ) | (633.4 | ) | (9.9 | ) | (475.1 | ) | (7.9 | ) | ||||||||||||
Other operating expenses | (1,326.9 | ) | (21.0 | ) | (1,355.8 | ) | (21.2 | ) | (1,396.5 | ) | (23.4 | ) | ||||||||||||
Total operating expenses | (5,272.9 | ) | (83.4 | ) | (5,349.6 | ) | (83.5 | ) | (4,983.2 | ) | (83.3 | ) | ||||||||||||
Operating profit before financial activities | 1,046.9 | 16.6 | 1,057.7 | 16.5 | 1,000.9 | 16.7 | ||||||||||||||||||
Income/(expense) from financial activities: | ||||||||||||||||||||||||
Interest expense | (238.7 | ) | (3.8 | ) | (343.7 | ) | (5.4 | ) | (325.2 | ) | (5.4 | ) | ||||||||||||
Interest income | 77.8 | 1.2 | 72.3 | 1.1 | 61.6 | 1.0 | ||||||||||||||||||
Foreign exchange differences, net | (4.8 | ) | (0.1 | ) | 11.8 | 0.2 | 10.2 | 0.2 | ||||||||||||||||
Gains from investments | 256.8 | 4.1 | 33.7 | 0.5 | 23.6 | 0.4 | ||||||||||||||||||
Dividend income | 16.8 | 0.3 | 12.2 | 0.2 | 9.6 | 0.2 | ||||||||||||||||||
Total profit/(loss) from financial activities | 107.9 | 1.7 | (213.7 | ) | (3.3 | ) | (220.2 | ) | (3.6 | ) | ||||||||||||||
Profit before tax | 1,154.8 | 18.3 | 844.0 | 13.2 | 780.7 | 13.1 | ||||||||||||||||||
Income tax expense | (381.8 | ) | (6.0 | ) | (246.2 | ) | (3.8 | ) | (410.0 | ) | (6.9 | ) | ||||||||||||
Profit for the year(4) | 773.0 | 12.2 | 597.8 | 9.3 | 370.7 | 6.2 | ||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||
Owners of the parent: | 662.6 | 10.5 | 601.8 | 9.4 | 374.0 | 6.2 | ||||||||||||||||||
Non-controlling interests: | 110.4 | 1.7 | (4.0 | ) | (0.1 | ) | (3.3 | ) | (0.1 | ) |
(1) | Includes revenue from monthly network service fees, revenues fromfixed-to-fixed andfixed-to-mobile calls and revenues from such services as operator assistance, connection and reconnection charges and paging services. |
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(2) | Includes revenue from incoming including transit, and outgoing, traffic, gross of amounts charged by foreign telephony operators, and payments from the unaffiliated domestic mobile telephony operators to us for international calls. The respective revenues from our consolidated subsidiaries providing mobile services are eliminated upon consolidation. | |
(3) | Includes revenue from prepaid cards, leased lines and data ATM telecommunications, provision for services, interconnection charges, internet services/ADSL, ISDN, sales of telecommunication equipment, collocation and local loop unbundling. | |
(4) | In 2007, we took a charge of Euro 22.1 million relating to the employees who participated in the early retirement program of 2007. In addition, in 2007, we recorded a pre-tax gain of Euro 244.7 million from the sale of INFOTE and received dividends totaling Euro 15.7 million from Telekom Srbija. In 2008, the Group took a charge of Euro 50.2 million relating to the employees who participated in our and RomTelecom’s early retirement programs of 2008. Furthermore, we recorded a pre-tax gain of Euro 17.0 million from the sale of our investment in the Lofos-Palini real estate company. In addition, we received dividends totaling Euro 11.2 million from Telekom Srbija. In 2009, the Group’s profit for the year was affected by our and RomTelecom’s early retirement programs’ costs of Euro 171.6 million, which were offset by Euro 201.9 million from the transfer of 4.0% of our share capital held by the State to IKA-ETAM, resulting in a net gain of Euro 30.3 million. Furthermore, the 2009 income tax expense was affected by the new laws regarding a one-time special contribution of social responsibility (a charge of Euro 113.1 million), a tax on dividends (a charge of Euro 30.3 million) and the result of the tax audit in OTE for the years2006-2008 of Euro 30.0 million. In addition, the Group recorded a pre-tax gain of Euro 23.6 million from the sale of its subsidiaries Cosmofon and Germanos Telecom AD Skopje and received dividends totaling Euro 9.3 million from Telekom Srbija. |
• | Revenues derived from the provision of fixed-line domestic telephony represented 27.1% of our total revenues in 2009, as compared to 28.3% in 2008 and 32.0% in 2007; | |
• | Revenues derived from the provision of fixed-line international telephony represented 4.2% of our total revenues in 2009, as compared to 4.5% in 2008 and 4.8% in 2007; | |
• | Revenues from mobile telephony services represented 40.0% of our revenues in 2009, as compared to 38.6% in 2008 and 35.0% in 2007; and | |
• | Other revenues represented 28.7% of our revenues in 2009, as compared to 28.6% in 2008 and 28.2% in 2007. |
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Year Ended December 31, | % of Total | |||||||||||||||
2007 | 2008 | 2009 | 2009 | |||||||||||||
(Euro in millions) | ||||||||||||||||
Domestic Telephony: | ||||||||||||||||
Local and long-distance calls | ||||||||||||||||
Fixed-to-fixed | 565.5 | 481.9 | 461.9 | 28.5 | % | |||||||||||
Fixed-to-mobile | 378.3 | 325.3 | 249.5 | 15.4 | % | |||||||||||
Total local and long-distance calls | 943.8 | 807.2 | 711.4 | 43.9 | % | |||||||||||
Monthly network service fees | 988.1 | 910.7 | 845.9 | 52.2 | % | |||||||||||
Other | 90.3 | 96.3 | 62.3 | 3.9 | % | |||||||||||
Total domestic telephony services | 2,022.2 | 1,814.2 | 1,619.6 | 100.0 | % | |||||||||||
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Year Ended December 31, | % of Total | |||||||||||||||
2007 | 2008 | 2009 | 2009 | |||||||||||||
(Euro in millions) | ||||||||||||||||
International Telephony: | ||||||||||||||||
International traffic | 108.1 | 93.8 | 84.9 | 33.8 | % | |||||||||||
Dues from international operators(1) | 146.8 | 136.6 | 113.3 | 45.1 | % | |||||||||||
Dues from mobile and alternative operators | 49.6 | 56.5 | 52.9 | 21.1 | % | |||||||||||
Total | 304.5 | 286.9 | 251.1 | 100.0 | % | |||||||||||
(1) | Represents revenues from payments by foreign operators before settlement of amounts due to them in respect of outgoing traffic, which are included in operating expenses as payments to international operators. |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Prepaid cards | 76.2 | 52.2 | 37.3 | |||||||||
Leased lines and data ATM communications | 272.1 | 336.6 | 319.4 | |||||||||
Integrated Services Digital Network (ISDN) | 166.1 | 147.5 | 141.7 | |||||||||
Sales of telecommunication equipment | 679.8 | 617.2 | 438.0 | |||||||||
Internet services/ADSL | 225.7 | 226.9 | 297.7 | |||||||||
Collocation /local loop | 30.8 | 91.7 | 122.1 | |||||||||
Metro Ethernet and IP Core | 11.0 | 23.6 | 31.9 | |||||||||
Provision for services | 68.3 | 120.4 | 116.4 | |||||||||
Interconnection charges | 108.2 | 119.4 | 88.9 | |||||||||
Miscellaneous | 144.9 | 99.9 | 123.8 | |||||||||
Total other revenues | 1,783.1 | 1,835.4 | 1,717.2 | |||||||||
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2007 | 2008 | 2009 | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Euro | total | Euro | total | Euro | total | |||||||||||||||||||
(Millions, other than percentages) | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Payroll and employee benefits | (1,149.0 | ) | 21.8 | (1,168.4 | ) | 21.8 | (1,190.8 | ) | 23.9 | |||||||||||||||
Provision for staff retirement indemnities and youth account | (92.3 | ) | 1.7 | (112.6 | ) | 2.1 | (95.5 | ) | 1.9 | |||||||||||||||
Cost of early retirement program | (22.1 | ) | 0.4 | (50.2 | ) | 0.9 | 30.3 | (0.6 | ) | |||||||||||||||
Charges from international operators | (182.7 | ) | 3.5 | (173.9 | ) | 3.3 | (184.0 | ) | 3.7 | |||||||||||||||
Charges from domestic operators | (655.3 | ) | 12.4 | (642.3 | ) | 12.0 | (516.3 | ) | 10.4 | |||||||||||||||
Depreciation and amortization | (1,171.8 | ) | 22.2 | (1,213.0 | ) | 22.7 | (1,155.3 | ) | 23.2 | |||||||||||||||
Cost of telecommunications equipment | (672.8 | ) | 12.8 | (633.4 | ) | 11.8 | (475.1 | ) | 9.5 | |||||||||||||||
Other operating expenses | (1,326.9 | ) | 25.2 | (1,355.8 | ) | 25.4 | (1,396.5 | ) | 28.0 | |||||||||||||||
Total operating expenses | (5,272.9 | ) | 100.0 | (5,349.6 | ) | 100.0 | (4,983.2 | ) | 100.0 |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Third-party fees | 183.5 | 208.4 | 234.2 | |||||||||
Cost of telecommunication materials, repair and maintenance | 201.8 | 191.5 | 182.2 | |||||||||
Advertising and promotion costs | 208.3 | 212.9 | 216.8 | |||||||||
Utilities | 127.3 | 142.0 | 163.7 | |||||||||
Provision for doubtful accounts | 88.0 | 119.8 | 107.0 | |||||||||
Other provisions | 18.1 | 2.1 | — | |||||||||
Travel costs | 18.9 | 18.1 | 18.0 | |||||||||
Commissions to independent commercial distributors | 244.1 | 253.4 | 238.4 | |||||||||
Payments to Audiotex providers | 14.3 | 8.7 | 9.5 | |||||||||
Rents | 88.0 | 90.9 | 101.8 | |||||||||
Taxes, other than income tax | 56.3 | 51.7 | 56.2 | |||||||||
Transportation costs | 13.0 | 11.8 | 11.2 | |||||||||
Other | 65.3 | 44.5 | 57.5 | |||||||||
1,326.9 | 1,355.8 | 1,396.5 | ||||||||||
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Year Ended December 31 | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro, in millions) | ||||||||||||
Income/(expense) from financial activities: | ||||||||||||
Interest expense | (238.7 | ) | (343.7 | ) | (325.2 | ) | ||||||
Interest income | 77.8 | 72.3 | 61.6 | |||||||||
Foreign exchange differences, net | (4.8 | ) | 11.8 | 10.2 | ||||||||
Gains from investments | 256.8 | 33.7 | 23.6 | |||||||||
Dividend income | 16.8 | 12.2 | 9.6 | |||||||||
Total profit/(loss) from financial activities | 107.9 | (213.7 | ) | (220.2 | ) |
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Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Net cash flows from operating activities | 1,450.7 | 1,757.6 | 1,418.0 | |||||||||
Net cash flows used in investing activities | (2,780.2 | ) | (1,806.0 | ) | (958.6 | ) | ||||||
Net cash flows from / (used in) financing activities | 603.3 | 165.3 | (1,005.5 | ) | ||||||||
Net increase / (decrease) in cash and cash equivalents | (726.2 | ) | 116.9 | (546.1 | ) |
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Amortized Cost | ||||||||||||
Type of Loan | under IFRS | Interest Rate | Maturity Date | |||||||||
(Euro in millions) | ||||||||||||
Global Medium Term Notes (Euro 1,250 million) | 1,250.8 | 5.0 | % | 2013 | ||||||||
Global Medium Term Notes (Euro 900 million) | 892.5 | 4.625 | % | 2016 | ||||||||
Global Medium Term Notes (Euro 650 million) | 639.7 | 3.75 | % | 2011 | ||||||||
Global Medium Term Notes (Euro 1,500 million) | 1,496.8 | 5.375 | % | 2011 | ||||||||
Global Medium Term Notes (Euro 600 million) | 596.7 | 6.0 | % | 2015 | ||||||||
OTE Plc’s Syndicated Credit facility (Term Loan) | 500.0 | EURIBOR + 0.25 | % | Up to 2012 | ||||||||
Other bank loans (long-term) | 42.1 | Various | Various | |||||||||
Short-term borrowings | 3.3 | Various | 2010 | |||||||||
Total | 5,421.9 |
• | Euro 1,250.0 million notes (nominal value) at a fixed rate of 5.0%, issued in August 2003, maturing on August 5, 2013. As at December 31, 2009 the outstanding IFRS balance (being amortised cost) was Euro 1,250.8 million, as compared to Euro 1,248.8 million in 2008. | |
• | Euro 650.0 million notes (nominal value) at a fixed rate of 3.75%, issued in November 2005, maturing on November 11, 2011. As at December 31, 2009 the outstanding IFRS balance (being amortised cost) was Euro 639.7 million, as compared to Euro 634.4 million in 2008. | |
• | Euro 900.0 million notes (nominal value) at a fixed rate of 4.625%, issued in November 2006, maturing on May 20, 2016. As at December 31, 2009 the outstanding IFRS balance (being amortised cost) was Euro 892.5 million, as compared to Euro 891.5 million in 2008. | |
• | Euro 1,500.0 million notes (nominal value) at a fixed rate of 5.375%, issued in February 2008, maturing on February 14, 2011. As at December 31, 2009 the outstanding IFRS balance (being amortised cost) was Euro 1,496.8 million, as compared to Euro 1,494.2 million in 2008. In May 2010, OTE Plc bought back |
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Notes of a total nominal amount of Euro 56.0 million which have been cancelled. The outstanding nominal value of the Notes following cancellation is currently Euro 1,444.0 million. |
• | Euro 600.0 million notes at a fixed rate of 6.0%, issued in February 2008, maturing on February 12, 2015. As at December 31, 2009 the outstanding IFRS balance (being amortised cost) was Euro 596.7 million, as compared to Euro 596.3 million in 2008. |
• | for Euro 25.8 million (Term Loan) and Euro 18.0 million (Revolving Credit Facility) to September 2010; | |
• | for Euro 29.0 million (Term Loan) and Euro 20.3 million (Revolving Credit Facility) to September 2011; and | |
• | for Euro 445.2 million (Term Loan) and Euro 311.7 million (Revolving Credit Facility) to September 2012. |
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• | IFRIC 13 Customer Loyalty Programs effective July 1, 2008 | |
• | IFRIC 15 Agreements for the Construction of Real Estate effective January 1, 2009 | |
• | IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective October 1, 2008 | |
• | IFRIC 9 Remeasurement of Embedded Derivatives (Amended) and IAS 39 Financial Instruments: Recognition and Measurement (Amended) effective for periods ending on or after June 30, 2009 | |
• | IFRS 1 First-time Adoption of International Financial Reporting Standards (Amended) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective January 1, 2009 | |
• | IFRS 2 Share-based Payment: Vesting Conditions and Cancellations (Amended) effective January 1, 2009 | |
• | IFRS 8 Operating Segments effective January 1, 2009 | |
• | IFRS 7 Financial Instruments: Disclosures (Amended) effective January 1, 2009 | |
• | IAS 1 Presentation of Financial Statements (Revised) effective January 1, 2009 | |
• | IAS 32 Financial Instruments: Presentation (Amended) and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation (Amended) effective January 1, 2009 | |
• | IAS 23 Borrowing Costs (Revised) effective January 1, 2009 | |
• | Improvements to IFRSs (May 2008) | |
• | IFRIC 18 Transfers of Assets from Customers effective for transfers after July 1, 2009 |
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• | IAS 1, “Presentation of Financial Statements” (Revised): The revised standard requires that the statement of changes in equity includes only transactions with owners; introduces a new statement of comprehensive income that combines all items of income and expense recognized in the income statement together with “other comprehensive income” (either in one single statement or in two linked statements); and requires the inclusion of a third column on the statement of financial position to present the effect of restatements of financial statements or retrospective application of a new accounting policy as at the beginning of the earliest comparative period. The Group made the necessary changes to the presentation of its financial statements in 2009 and elected to present two linked statements for the statement of comprehensive income. | |
• | IFRS 7, “Financial Instruments: Disclosures”: The amended standard requires additional disclosures about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by the source of inputs, using a three-level hierarchy, by class, for all financial instruments recognized at fair value. In addition, reconciliation between the beginning and ending balance for level 3 fair value measurements is now required, as well as significant transfers between the levels in the fair value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. | |
• | IFRS 8, “Operating segments”: IFRS 8 replaces IAS 14 “Segment reporting” and adopts a management approach to segment reporting. The Group concluded that the operating segments determined in accordance with IFRS 8 are the same as the business segments previously identified under IAS 14. |
• | IFRIC 17 Distributions of Non-cash Assets to Owners: This interpretation is effective for annual periods beginning on or after July 1, 2009 with early application permitted. The interpretation provides guidance on how to account for non-cash distributions to owners. The interpretation clarifies when to recognize a liability, how to measure it and the associated assets, and when to derecognize the asset and liability. | |
• | IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments: The interpretation is effective for annual periods beginning on or after July 1, 2010. This interpretation addresses the accounting treatment when there is a renegotiation between the entity and the creditor regarding the terms of a financial liability and the creditor agrees to accept the entity’s equity instruments to settle the financial liability fully or partially. IFRIC 19 clarifies such equity instruments are “consideration paid” in accordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognized and the equity instruments issued are treated as consideration paid to extinguish that financial liability. | |
• | IFRIC 14 Prepayments of a Minimum Funding Requirement (Amended): The amendment is effective for annual periods beginning on or after January 1, 2011. The purpose of this amendment was to permit entities to recognize as an asset some voluntary prepayments for minimum funding contributions. Earlier application is permitted and must be applied retrospectively. | |
• | IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended): The revision and amendment is effective for annual periods beginning on or after July 1, 2009. The revised IFRS 3 introduces a number of changes in the accounting for business combinations which impacts the amount of goodwill recognized, the reported results in the period that an acquisition occurs, and future reported results. Such changes include the expensing of acquisition-related costs and recognizing subsequent changes in fair value of contingent consideration in the income statement (rather than by adjusting goodwill). The amended IAS 27 requires that a change in ownership interest of a subsidiary is accounted for as an equity transaction. Therefore such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by IFRS 3 (Revised) and |
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IAS 27 (Amendment) must be applied prospectively and will affect future acquisitions and transactions with non-controlling interests. |
• | IAS 39 Financial Instruments: Recognition and Measurement (Amended) — eligible hedged items: The amendment is effective for annual periods beginning on or after July 1, 2009. The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. | |
• | IFRS 9 Financial Instruments — Phase 1 financial assets, classification and measurement: The new standard is effective for annual periods beginning on or after January 1, 2013. Phase 1 of this new IFRS introduces new requirements for classifying and measuring financial assets. Early adoption is permitted. | |
• | IFRS 2 Group Cash-settled Share-based Payment Transactions (Amended): The amendment is effective for annual periods beginning on or after January 1, 2010. This amendment clarifies the accounting for group cash-settled share-based payment transactions and how such transactions should be arranged in the individual financial statements of the subsidiary. | |
• | IAS 32 Classification on Rights Issues (Amended): The amendment is effective for annual periods beginning on or after February 1, 2010. This amendment relates to the rights issues offered for a fixed amount of foreign currency which were treated as derivative liabilities by the existing standard. The amendment states that if certain criteria are met, these should be classified as equity regardless of the currency in which the exercise price is denominated. The amendment is to be applied retrospectively. | |
• | IAS 24 Related Party Disclosures (Revised): The revision is effective for annual periods beginning on or after January 1, 2011. This revision relates to the judgment which is required so as to assess whether a government and entities known to the reporting entity to be under the control of that government are considered a single customer. In assessing this, the reporting entity shall consider the extent of economic integration between those entities. Early application is permitted and adoption shall be applied retrospectively. | |
• | IFRS 1 Additional Exemptions for First-time Adopters (Amended): The amendment is effective for annual periods beginning on or after January 1, 2010. | |
• | IFRS 1 Limited Exemption from Comparative IRFS 7 Disclosures for first time adopters (Amended): The amendment is effective for annual periods beginning on or after July 1, 2010. |
• | Next Generation Access Network Architectures (NGA); |
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• | Next Generation SDH technologies; | |
• | Security and Environmental Monitor of Outdoor Distributing Cabinets; | |
• | IPTV services; and | |
• | IMS platform and next generation service creation platforms. |
• | REWIND (Relay based Wireless Network and standard) aims to develop a “smart” WiMAX repeater fully utilizing all advanced capabilities WiMAX offers; | |
• | FUTON (Fiber Optic Networks for Distributed, Extendible Heterogeneous Radio Architectures and Service Provisioning) aims to develop a hybrid optical-wireless infrastructure to connect distributed antenna units to a centralized common processing unit(Radio-Over-Fiber); and | |
• | SELFnet (Self Management of Cognitive Future Internet Elements) aims to develop an innovative cognitive telecommunications network, facing the challenge for the development and exploitation of the future internet, whose infrastructure and applications can self-extend, self-improve, self-adjust and self-repair in real time. |
Payments Due by Maturity at December 31, 2009 | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
(Euro in millions) | ||||||||||||||||||||
Total debt obligations | 5,421.9 | 36.2 | 2,626.7 | 1,258.0 | 1,501.0 | |||||||||||||||
Purchase obligations | 369.2 | 259.0 | 26.2 | 26.2 | 57.8 | |||||||||||||||
Operating lease obligations | 612.9 | 107.5 | 152.1 | 151.7 | 201.6 | |||||||||||||||
Accrued interest payable | 158.2 | 158.2 | — | — | — | |||||||||||||||
Total | 6,562.2 | 560.9 | 2,805.0 | 1,435.9 | 1,760.4 | |||||||||||||||
ITEM 6 | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
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Name | Position | Capacity | Appointed | Expiry | Age | |||||||||||||||
Panagis Vourloumis | Chairman and Managing Director | Executive | June 24, 2009 | 2012 | 73 | |||||||||||||||
Charalambos Dimitriou | Vice-chairman | Non-executive | June 24, 2009 | 2012 | 54 | |||||||||||||||
Panagiotis Tampourlos | Director | Independent | June 24, 2009 | 2012 | 58 | |||||||||||||||
Rainer Rathgeber(1) | Director | Non-executive | February 19, 2010 | 2012 | 46 | |||||||||||||||
Kevin Copp | Director | Executive | June 24, 2009 | 2012 | 46 | |||||||||||||||
Leonidas Evangelidis | Director | Independent | June 24, 2009 | 2012 | 75 | |||||||||||||||
Konstantinos Michalos | Director | Independent | June 24, 2009 | 2012 | 50 | |||||||||||||||
Ioannis Benopoulos | Director | Independent | June 24, 2009 | 2012 | 45 | |||||||||||||||
Guido Kerkhoff | Director | Non-executive | June 24, 2009 | 2012 | 43 | |||||||||||||||
Iordanis Aivazis | Director | Executive | June 24, 2009 | 2012 | 60 |
(1) | Mr. Rathgeber was elected to the Board of Directors on February 19, 2010. He replaced Mr. Hamid Akhavan-Malayeri for the remainder of his office term, following his resignation. |
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• | the composition of our Board of Directors; | |
• | transparency and disclosure of information; and | |
• | the protection of shareholders’ rights. |
• | an internal audit department responsible for monitoring of the company’s controls, including, among other things, monitoring of the continuous implementation of Internal Regulations and Articles of Incorporation, as well as regulations pertaining to the company; | |
• | a shareholders’ relations department responsible for providing information to shareholders relating to distribution and payment of dividends, corporate actions and information concerning the general assembly of shareholders; and | |
• | an announcement department responsible for the announcement of all notices and statements pertaining to the company. |
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• | integrity of our financial statements; | |
• | adequacy of internal control procedures and systems; | |
• | observance and adequacy of accounting and financial reporting processes; | |
• | operation of internal audit department procedures; | |
• | evaluation of our external auditors, mainly referring to their independence, integrity, adequacy and performance; and | |
• | observance of our legal and regulatory framework. |
• | examining and evaluating the efficiency and effectiveness of the internal control framework that we apply, including the adequacy of security and control of informational systems, and informing the Board of its conclusions regarding these matters; | |
• | discussing with management and our external auditors, our quarterly, semi-annual and annual financial statements prior to their publication; | |
• | evaluating the completeness and consistency of our financial statements, pursuant to the information that is known to its members; | |
• | examining, following the completion of the annual audit, the significant issues that have arisen during the audit, the results of the audit and any issues raised by the external auditors during the execution of their work; | |
• | advising our Board regarding the selection of external auditors; | |
• | examining the audit framework and methodology of the annual audit conducted by the external auditors, evaluating their performance and recommending to the Board their release from any liability to us with respect to the audit of our statutory financial statements; | |
• | pre-approving all services rendered by, and fees due to, the external auditors; | |
• | examining and evaluating the independence of the external auditors and suggesting to the Board measures to be taken in order to maintain their independence; |
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• | supervising the internal audit department and overseeing the independent and effective function of the internal auditors, including, among other matters, examining and evaluating the development of the annual audit plan and recommending its approval to the Board, monitoring the implementation of the annual audit plan and evaluating the progress and effectiveness of the internal audit work; | |
• | designing, establishing and implementing procedures for the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters, as well as the confidential, anonymous submission by our employees or third parties of concerns regarding questionable accounting or auditing matters. Our Audit Committee has adopted a complaints procedure in accordance withRule 10A-3 of the Exchange Act, according to which, such complaints may be submitted to the Audit Committee via the Chief Compliance Officer function; | |
• | examining, along with management and our external auditors, any exchange of information with the supervisory authorities, as well as any public reports and publications regarding critical issues relating to our financial statements; and | |
• | examining, along with our legal counsel, any legal issues that may significantly affect our financial statements or our compliance with the applicable statutory framework. |
• | may delegate to its members the exercise of particular competences; for this purpose, the Audit committee may give to its members specific written authorizations; | |
• | may engage, following the approval of our Board, independent counsel and other advisers; | |
• | determines our obligation to provide the necessary funding for the performance of its tasks; and | |
• | has free access to all of our information and records. |
• | Determination of the principles of the company’s human resources policy, which will govern the decisions and actions of the management; | |
• | Definition of our company’s compensation and remuneration policy; | |
• | Approval of draft plans relating to compensation, benefits, stock options and bonuses; | |
• | Submitting proposals to the Board of Directors regarding compensation and benefits of the Managing Director; | |
• | Studying and assessing issues relating to our company’s human resources; and | |
• | Setting out principles of our corporate social responsibility policies. |
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• | examining and evaluating the group’s system of internal controls; | |
• | carrying out investigations of compliance issues; | |
• | identifying risks and makes relevant recommendations to the management; and | |
• | ensuring the uniform development and operation of Internal Audit departments within the Group companies |
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Name | Position | Age | ||||
Panagis Vourloumis | Chairman and Managing Director | 73 | ||||
Iordanis Aivazis | Chief Operating Officer | 60 | ||||
Kevin Copp | Group Chief Financial Officer | 46 | ||||
Yorgos Ioannidis | Managing Director of RomTelecom | 60 | ||||
Michael Tsamaz | Managing Director of Cosmote, | 51 | ||||
Managing Director of OTE Investment Services | ||||||
Elias Drakopoulos | Chief Commercial Officer for Enterprise and Business Services | 46 | ||||
Christos Katsaounis(1) | Chief Commercial Officer for Residential Customers | 47 | ||||
George Mavrakis(2) | Chief Financial Officer | 46 | ||||
Maria Efthimerou | Chief Technology Officer | 55 | ||||
Konstantinos Kappos | Chief Information Officer | 55 | ||||
Andreas Karageorgos | Chief Regional Officer | 58 | ||||
Loizos Kyzas(3) | Chief Human Resources Officer | 59 | ||||
Maria Rontogianni(4) | Chief Internal Audit Officer | 37 | ||||
Panagiotis Sarandopoulos(5) | Chief Officer of National Wholesale Services | 55 | ||||
Konstantinos Ploumpis | Chief Regulatory Officer | 42 | ||||
Paraskevas Passias(6) | General Counsel | 44 | ||||
Aristodimos Dimitriadis | Chief Compliance Officer | 45 | ||||
Dino Andreou | Chief Executive Officer of OTEGlobe | 53 |
(1) | Mr. Katsaounis who has served as Chief Officer of National Wholesale Services from July 2007 until January 18, 2010, assumed the position of Chief Commercial Officer for Residential Customers. | |
(2) | Mr. Mavrakis replaced Ms. Christini Spanoudaki in this position as of August 19, 2009. | |
(3) | Mr. Kyzas replaced Mr. Tsatsanis in this position on April 27, 2009. | |
(4) | Mrs. Rontogianni replaced Mr. Kosmas Liaros in this position as of September 7, 2009. | |
(5) | Mr. Sarandopoulos, Chief Commercial Officer for Residential Customers from December 2007 until January 18, 2010, assumed the position of Chief Officer of National Wholesale Services. | |
(6) | Dr. Passias is General Counsel of OTE and his area of responsibility covers all legal matters excluding regulatory and competition affairs and legal matters of subsidiaries. |
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• | our Managing Director, General Directors, Deputy General Directors, General Counsel, Directors and Deputy Directors; | |
• | the Managing Directors of OTE Globe, OTE Estate and RomTelecom; | |
• | the Chairman, Managing Director, Deputy Managing Director, Legal Counsel, Directors, Deputy Directors and heads of departments of Cosmote; and | |
• | key executives of subsidiaries of Cosmote. |
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For the Year Ended | ||||||||
December 31, 2009 | ||||||||
Weighted Average | ||||||||
Number of Options | Exercise Price | |||||||
Outstanding at the beginning of the year | 6,008,060 | 15.66 | ||||||
Granted | 3,225,670 | 16.21 | ||||||
Forfeited | (559,130 | ) | 16.23 | |||||
Exercised | — | — | ||||||
Expired at end of the year | — | — | ||||||
Outstanding at the end of the year | 8,674,600 | 15.59 | ||||||
Exercisable at the end of the year | 4,485,370 | 15.05 | ||||||
As of December 31(1), | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Administration | 3,247 | 3,314 | 3,094 | |||||||||
Finance | 626 | 609 | 594 | |||||||||
Technical | 6,360 | 6,545 | 6,118 | |||||||||
Support Staff | 732 | 701 | 652 | |||||||||
Specialists | 295 | 304 | 303 | |||||||||
Other Staff | 88 | 89 | 92 | |||||||||
Total Permanent Staff | 11,348 | 11,562 | 10,853 | |||||||||
Part-time | 27 | 121 | 147 | |||||||||
Personnel previously with OTENet | 379 | 373 | 369 | |||||||||
Total | 11,754 | 12,056 | 11,369 | |||||||||
Change (%) | (0.2 | )% | 2.6 | % | (5.7 | )% | ||||||
Access lines in service per employee(2) | 497 | 446.7 | 439.1 | |||||||||
(1) | Includes our employees currently working with us or transferred or seconded to our subsidiaries. | |
(2) | Includes our fixed-line telephony network access lines in service (64kb equivalent) at the end of respective period. Also includes our employees currently working with us or seconded or transferred to our subsidiaries. |
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• | we continue to improve our performance appraisal process; | |
• | we focus our recruitment efforts on personnel with the necessary specialized and technical knowledge, mainly in the areas of telecommunications engineering, economics, finance and accounting, sales and marketing and information technology; | |
• | we are training our employees to function in a customer-oriented manner and in new technologies, having instituted several customer service training programs; in 2009, 6,853 of our employees attended 803 seminars on topics selected to improve the quality and efficiency of their performance; and | |
• | we have streamlined our management structure, delegating decision-making responsibility to more junior levels in order to accelerate our response to customer demands. |
Number of Employees | ||||||||||||
As of December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Attica | 1,876 | 2,043 | 1,910 | |||||||||
Northern Greece | 1,958 | 1,996 | 1,880 | |||||||||
Southwestern Greece | 1,561 | 1,601 | 1,533 | |||||||||
Crete and Islands | 841 | 851 | 804 | |||||||||
Employees of our OTEShops/Sales Support in Greece | 1,483 | 2,078 | 1,870 | |||||||||
Remainder of our employees (Athens) | 4,035 | 3,487 | 3,372 | |||||||||
Total(1) | 11,754 | 12,056 | 11,369 | |||||||||
(1) | The 2007 figures include 379 employees of OTENet. OTENet employees were integrated within OTE as of 2008. |
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Number of OTE | Number of OTE | |||||||||||
Name | Shares Held | Options Held(1) | ||||||||||
Panagis Vourloumis | 0 | 368,295 | ||||||||||
Iordanis Aivazis | 0 | 140,356 | ||||||||||
Charalambos Dimitriou | 0 | 0 | ||||||||||
Panagiotis Tampourlos | 0 | 0 | ||||||||||
Kevin Copp | 0 | 133,898 | ||||||||||
Konstantinos Michalos | 0 | 0 | ||||||||||
Ioannis Benopoulos | 0 | 0 | ||||||||||
Rainer Rathgeber | 0 | 0 | ||||||||||
Guido Kerkhoff | 0 | 0 | ||||||||||
Leonidas Evangelidis | 0 | 0 | ||||||||||
Yorgos Ioannidis | 0 | 125,677 | ||||||||||
Dinos Andreou | 0 | 69,851 | ||||||||||
Michael Tsamaz | 0 | 211,350 | ||||||||||
Elias Drakopoulos | 0 | 96,214 | ||||||||||
George Mavrakis | 0 | 60,352 | ||||||||||
Maria Efthimerou | 0 | 79,505 | ||||||||||
Konstantinos Kappos | 3,136 | 85,493 | ||||||||||
Andreas Karageorgos | 35 | 81,063 | ||||||||||
Loizos Kyzas | 0 | 92,456 | ||||||||||
Maria Rontogianni | 0 | 73,358 | ||||||||||
Christos Katsaounis | 300 | 75,097 | ||||||||||
Konstantinos Ploumpis | 0 | 75,304 | ||||||||||
Paraskevas Passias | 0 | 53,880 | ||||||||||
Panagiotis Sarantopoulos | 0 | 84,774 | ||||||||||
Aristodimos Dimitriadis | 0 | 0 |
(1) | The number of options listed have been granted under our existing management stock option plan (including vested and non-vested options). |
ITEM 7 | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
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• | contemplating the possibility of the establishment of an Executive Committee; | |
• | contemplating our Board of Directors comprising of ten members, as opposed to the previous minimum of eleven members; and | |
• | contemplating that, in the event of a tie in the Board of Directors, the Chairman will hold the casting vote, except for certain matters and except in the event an Executive Committee has already been established. |
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in millions) | ||||||||||||
Accounts receivable from related parties(1) | 0 | 6.5 | 10.1 | |||||||||
Accounts payable to related parties by our Group(1) | 0 | 7.5 | 6.4 |
(1) | Amounts relate to Deutsche Telekom (and its subsidiaries for 2009). |
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ITEM 8 | FINANCIAL INFORMATION |
ITEM 9 | THE OFFER AND LISTING |
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Athens Exchange | NYSE | |||||||||||||||||||||||
Average Daily | Average Daily | |||||||||||||||||||||||
High | Low | Trading Volume | High | Low | Trading Volume(2) | |||||||||||||||||||
Price per share (Euro) | Price per ADS(1) (U.S.$) | |||||||||||||||||||||||
2005 | 18.46 | 13.04 | 1,309,218 | 11.17 | 8.46 | 32,943 | ||||||||||||||||||
2006 | 23.72 | 15.94 | 1,094,406 | 15.72 | 10.03 | 26,366 | ||||||||||||||||||
2007 | 26.98 | 19.92 | 2,139,423 | 19.31 | 13.31 | 58,536 | ||||||||||||||||||
2008 | 25.40 | 8.98 | 2,042,136 | 18.69 | 5.65 | 79,633 | ||||||||||||||||||
2009 | 13.14 | 9.84 | 1,300,818 | 9.70 | 6.14 | 54,434 | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
First quarter | 25.40 | 17.60 | 2,223,633 | 18.69 | 13.74 | 86,850 | ||||||||||||||||||
Second quarter | 20.60 | 15.56 | 3,186,304 | 15.89 | 11.71 | 95,503 | ||||||||||||||||||
Third quarter | 15.48 | 12.56 | 1,326,041 | 12.06 | 8.77 | 61,520 | ||||||||||||||||||
Fourth quarter | 12.92 | 8.98 | 1,506,027 | 9.22 | 5.65 | 74,997 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
First quarter | 13.14 | 9.84 | 935,662 | 8.91 | 6.14 | 52,709 | ||||||||||||||||||
Second quarter | 12.58 | 10.90 | 1,367,781 | 8.71 | 7.16 | 51,221 | ||||||||||||||||||
Third quarter | 11.65 | 10.00 | 1,790,914 | 8.50 | 7.03 | 53,458 | ||||||||||||||||||
Fourth quarter | 12.71 | 10.01 | 1,233,488 | 9.70 | 7.35 | 60,219 | ||||||||||||||||||
2010 | ||||||||||||||||||||||||
January | 10.75 | 9.88 | 1,118,695 | 7.94 | 6.88 | 76,894 | ||||||||||||||||||
February | 9.99 | 8.56 | 1,282,696 | 6.97 | 5.90 | 406,148 | ||||||||||||||||||
March | 9.60 | 8.86 | 825,446 | 6.58 | 6.08 | 365,193 | ||||||||||||||||||
April | 9.19 | 7.80 | 1,385,265 | 6.23 | 5.34 | 572,123 | ||||||||||||||||||
May | 8.39 | 6.45 | 1,571,126 | 5.54 | 3.87 | 681,941 |
(1) | Each ADS represents one half of one share. | |
(2) | Number of ADSs. |
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ITEM 10 | ADDITIONAL INFORMATION |
• | the establishment, management and operation of telecommunications infrastructure; | |
• | the development and provision of telecommunications services, including satellite telecommunications services; | |
• | the production, ownership, use and exploitation of telecommunications equipment and other assets; and | |
• | the development and use of new services based on technological advances in the areas of telecommunications, information technology, multimedia, internet, or other services we can provide through our own networks or through networks we may be granted access to. |
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• | to request the Board to convene an extraordinary general assembly; | |
• | to request that the Board include additional items on the agenda, if such request is made at least 15 days prior to the date set for the general assembly; | |
• | to postpone only once the adoption of a resolution by the ordinary or extraordinary general assembly for all or certain items on the agenda; | |
• | to request that the Board, during an ordinary general assembly, provide information concerning any amounts paid within the last two years to our Directors or executive officers, as well as details of any financial benefit to these persons derived from any cause or contract between the company and these persons; the Board may refuse to give such information by providing a material reason for such refusal. Disputes over the Board’s grounds to refusing such information may be adjudicated by the competent court according to injunctive relief proceedings; | |
• | to request a vote of the holders of the shares present or represented at the meeting regarding any item on the agenda; and | |
• | to request that a competent court review our operations when it is believed that applicable laws, our Articles of Incorporation or resolutions of the general assembly are being violated. |
• | to request that competent court review our operations, when it is believed that our affairs are not properly managed; and | |
• | to request from the Board particular informaPtion on our company’s operations and financial condition. Disputes over the Board’s grounds to refuse such information may be adjudicated by the competent court according to injunctive relief proceedings. |
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• | a certificate of a broker or other relevant person evidencing the sale of shares; and | |
• | a certificate as to the entitlement to the payment of dividends on shares. |
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• | a citizen of or an individual resident in the United States; | |
• | a corporation or certain other entities, created or organized in or under the laws of the United States or any state thereof (including the District of Columbia); | |
• | an estate whose income is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust or the trust elects under U.S. Treasury Regulations to be treated as a U.S. person (a“U.S. Holder”). |
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ITEM 11 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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Year Ended December 31, | ||||||||
2008 | 2009 | |||||||
(Euro in millions) | ||||||||
Variable interest rate | 1,099.3 | 503.3 | ||||||
Fixed interest rate | 4,948.4 | 4,918.6 | ||||||
Total | 6,047.7 | 5,421.9 |
Year Ended December 31, | ||||||||
2008 | 2009 | |||||||
(Euro in millions) | ||||||||
Profit before tax | 3.3 | 4.7 | ||||||
Equity | 3.0 | — |
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Expected Maturity Date as at December 31, 2009 | ||||||||||||||||||||||||||||||||||
Base | ||||||||||||||||||||||||||||||||||
Currency | 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||||
(Euro in millions) | ||||||||||||||||||||||||||||||||||
Long term Debt: | ||||||||||||||||||||||||||||||||||
Fixed Rate: | ||||||||||||||||||||||||||||||||||
€650 million 3.75% Nov 2011 bond | Euro | — | 639.7 | — | — | — | — | 639.7 | 657.0 | |||||||||||||||||||||||||
€1,250 million 5% Aug 2013 bond | Euro | — | — | — | 1,250.8 | — | — | 1,250.8 | 1,284.1 | |||||||||||||||||||||||||
€900 million 4.625% May 2016 bond | Euro | — | — | — | — | — | 892.5 | 892.5 | 892.5 | |||||||||||||||||||||||||
€1,500 million 5.375% Feb 2011 bond | Euro | — | 1,496.8 | — | — | — | — | 1,496.8 | 1,545.0 | |||||||||||||||||||||||||
€600 million 6% Feb 2015 bond | Euro | — | — | — | — | — | 596.7 | 596.7 | 638.3 | |||||||||||||||||||||||||
Other bank loans | Various | 7.1 | 8.0 | 8.0 | 4.0 | 3.2 | 11.8 | 42.1 | 35.3 | |||||||||||||||||||||||||
Floating Rate: | ||||||||||||||||||||||||||||||||||
Syndicated loan facility | Euro | 25.8 | 29.0 | 445.2 | — | — | — | 500.0 | 500.0 | |||||||||||||||||||||||||
Other bank loans | Various | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total long term debt | 32.9 | 2,173.5 | 453.2 | 1,254.8 | 3.2 | 1,501.0 | 5,418.6 | 5,552.2 | ||||||||||||||||||||||||||
Short term Debt | ||||||||||||||||||||||||||||||||||
Floating rate | Euro | 3.3 | — | — | — | — | — | 3.3 | 3.3 | |||||||||||||||||||||||||
Total short term debt | 3.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.3 | 3.3 | ||||||||||||||||||||||||||
TOTAL | 36.2 | 2,173.5 | 453.2 | 1,254.8 | 3.2 | 1,501.0 | 5,421.9 | 5,555.5 | ||||||||||||||||||||||||||
Expected Maturity Date as at December 31, 2008 | ||||||||||||||||||||||||||||||||||
Base | ||||||||||||||||||||||||||||||||||
Currency | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||||
(Euro in millions) | ||||||||||||||||||||||||||||||||||
Long term Debt: | ||||||||||||||||||||||||||||||||||
Fixed Rate: | ||||||||||||||||||||||||||||||||||
€650 million 3.75% Nov 2011 bond | Euro | — | — | 634.4 | — | — | — | 634.4 | 604.2 | |||||||||||||||||||||||||
€1,250 million 5% Aug 2013 bond | Euro | — | — | — | — | 1,248.8 | — | 1,248.8 | 1,158.5 | |||||||||||||||||||||||||
€900 million 4.625% May 2016 bond | Euro | — | — | — | — | — | 891.5 | 891.5 | 758.3 | |||||||||||||||||||||||||
€1,500 million 5.375% Feb 2011 bond | Euro | — | — | 1,494.2 | — | — | — | 1,494.2 | 1,466.3 | |||||||||||||||||||||||||
€600 million 6% Feb 2015 bond | Euro | — | — | — | — | — | 596.3 | 596.3 | 562.7 | |||||||||||||||||||||||||
Loan from E.I.B. | Euro | 18.9 | — | — | — | — | — | 18.9 | 18.9 | |||||||||||||||||||||||||
Other bank loans | Various | 14.8 | 11.2 | 7.8 | 7.8 | 3.7 | 14.0 | 59.3 | 59.3 | |||||||||||||||||||||||||
Floating Rate: | ||||||||||||||||||||||||||||||||||
Syndicated loan facility | Euro | — | 25.8 | 29.0 | 445.2 | — | — | 500.0 | 500.0 | |||||||||||||||||||||||||
€600 million floating rate Nov 2009 note | Euro | 599.3 | — | — | — | — | — | 599.3 | 589.5 | |||||||||||||||||||||||||
Other bank loans | Various | — | — | — | — | — | — | 0.0 | 0.0 | |||||||||||||||||||||||||
Total long term debt | 633.0 | 37.0 | 2,165.4 | 453.0 | 1,252.5 | 1,501.8 | 6,042.7 | 5,717.7 | ||||||||||||||||||||||||||
Short term Debt | ||||||||||||||||||||||||||||||||||
Floating rate | Euro | 5.1 | — | — | — | — | — | 5.1 | 5.1 | |||||||||||||||||||||||||
Total short term debt | 5.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 5.1 | 5.1 | ||||||||||||||||||||||||||
TOTAL | 638.1 | 37.0 | 2,165.4 | 453.0 | 1,252.5 | 1,501.8 | 6,047.8 | 5,722.8 | ||||||||||||||||||||||||||
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Effect on Profit Before Tax | ||||||||
2009 | 2009 | |||||||
(Euro in million) | ||||||||
+10% | 12.4 | 7.2 | ||||||
−10% | (12.4 | ) | (7.2 | ) |
ITEM 12 | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
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Persons depositing or withdrawing shares must pay: | For: | |
U.S. $5.00 (or less) per 100 American Depositary Shares (or portion of 100 American Depositary Shares) | • Issuance of American Depositary Shares, including issuances resulting from a distribution of shares or rights or other property | |
• Cancellation of American Depositary Shares for the purpose of withdrawal, including if the deposit agreement terminates (except for cancellations or withdrawals, if any, caused solely by the appointment and qualification of a successor depositary) | ||
U.S. $0.02 (or less) per American Depositary Share | • Any cash distribution to registered holders of American Depositary Shares (except for distributions of cash dividends) | |
A fee equivalent to the fee that would be payable if securities distributed to holders of American Depositary Shares had been shares and the shares had been deposited for issuance of American Depositary Shares | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to registered holders of American Depositary Shares | |
Registration or transfer fees | • Transfer and registration of shares on our share (or the share register of the registrar or any securities depositary, including the Central Securities Depositary of the Athens Stock Exchange) register to or from the name of the depositary or its agent when American Depositary Shares are deposited or withdrawn | |
Expenses of the depositary | • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) | |
• Converting foreign currency to U.S. dollars | ||
Taxes and other governmental charges the depositary or the custodian have to pay on any American Depositary Share or share underlying an American Depositary Share, for example, stock transfer taxes, stamp duty or withholding taxes | • As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | • As necessary |
ITEM 13 | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
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ITEM 14 | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15 | CONTROLS AND PROCEDURES |
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ITEM 16 | [RESERVED] |
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• | compliance with the laws and the regulations of countries where we develop business activities; | |
• | reliability of information, reports and internal audits; | |
• | confidentiality of information, especially of a nature affecting share price and corporate reputation; | |
• | avoidance of conflicts between personal and professional interests; | |
• | non-discrimination against employees, customers and vendors and the avoidance of non-transparent agreements with competitors; and | |
• | accountability for adherence to the Code of Ethics. |
KPMG | Ernst & Young | |||||||||||
2007 | 2008 | 2009 | ||||||||||
(Euro in thousands) | ||||||||||||
Audit fees | 4,475 | 2,358 | 2,877 | |||||||||
Audit-Related Fees | 599 | 374 | 78 | |||||||||
Tax Fees | 6 | 13 | 40 | |||||||||
Other Fees | — | — | — | |||||||||
Total Fees | 5,080 | 2,745 | 2,995 | |||||||||
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ITEM 17 | FINANCIAL STATEMENTS |
ITEM 18 | FINANCIAL STATEMENTS |
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ITEM 19 | EXHIBITS |
3 | .1 | Agreement between the Greek State and IKA-ETAM regarding the transfer of shares representing 4.0% of the share capital of OTE S.A. and the exercise of voting rights with respect to these shares byIKA-ETAM. | ||
12 | .1 | Certification of chief executive officer pursuant to 18 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
12 | .2 | Certification of chief financial officer pursuant to 18 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
13 | .1 | Certification of chief executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
13 | .2 | Certification of chief financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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ORGANIZATION S.A.
By: | /s/ Panagis Vourloumis |
Title: | Chairman & Managing Director |
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AS OF DECEMBER 31, 2009
IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS
as issued by the International Accounting Standards Board (“IASB”)
REGISTRATION No S.A. 347/06/B/86/10
99 KIFFISIAS AVE — 151 24 MAROUSSI ATHENS, GREECE
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Ernst & Young (Hellas) Certified Auditors Accountants S.A.(2009-2008)
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Hellenic Telecommunications Organization S.A.:
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December 31, | ||||||||||||
Notes | 2009 | 2008 | ||||||||||
(Amounts in millions of Euro) | ||||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 4 | 5,625.1 | 5,872.8 | |||||||||
Goodwill | 5 | 551.8 | 525.1 | |||||||||
Telecommunication licenses | 6 | 362.2 | 329.5 | |||||||||
Other intangible assets | 7 | 520.6 | 550.7 | |||||||||
Investments | 8 | 157.0 | 156.6 | |||||||||
Loans and advances to pension funds | 18 | 154.5 | 194.5 | |||||||||
Deferred tax assets | 21 | 253.6 | 286.8 | |||||||||
Other non-current assets | 9 | 127.3 | 120.7 | |||||||||
Total non-current assets | 7,752.1 | 8,036.7 | ||||||||||
Current assets | ||||||||||||
Inventories | 229.1 | 201.3 | ||||||||||
Trade receivables | 10 | 1,153.0 | 1,194.2 | |||||||||
Other financial assets | 11 | 35.4 | 135.9 | |||||||||
Other current assets | 12 | 255.6 | 261.6 | |||||||||
Cash and cash equivalents | 13 | 868.8 | 1,427.8 | |||||||||
Total current assets | 2,541.9 | 3,220.8 | ||||||||||
Assets classified as held for sale | 8 | — | 167.7 | |||||||||
TOTAL ASSETS | 10,294.0 | 11,425.2 | ||||||||||
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December 31, | ||||||||||||
Notes | 2009 | 2008 | ||||||||||
(Amounts in millions of Euro) | ||||||||||||
EQUITY AND LIABILITIES | ||||||||||||
Equity attributable to owners of the Parent | ||||||||||||
Share capital | 14 | 1,171.5 | 1,171.5 | |||||||||
Share premium | 14 | 505.1 | 497.9 | |||||||||
Statutory reserve | 15 | 344.1 | 330.2 | |||||||||
Foreign exchange and other reserves | 15 | (53.3 | ) | 73.9 | ||||||||
Changes in non-controlling interests | 8 | (3,321.5 | ) | (3,315.2 | ) | |||||||
Retained earnings | 15 | 2,546.1 | 2,553.6 | |||||||||
Total equity attributable to owners of the Parent | 1,192.0 | 1,311.9 | ||||||||||
Non-controlling Interests | 757.7 | 861.3 | ||||||||||
Total equity | 1,949.7 | 2,173.2 | ||||||||||
Non-current liabilities | ||||||||||||
Long-term borrowings | 17 | 5,385.7 | 5,409.6 | |||||||||
Provision for staff retirement indemnities | 18 | 266.5 | 254.9 | |||||||||
Provision for voluntary leave scheme | 18 | 109.9 | 107.2 | |||||||||
Provision for youth account | 18 | 282.3 | 286.3 | |||||||||
Deferred tax liabilities | 21 | 113.7 | 116.7 | |||||||||
Other non-current liabilities | 19 | 77.9 | 74.6 | |||||||||
Total non-current liabilities | 6,236.0 | 6,249.3 | ||||||||||
Current liabilities | ||||||||||||
Trade accounts payable | 813.2 | 943.9 | ||||||||||
Short-term borrowings | 20 | 3.3 | 5.1 | |||||||||
Short-term portion of long-term borrowings | 17 | 32.9 | 633.0 | |||||||||
Income tax payable | 163.2 | 58.0 | ||||||||||
Deferred revenue | 256.6 | 228.4 | ||||||||||
Provision for voluntary leave scheme | 18 | 149.0 | 275.8 | |||||||||
Dividends payable | 16 | 4.2 | 3.8 | |||||||||
Other current liabilities | 22 | 685.9 | 838.2 | |||||||||
Total current liabilities | 2,108.3 | 2,986.2 | ||||||||||
Liabilities directly associated with the assets classified as held for sale | 8 | — | 16.5 | |||||||||
TOTAL EQUITY AND LIABILITIES | 10,294.0 | 11,425.2 | ||||||||||
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Year Ended December 31, | ||||||||||||||||
Notes | 2009 | 2008 | 2007 | |||||||||||||
(Amounts in millions of Euro except per share data) | ||||||||||||||||
Revenue | ||||||||||||||||
Domestic telephony | 23 | 1,619.6 | 1,814.2 | 2,022.2 | ||||||||||||
International telephony | 23 | 251.1 | 286.9 | 304.5 | ||||||||||||
Mobile telephony | 23 | 2,396.2 | 2,470.8 | 2,210.0 | ||||||||||||
Other revenue | 23 | 1,717.2 | 1,835.4 | 1,783.1 | ||||||||||||
Total revenue | 5,984.1 | 6,407.3 | 6,319.8 | |||||||||||||
Operating expenses | ||||||||||||||||
Payroll and employee benefits | (1,190.8 | ) | (1,168.4 | ) | (1,149.0 | ) | ||||||||||
Provision for staff retirement indemnities and youth account | 18 | (95.5 | ) | (112.6 | ) | (92.3 | ) | |||||||||
Cost of early retirement program | 18 | 30.3 | (50.2 | ) | (22.1 | ) | ||||||||||
Charges from international operators | (184.0 | ) | (173.9 | ) | (182.7 | ) | ||||||||||
Charges from domestic operators | (516.3 | ) | (642.3 | ) | (655.3 | ) | ||||||||||
Depreciation and amortization | (1,155.3 | ) | (1,213.0 | ) | (1,171.8 | ) | ||||||||||
Cost of telecommunications equipment | (475.1 | ) | (633.4 | ) | (672.8 | ) | ||||||||||
Other operating expenses | 24 | (1,396.5 | ) | (1,355.8 | ) | (1,326.9 | ) | |||||||||
Total operating expenses | (4,983.2 | ) | (5,349.6 | ) | (5,272.9 | ) | ||||||||||
Operating profit before financial activities | 1,000.9 | 1,057.7 | 1,046.9 | |||||||||||||
Income and expense from financial activities | ||||||||||||||||
Interest expense | (325.2 | ) | (343.7 | ) | (238.7 | ) | ||||||||||
Interest income | 61.6 | 72.3 | 77.8 | |||||||||||||
Foreign exchange differences, net | 10.2 | 11.8 | (4.8 | ) | ||||||||||||
Dividend income | 8 | 9.6 | 12.2 | 16.8 | ||||||||||||
Gains from investments | 8 | 23.6 | 33.7 | 256.8 | ||||||||||||
Total profit /(loss) from financial activities | (220.2 | ) | (213.7 | ) | 107.9 | |||||||||||
Profit before tax | 780.7 | 844.0 | 1,154.8 | |||||||||||||
Income tax expense | 21 | (410.0 | ) | (246.2 | ) | (381.8 | ) | |||||||||
Profit for the year | 370.7 | 597.8 | 773.0 | |||||||||||||
Attributable to: | ||||||||||||||||
Owners of the parent | 374.0 | 601.8 | 662.6 | |||||||||||||
Non-controlling interests | (3.3 | ) | (4.0 | ) | 110.4 | |||||||||||
370.7 | 597.8 | 773.0 | ||||||||||||||
Basic earnings per share | 25 | 0.7630 | 1.2278 | 1.3518 | ||||||||||||
Diluted earnings per share | 25 | 0.7630 | 1.2129 | 1.3518 | ||||||||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(Amounts in millions of Euro) | ||||||||||||
Profit for the year | 370.7 | 597.8 | 773.0 | |||||||||
Foreign currency translation | (178.4 | ) | (235.3 | ) | (167.3 | ) | ||||||
Net loss on cash flow hedge | (0.5 | ) | (6.3 | ) | — | |||||||
Fair value movement in available for sale financial assets | 3.5 | (34.8 | ) | 9.8 | ||||||||
Other comprehensive income / (loss) for the year | (175.4 | ) | (276.4 | ) | (157.5 | ) | ||||||
Total comprehensive income for the year | 195.3 | 321.4 | 615.5 | |||||||||
Attributable to: | ||||||||||||
Owners of the parent | 246.8 | 417.4 | 589.8 | |||||||||
Non-controlling interests | (51.5 | ) | (96.0 | ) | 25.7 | |||||||
195.3 | 321.4 | 615.5 | ||||||||||
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Attributed to Equity Holders of the Parent | ||||||||||||||||||||||||||||||||||||
Foreign | ||||||||||||||||||||||||||||||||||||
Exchange | ||||||||||||||||||||||||||||||||||||
and | Changes in | |||||||||||||||||||||||||||||||||||
Share | Share | Statutory | Other | Non-Controlling | Retained | Non-Controlling | Total | |||||||||||||||||||||||||||||
Capital | Premium | Reserve | Reserves | Interests | Earnings | Total | Interest | Equity | ||||||||||||||||||||||||||||
(Amounts in millions of Euro) | ||||||||||||||||||||||||||||||||||||
Balance as at January 1, 2007 | 1,171.5 | 485.9 | 283.3 | 331.1 | (580.3 | ) | 1,973.3 | 3,664.8 | 1,223.9 | 4,888.7 | ||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 662.6 | 662.6 | 110.4 | 773.0 | |||||||||||||||||||||||||||
Other comprehensive income / (loss) | — | — | — | (72.8 | ) | — | — | (72.8 | ) | (84.7 | ) | (157.5 | ) | |||||||||||||||||||||||
Total comprehensive income / (loss) | — | — | — | (72.8 | ) | — | 662.6 | 589.8 | 25.7 | 615.5 | ||||||||||||||||||||||||||
Transfer to statutory reserve | — | — | 28.8 | — | — | (28.8 | ) | — | — | — | ||||||||||||||||||||||||||
Dividends | — | — | — | — | — | (269.6 | ) | (269.6 | ) | (81.2 | ) | (350.8 | ) | |||||||||||||||||||||||
Net change of participation in subsidiaries | — | — | — | — | (1,953.5 | ) | — | (1,953.5 | ) | (145.3 | ) | (2,098.8 | ) | |||||||||||||||||||||||
Balance as at December 31, 2007 | 1,171.5 | 485.9 | 312.1 | 258.3 | (2,533.8 | ) | 2,337.5 | 2,031.5 | 1,023.1 | 3,054.6 | ||||||||||||||||||||||||||
Balance as at January 1, 2008 | 1,171.5 | 485.9 | 312.1 | 258.3 | (2,533.8 | ) | 2,337.5 | 2,031.5 | 1,023.1 | 3,054.6 | ||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 601.8 | 601.8 | (4.0 | ) | 597.8 | ||||||||||||||||||||||||||
Other comprehensive income / (loss) | — | — | — | (184.4 | ) | — | — | (184.4 | ) | (92.0 | ) | (276.4 | ) | |||||||||||||||||||||||
Total comprehensive income / (loss) | — | — | — | (184.4 | ) | — | 601.8 | 417.4 | (96.0 | ) | 321.4 | |||||||||||||||||||||||||
Transfer to statutory reserve | — | — | 18.1 | — | — | (18.1 | ) | — | — | — | ||||||||||||||||||||||||||
Dividends | — | — | — | — | — | (367.6 | ) | (367.6 | ) | — | (367.6 | ) | ||||||||||||||||||||||||
Share-based payment | — | 12.0 | — | — | — | — | 12.0 | — | 12.0 | |||||||||||||||||||||||||||
Net change of participation in subsidiaries | — | — | — | — | (781.4 | ) | — | (781.4 | ) | (65.8 | ) | (847.2 | ) | |||||||||||||||||||||||
Balance as at December 31, 2008 | 1,171.5 | 497.9 | 330.2 | 73.9 | (3,315.2 | ) | 2,553.6 | 1,311.9 | 861.3 | 2,173.2 | ||||||||||||||||||||||||||
Balance as at January 1, 2009 | 1,171.5 | 497.9 | 330.2 | 73.9 | (3,315.2 | ) | 2,553.6 | 1,311.9 | 861.3 | 2,173.2 | ||||||||||||||||||||||||||
Profit for the year | — | — | — | — | — | 374.0 | 374.0 | (3.3 | ) | 370.7 | ||||||||||||||||||||||||||
Other comprehensive income / (loss) | — | — | — | (127.2 | ) | — | — | (127.2 | ) | (48.2 | ) | (175.4 | ) | |||||||||||||||||||||||
Total comprehensive income / (loss) | — | — | — | (127.2 | ) | — | 374.0 | 246.8 | (51.5 | ) | 195.3 | |||||||||||||||||||||||||
Transfer to statutory reserve | — | — | 13.9 | — | — | (13.9 | ) | — | — | — | ||||||||||||||||||||||||||
Dividends | — | — | — | — | — | (367.6 | ) | (367.6 | ) | — | (367.6 | ) | ||||||||||||||||||||||||
Share-based payment | — | 7.2 | — | — | — | — | 7.2 | — | 7.2 | |||||||||||||||||||||||||||
Net change of participation in subsidiaries | — | — | — | — | (4.7 | ) | — | (4.7 | ) | (43.7 | ) | (48.4 | ) | |||||||||||||||||||||||
Obligation to acquire non-controlling interests | — | — | — | — | (1.6 | ) | — | (1.6 | ) | (8.4 | ) | (10.0 | ) | |||||||||||||||||||||||
Balance as at December 31, 2009 | 1,171.5 | 505.1 | 344.1 | (53.3 | ) | (3,321.5 | ) | 2,546.1 | 1,192.0 | 757.7 | 1,949.7 | |||||||||||||||||||||||||
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Year Ended December 31, | ||||||||||||||||
Notes | 2009 | 2008 | 2007 | |||||||||||||
(Amounts in millions of Euro) | ||||||||||||||||
Cash Flows from Operating Activities | ||||||||||||||||
Profit before tax | 780.7 | 844.0 | 1,154.8 | |||||||||||||
Adjustments for: | ||||||||||||||||
Depreciation and amortization | 1,155.3 | 1,213.0 | 1,171.8 | |||||||||||||
Share-based payment | 28 | 7.2 | 12.0 | — | ||||||||||||
Cost of early retirement program | 18 | (30.3 | ) | 50.2 | 22.1 | |||||||||||
Provision for staff retirement indemnities and youth account | 18 | 95.5 | 112.6 | 92.3 | ||||||||||||
Other provisions | 24 | — | 2.1 | 18.1 | ||||||||||||
Provisions for doubtful accounts | 24 | 107.0 | 119.8 | 88.0 | ||||||||||||
Foreign exchange differences, net | (10.2 | ) | (11.8 | ) | 4.8 | |||||||||||
Interest income | (61.6 | ) | (72.3 | ) | (77.8 | ) | ||||||||||
Dividend income, (gains)/losses and impairment of investments | (33.2 | ) | (45.9 | ) | (273.6 | ) | ||||||||||
Release of EDEKT fund prepayment | 18 | 35.2 | 35.2 | 35.2 | ||||||||||||
Interest expense | 325.2 | 343.7 | 238.7 | |||||||||||||
Working capital adjustments: | ||||||||||||||||
Decrease/(increase) in inventories | (27.3 | ) | (9.2 | ) | (2.0 | ) | ||||||||||
Decrease/(increase) in accounts receivable | (75.7 | ) | (123.4 | ) | (127.9 | ) | ||||||||||
(Decrease)/increase in liabilities (except borrowings) | (72.1 | ) | (91.7 | ) | 56.6 | |||||||||||
Plus/(Minus): | ||||||||||||||||
Payment for early retirement programs | (130.3 | ) | (91.6 | ) | (265.8 | ) | ||||||||||
Payment of staff retirement indemnities and youth account, net of employees’ contributions | (88.3 | ) | (76.0 | ) | (83.3 | ) | ||||||||||
Interest and related expenses paid | (276.4 | ) | (212.9 | ) | (216.4 | ) | ||||||||||
Income taxes paid | (299.3 | ) | (240.2 | ) | (384.9 | ) | ||||||||||
Settlement of receivables due from disposed subsidiaries | 8 | 16.6 | — | — | ||||||||||||
Net Cash Flows from Operating Activities | 1,418.0 | 1,757.6 | 1,450.7 | |||||||||||||
Cash Flows from Investing Activities | ||||||||||||||||
Acquisition of non-controlling interest and participation in subsidiaries’ share capital increase | 8 | (48.4 | ) | (849.4 | ) | (2,119.0 | ) | |||||||||
Acquisition of subsidiary net of cash acquired | 8 | (197.8 | ) | — | — | |||||||||||
Purchase of financial assets | 11 | (308.0 | ) | (138.0 | ) | — | ||||||||||
Sale or maturity of financial assets | 11 | 412.2 | 46.8 | — | ||||||||||||
Loans granted | — | (1.3 | ) | (121.6 | ) | |||||||||||
Other long term liabilities | — | — | 144.5 | |||||||||||||
Repayments of loans receivable | 9.7 | — | — | |||||||||||||
Loans proceeds in conjunction with disposal of subsidiaries | 8 | 78.5 | — | — | ||||||||||||
Purchase of property plant and equipment and intangible assets | (890.9 | ) | (964.0 | ) | (1,101.3 | ) | ||||||||||
Proceeds from disposal of subsidiaries | 8 | 86.1 | 24.0 | 352.8 | ||||||||||||
Interest received | 61.6 | 66.7 | 52.1 | |||||||||||||
Dividends received | 6.9 | 9.2 | 12.3 | |||||||||||||
Return of capital invested in subsidiary | — | — | — | |||||||||||||
Settlements of other current liabilities | 22 | (168.5 | ) | — | — | |||||||||||
Net Cash Flows from/(Used in) Investing Activities | (958.6 | ) | (1,806.0 | ) | (2,780.2 | ) | ||||||||||
Cash Flows from Financing Activities | ||||||||||||||||
Proceeds from non-controlling interests for their participation in subsidiaries’ share capital increase | — | 16.9 | 12.6 | |||||||||||||
Proceeds from loans granted and issued | — | 2,705.5 | 1,500.0 | |||||||||||||
Repayment of loans | (637.1 | ) | (2,183.4 | ) | (558.4 | ) | ||||||||||
Dividends paid to Company’s owners | (367.2 | ) | (367.8 | ) | (269.3 | ) | ||||||||||
Dividends paid to non-controlling interests | (1.2 | ) | (5.9 | ) | (81.6 | ) | ||||||||||
Net Cash Flows from/(Used in) Financing Activities | (1,005.5 | ) | 165.3 | 603.3 | ||||||||||||
Net increase/(decrease) in Cash and Cash Equivalents | (546.1 | ) | 116.9 | (726.2 | ) | |||||||||||
Cash and cash equivalents, at the beginning of the year | 1,427.8 | 1,316.3 | 2,042.5 | |||||||||||||
Net foreign exchange differences | (14.8 | ) | (3.5 | ) | — | |||||||||||
Cash and Cash Equivalents classified as held for sale/disposed of | 8 | 1.9 | (1.9 | ) | — | |||||||||||
Cash and Cash Equivalents, at the end of the year | 13 | 868.8 | 1,427.8 | 1,316.3 | ||||||||||||
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1. | CORPORATE INFORMATION |
December 31, 2009 | 32,864 | |||
December 31, 2008 | 33,610 | |||
December 31, 2007 | 34,350 |
Group’s | ||||||||||||
Ownership Interest | ||||||||||||
Company Name | Line of Business | Country | 2009 | 2008 | ||||||||
COSMOTE MOBILE TELECOMMUNICATIONS S.A. (“COSMOTE”) | Mobile telecommunications services | Greece | 100.00 | % | 100.00 | % | ||||||
OTE INTERNATIONAL INVESTMENTS LTD | Investment holding company | Cyprus | 100.00 | % | 100.00 | % | ||||||
HELLAS SAT CONSORTIUM LIMITED (“HELLAS-SAT”) | Satellite communications | Cyprus | 99.05 | % | 99.05 | % | ||||||
COSMO-ONE HELLAS MARKET SITE S.A. (“COSMO-ONE”) | E-commerce services | Greece | 61.74 | % | 61.74 | % | ||||||
VOICENET S.A. (“VOICENET”) | Telecommunications services | Greece | 100.00 | % | 100.00 | % | ||||||
HELLASCOM S.A. (“HELLASCOM”) | Telecommunication projects | Greece | 100.00 | % | 100.00 | % | ||||||
OTE PLC | Financing services | U.K. | 100.00 | % | 100.00 | % | ||||||
OTE SAT-MARITEL S.A. (“OTE SAT — MARITEL”) | Satellite telecommunications services | Greece | 94.08 | % | 94.08 | % | ||||||
OTE PLUS S.A. (“OTE PLUS”) | Consulting services | Greece | 100.00 | % | 100.00 | % | ||||||
OTE ESTATE S.A. (“OTE ESTATE”) | Real estate | Greece | 100.00 | % | 100.00 | % | ||||||
OTE INTERNATIONAL SOLUTIONS S.A. (“OTE-GLOBE”) | Wholesale telephony services | Greece | 100.00 | % | 100.00 | % | ||||||
HATWAVEHELLENIC-AMERICAN TELECOMMUNICATIONS WAVE LTD. (“HATWAVE”) | Investment holding company | Cyprus | 52.67 | % | 52.67 | % |
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Group’s | ||||||||||||
Ownership Interest | ||||||||||||
Company Name | Line of Business | Country | 2009 | 2008 | ||||||||
OTE INSURANCE AGENCY S.A. (“OTE INSURANCE”) | Insurance brokerage services | Greece | 100.00 | % | 100.00 | % | ||||||
OTE ACADEMY S.A. (“OTE ACADEMY”) | Training services | Greece | 100.00 | % | 100.00 | % | ||||||
ROMTELECOM S.A. (“ROMTELECOM”) | Fixed line telephony services | Romania | 54.01 | % | 54.01 | % | ||||||
S.C. COSMOTE ROMANIAN MOBILE TELECOMMUNICATIONS S.A. (“COSMOTE ROMANIA”) | Mobile telecommunications services | Romania | 86.20 | % | 86.20 | % | ||||||
OTE MTS HOLDING B.V. | Investment holding company | Holland | — | 100.00 | % | |||||||
COSMOFON MOBILE TELECOMMUNICATIONS SERVICES A.D. — SKOPJE (“COSMOFON”) | Mobile telecommunications services | Skopje | — | 100.00 | % | |||||||
COSMO BULGARIA MOBILE EAD (“GLOBUL”) | Mobile telecommunications services | Bulgaria | 100.00 | % | 100.00 | % | ||||||
COSMO-HOLDING ALBANIA S.A. (“CHA”) | Investment holding company | Greece | 97.00 | % | 97.00 | % | ||||||
ALBANIAN MOBILE COMMUNICATIONS Sh.a (“AMC”) | Mobile telecommunications services | Albania | 95.03 | % | 82.45 | % | ||||||
COSMOHOLDING CYPRUS LTD (“COSMOHOLDING CYPRUS”) | Investment holding company | Cyprus | 100.00 | % | 90.00 | % | ||||||
GERMANOS S.A. (“GERMANOS”) | Retail services | Greece | 100.00 | % | 90.00 | % | ||||||
E-VALUE S.A. | Marketing Services | Greece | 100.00 | % | 90.00 | % | ||||||
GERMANOS TELECOM SKOPJE S.A. | Retail services | Skopje | — | 90.00 | % | |||||||
GERMANOS TELECOM ROMANIA S.A. | Retail services | Romania | 100.00 | % | 90.00 | % | ||||||
SUNLIGHT ROMANIA S.R.L. FILIALA | Retail services | Romania | 100.00 | % | 90.00 | % | ||||||
GERMANOS TELECOM BULGARIA A.D. | Retail services | Bulgaria | 100.00 | % | 90.00 | % | ||||||
MOBILBEEEP LTD | Retail services | Greece | 100.00 | % | 90.00 | % | ||||||
OTE PROPERTIES | Real estate | Greece | 100.00 | % | 100.00 | % | ||||||
HELLAS SAT S.A. | Satellite communications | Greece | 99.05 | % | 99.05 | % | ||||||
OTE INVESTMENT SERVICES S.A. | Investment holding company | Greece | 100.00 | % | 100.00 | % | ||||||
OTE PLUS BULGARIA | Consulting services | Bulgaria | 100.00 | % | 100.00 | % | ||||||
COSMOHOLDING ROMANIA LTD | Investment holding company | Cyprus | 100.00 | % | — | |||||||
TELEMOBIL S.A. (“ZAPP”) | Mobile telecommunications services | Romania | 99.99 | % | — | |||||||
E-VALUE DEBTORS AWARENESS ONE PERSON LTD(“E-VALUE LTD”) | Overdue accounts | Greece | 100.00 | % | — |
2. | BASIS OF PREPARATION |
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• | IFRIC 17 Distributions of Non-cash Assets to Owners: This interpretation is effective for annual periods beginning on or after July 1, 2009 with early application permitted. The interpretation provides guidance on how to account for non-cash distributions to owners. The interpretation clarifies when to recognize a liability, how to measure it and the associated assets, and when to derecognize the asset and liability. | |
• | IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments: The interpretation is effective for annual periods beginning on or after July 1, 2010. This interpretation addresses the accounting treatment when there is a renegotiation between the entity and the creditor regarding the terms of a financial liability and the creditor agrees to accept the entity’s equity instruments to settle the financial liability fully or partially. IFRIC 19 clarifies such equity instruments are “consideration paid” in accordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognized and the equity instruments issued are treated as consideration paid to extinguish that financial liability. | |
• | IFRIC 14 Prepayments of a Minimum Funding Requirement (Amended): The amendment is effective for annual periods beginning on or after January 1, 2011. The purpose of this amendment was to permit entities to recognize as an asset some voluntary prepayments for minimum funding contributions. Earlier application is permitted and must be applied retrospectively. | |
• | IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended): The revision and amendment is effective for annual periods beginning on or after July 1, 2009. The revised IFRS 3 introduces a number of changes in the accounting for business combinations which impacts the amount of goodwill recognized, the reported results in the period that an acquisition occurs, and future reported results. Such changes include the expensing of acquisition-related costs and recognizing subsequent changes in fair value of contingent consideration in the income statement (rather than by adjusting goodwill). The amended IAS 27 requires that a change in ownership interest of a subsidiary is accounted for as an equity transaction. Therefore such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by IFRS 3 (Revised) and IAS 27 (Amendment) must be applied prospectively and will affect future acquisitions and transactions with non-controlling interests. |
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• | IAS 39 Financial Instruments: Recognition and Measurement (Amended) — eligible hedged items: The amendment is effective for annual periods beginning on or after July 1, 2009. The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. | |
• | IFRS 9 Financial Instruments — Phase 1 financial assets, classification and measurement: The new standard is effective for annual periods beginning on or after January 1, 2013. Phase 1 of this new IFRS introduces new requirements for classifying and measuring financial assets. Early adoption is permitted. | |
• | IFRS 2 Group Cash-settled Share-based Payment Transactions (Amended): The amendment is effective for annual periods beginning on or after January 1, 2010. This amendment clarifies the accounting for group cash-settled share-based payment transactions and how such transactions should be arranged in the individual financial statements of the subsidiary. | |
• | IAS 32 Classification on Rights Issues (Amended): The amendment is effective for annual periods beginning on or after February 1, 2010. This amendment relates to the rights issues offered for a fixed amount of foreign currency which were treated as derivative liabilities by the existing standard. The amendment states that if certain criteria are met, these should be classified as equity regardless of the currency in which the exercise price is denominated. The amendment is to be applied retrospectively. | |
• | IAS 24 Related Party Disclosures (Revised): The revision is effective for annual periods beginning on or after January 1, 2011. This revision relates to the judgment which is required so as to assess whether a government and entities known to the reporting entity to be under the control of that government are considered a single customer. In assessing this, the reporting entity shall consider the extent of economic integration between those entities. Early application is permitted and adoption shall be applied retrospectively. | |
• | IFRS 1 Additional Exemptions for First-time Adopters (Amended): The amendment is effective for annual periods beginning on or after January 1, 2010. | |
• | IFRS 1 Limited Exemption from Comparative IRFS 7 Disclosures for first time adopters (Amended): The amendment is effective for annual periods beginning on or after July 1, 2010. | |
• | In April 2009 the IASB issued its second omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The effective dates of the improvements are various and the earliest is for the financial year beginning on or after July 1, 2009. | |
• | In May 2010 the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The effective dates of the improvements are various and the earliest is for the financial year beginning on or after July 1, 2010. |
3. | SIGNIFICANT ACCOUNTING POLICIES |
• | IFRIC 13, “Customer Loyalty Programs”, effective July 1, 2008 | |
• | IFRIC 15, “Agreements for the Construction of Real Estate”, effective January 1, 2009 | |
• | IFRIC 16, “Hedges of a Net Investment in a Foreign Operation”, effective October 1, 2008 | |
• | IFRIC 9, “Remeasurement of Embedded Derivatives (Amended) and IAS 39 Financial Instruments: Recognition and Measurement (Amended)”,effective for periods ending on or after June 30, 2009 |
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• | IFRS 1, “First-time Adoption of International Financial Reporting Standards (Amended)”, and“IAS 27 Consolidated and Separate Financial Statements (Amended)”, effective January 1, 2009 | |
• | IFRS 2, “Share-based Payment:Vesting Conditions and Cancellations (Amended)”, effective January 1, 2009 | |
• | IFRS 8, “Operating Segments”, effective January 1, 2009 | |
• | IFRS 7, “Financial Instruments:Disclosures (Amended)”, effective January 1, 2009 | |
• | IAS 1, “Presentation of Financial Statements (Revised)”, effective January 1, 2009 | |
• | IAS 32, “Financial Instruments:Presentation (Amended) and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation (Amended)”, effective January 1, 2009 | |
• | IAS 23, “Borrowing Costs (Revised)”, effective January 1, 2009 | |
• | Improvements to IFRSs (May 2008) | |
• | IFRIC 18, “Transfers of Assets from Customers”, effective for transfers after July 1, 2009 |
• | IAS 1, “Presentation of Financial Statements” (Revised),The revised standard requires that the statement of changes in equity includes only transactions with owners; introduces a new statement of comprehensive income that combines all items of income and expense recognized in the income statement together with “other comprehensive income” (either in one single statement or in two linked statements); and requires the inclusion of a third column on the statement of financial position to present the effect of restatements of financial statements or retrospective application of a new accounting policy as at the beginning of the earliest comparative period. The Group made the necessary changes to the presentation of its financial statements in 2009 and elected to present two linked statements for the statement of comprehensive income. | |
• | IFRS 7, “Financial Instruments: Disclosures”,The amended standard requires additional disclosures about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by the source of inputs, using a three-level hierarchy, by class, for all financial instruments recognized at fair value. In addition, reconciliation between the beginning and ending balance for level 3 fair value measurements is now required, as well as significant transfers between the levels in the fair value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures and the liquidity disclosures, which are not significantly impacted by the amendment, are presented in note 30. | |
• | IFRS 8, “Operating segments”, IFRS 8 replaces IAS 14 “Segment reporting” and adopts a management approach to segment reporting. The Group concluded that the operating segments determined in accordance with IFRS 8 are the same as the business segments previously identified under IAS 14. Additional disclosures required by IFRS 8 are shown in note 26. |
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• | the rights to receive cash flows from the asset have expired; | |
• | the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or | |
• | the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the assets, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
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Estimated | Depreciation | |||
Useful Life | Rates | |||
Buildings — building installations | 20-40 years | 2.5%-5% | ||
Telecommunication equipment and installations: | ||||
Telephone exchange equipment | 8-12 years | 8.3%-12.5% | ||
Radio relay stations | 8 years | 12.5% | ||
Subscriber connections | 10 years | 10% | ||
Local and International network | 8-17 years | 6%-12.5% | ||
Other | 5-10 years | 10%-20% | ||
Transportation equipment | 5-8 years | 12.5%-20% | ||
Furniture and fixtures | 3-5 years | 20%-33% |
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• | where the deferred tax liability arises from the initial recognition of goodwill of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and | |
• | in respect of taxable temporary differences associated with investment in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. |
• | where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of goodwill of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and | |
• | in respect of taxable temporary differences associated with investment in subsidiaries and associates, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. |
• | Connection charges: Connection charges for the fixed network are deferred and amortized to income over the average customer retention period. Connection costs, up to the amount of deferred connection fees are recognized over the average customer retention period. No connection fees are charged for mobile services. | |
• | Monthly network service fees: Revenues related to the monthly network service fees are recognized in the month that the telecommunication service is provided. |
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• | Usage Charges and Value Added Services Fees: Call fees consist of fees based on airtime and traffic generated by the caller, the destination of the call and the service utilized. Fees are based on traffic, usage of airtime or volume of data transmitted for value added communication services. Revenues for usage charges and value added communication services are recognized in the period when the services are provided. |
• | Sales of telecommunication equipment: Revenues from the sale of handsets and accessories, net of discounts allowed, are recognized at thepoint-of-sale, when the significant risks and rewards of ownership have passed to the buyer. | |
• | Dividend income: Dividend income is recognized when the right to receive payment is established with the approval for distribution by the General Assembly of shareholders. | |
• | Interest income: Interest income is recognized as the interest accrues (using the effective interest method). | |
• | Revenues from construction projects: Revenues from construction projects are recognized in accordance with the percentage of completion method. | |
• | Principal and agency relationship: In a principal and agency relationship, amounts collected by the agent on behalf of the principal do not result in increases in equity of the agent and thus, they are not revenues for the agent. Revenue for the agent is the amount of commission received by the principal. On the other hand, the principal’s revenues consist of the gross amounts described above and the commission paid to the agent is recognized as an expense. |
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4. | PROPERTY, PLANT AND EQUIPMENT |
Furniture | ||||||||||||||||||||||||||||||||
Telecom | Transportation | and | Construction | Investment | ||||||||||||||||||||||||||||
Land | Buildings | Equipment | Means | Fixtures | in Progress | Supplies | Total | |||||||||||||||||||||||||
31/12/2007 | ||||||||||||||||||||||||||||||||
Cost | 48.6 | 946.7 | 12,687.4 | 59.6 | 502.2 | 485.4 | 161.3 | 14,891.2 | ||||||||||||||||||||||||
Accumulated depreciation | — | (313.5 | ) | (7,827.4 | ) | (39.1 | ) | (339.8 | ) | — | — | (8,519.8 | ) | |||||||||||||||||||
Net book value 31/12/2007 | 48.6 | 633.2 | 4,860.0 | 20.5 | 162.4 | 485.4 | 161.3 | 6,371.4 | ||||||||||||||||||||||||
Additions | 2.4 | 26.9 | 812.5 | 5.6 | 30.7 | 383.3 | 84.0 | 1,345.4 | ||||||||||||||||||||||||
Held for sale — cost | (0.3 | ) | (4.1 | ) | (150.5 | ) | (0.5 | ) | (11.9 | ) | — | — | (167.3 | ) | ||||||||||||||||||
Held for sale — accumulated depreciation | — | 1.0 | 60.5 | 0.3 | 6.6 | — | — | 68.4 | ||||||||||||||||||||||||
Other transfers — cost | — | — | 19.3 | — | (19.3 | ) | — | — | — | |||||||||||||||||||||||
Disposal and transfers — cost | — | (0.2 | ) | (273.7 | ) | (6.6 | ) | (13.3 | ) | (317.2 | ) | (101.6 | ) | (712.6 | ) | |||||||||||||||||
Disposals and transfers — accumulated depreciation | — | 4.0 | 267.7 | 6.0 | 14.0 | — | — | 291.7 | ||||||||||||||||||||||||
Exchange differences — cost | (0.6 | ) | (55.8 | ) | (449.8 | ) | (3.7 | ) | (16.0 | ) | (17.2 | ) | (6.9 | ) | (550.0 | ) | ||||||||||||||||
Exchange differences — accumulated depreciation | — | 31.7 | 290.4 | 3.0 | 11.7 | — | — | 336.8 | ||||||||||||||||||||||||
Depreciation charge for the year | — | (34.3 | ) | (1,028.2 | ) | (7.0 | ) | (41.5 | ) | — | — | (1,111.0 | ) | |||||||||||||||||||
Other transfers — accumulated depreciation | — | — | (17.5 | ) | — | 17.5 | — | — | — | |||||||||||||||||||||||
Net book value 31/12/2008 | 50.1 | 602.4 | 4,390.7 | 17.6 | 140.9 | 534.3 | 136.8 | 5,872.8 | ||||||||||||||||||||||||
31/12/2008 | ||||||||||||||||||||||||||||||||
Cost | 50.1 | 913.5 | 12,645.2 | 54.4 | 472.4 | 534.3 | 136.8 | 14,806.7 | ||||||||||||||||||||||||
Accumulated depreciation | — | (311.1 | ) | (8,254.5 | ) | (36.8 | ) | (331.5 | ) | — | — | (8,933.9 | ) | |||||||||||||||||||
Net book value 31/12/2008 | 50.1 | 602.4 | 4,390.7 | 17.6 | 140.9 | 534.3 | 136.8 | 5,872.8 | ||||||||||||||||||||||||
Additions | — | 49.4 | 654.4 | 5.0 | 23.8 | 431.2 | 55.9 | 1,219.7 | ||||||||||||||||||||||||
Acquisition of subsidiary — cost | 0.1 | 1.8 | 63.4 | 1.0 | 0.6 | 16.5 | — | 83.4 | ||||||||||||||||||||||||
Disposal and transfers — cost | (1.0 | ) | (0.1 | ) | (136.1 | ) | (7.6 | ) | (12.3 | ) | (447.0 | ) | (84.9 | ) | (689.0 | ) | ||||||||||||||||
Disposals and transfers — accumulated depreciation | — | 0.1 | 286.8 | 7.3 | 22.2 | — | — | 316.4 | ||||||||||||||||||||||||
Exchange differences — cost | (0.3 | ) | (31.6 | ) | (276.5 | ) | (2.5 | ) | (10.0 | ) | (11.3 | ) | (2.1 | ) | (334.3 | ) | ||||||||||||||||
Exchange differences — accumulated depreciation | — | 18.1 | 167.5 | 1.9 | 7.4 | — | — | 194.9 | ||||||||||||||||||||||||
Depreciation charge for the year | — | (56.4 | ) | (936.1 | ) | (6.2 | ) | (40.1 | ) | — | — | (1,038.8 | ) | |||||||||||||||||||
Net book value 31/12/2009 | 48.9 | 583.7 | 4,214.1 | 16.5 | 132.5 | 523.7 | 105.7 | 5,625.1 | ||||||||||||||||||||||||
31/12/2009 | ||||||||||||||||||||||||||||||||
Cost | 48.9 | 933.0 | 12,950.4 | 50.3 | 474.5 | 523.7 | 105.7 | 15,086.5 | ||||||||||||||||||||||||
Accumulated depreciation | — | (349.3 | ) | (8,736.3 | ) | (33.8 | ) | (342.0 | ) | — | — | (9,461.4 | ) | |||||||||||||||||||
Net book value 31/12/2009 | 48.9 | 583.7 | 4,214.1 | 16.5 | 132.5 | 523.7 | 105.7 | 5,625.1 | ||||||||||||||||||||||||
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5. | GOODWILL |
2009 | 2008 | |||||||
Carrying value January 1 | 525.1 | 541.5 | ||||||
Absorption of OTENET | — | (10.1 | ) | |||||
Foreign exchange differences | (6.8 | ) | (0.7 | ) | ||||
Acquisition of subsidiary (see Note 8) | 33.5 | — | ||||||
Transfer to assets held for sale | — | (5.6 | ) | |||||
Carrying value December 31 | 551.8 | 525.1 | ||||||
Foreign | ||||||||||||||||
Exchange | Acquisition of | |||||||||||||||
Country | 2008 | Differences | Subsidiary | 2009 | ||||||||||||
Greece | 376.6 | — | — | 376.6 | ||||||||||||
Albania | 61.8 | (6.3 | ) | — | 55.5 | |||||||||||
Romania | 26.4 | (0.5 | ) | 33.5 | 59.4 | |||||||||||
Bulgaria | 60.3 | — | — | 60.3 | ||||||||||||
Total | 525.1 | (6.8 | ) | 33.5 | 551.8 | |||||||||||
Assumptions | Greece | Albania | Romania | Bulgaria | ||||||||||||
Discount rate | 9.05 | % | 9.27 | % | 10.76 | % | 9.67 | % | ||||||||
Rate of increase/(decrease) of revenue | (0.15 | )% | 1.95 | % | 8.80 | % | 3.60 | % | ||||||||
Operating profit before depreciation and amortization margin | 37%-39% | 53%-60% | 16%-38% | 32%-47% |
• | Risk-free rate: The risk free rate was determined on the basis of external figures derived from the relevant market of each country. | |
• | Budgeted profit margin: Budgeted operating profit and operating profit before depreciation and amortization were based on actual historical experience from the last few years adjusted to take into consideration expected variances in operating profitability. |
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6. | TELECOMMUNICATION LICENSES |
2009 | 2008 | |||||||
Net book value January 1 | 329.5 | 396.2 | ||||||
Additions | — | 17.5 | ||||||
Acquisition of subsidiary (see Note 8) | 73.4 | — | ||||||
Transfer from other intangible assets, cost (see Note 7) | 13.3 | — | ||||||
Assets held for sale, cost | — | (39.2 | ) | |||||
Assets held for sale, accumulated amortization | — | 8.0 | ||||||
Exchange differences, cost | (7.5 | ) | (10.4 | ) | ||||
Exchange differences, accumulated amortization | 6.4 | 5.6 | ||||||
Amortization charge for the year | (51.0 | ) | (48.1 | ) | ||||
Write-offs, cost | (1.9 | ) | (3.9 | ) | ||||
Write-offs, accumulated amortization | — | 3.8 | ||||||
Net book value December 31 | 362.2 | 329.5 | ||||||
December 31 | ||||||||
Cost | 608.3 | 531.0 | ||||||
Accumulated amortization | (246.1 | ) | (201.5 | ) | ||||
Net book value | 362.2 | 329.5 | ||||||
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7. | OTHER INTANGIBLE ASSETS |
2009 | 2008 | |||||||
Net book value January 1 | 550.7 | 582.7 | ||||||
Additions | 31.3 | 46.7 | ||||||
Acquisition of subsidiary (see Note 8) | 22.0 | — | ||||||
Disposals, cost | (0.4 | ) | (18.2 | ) | ||||
Disposals, accumulated amortization | 0.1 | 0.4 | ||||||
Transfer to telecommunication licenses, cost (see Note 6) | (13.3 | ) | — | |||||
Exchange differences, cost | (8.1 | ) | (8.4 | ) | ||||
Exchange differences, accumulated amortization | 3.8 | 6.9 | ||||||
Amortization charge for the year | (65.5 | ) | (53.9 | ) | ||||
Transfer to assets held for sale | — | (5.5 | ) | |||||
Net book value December 31 | 520.6 | 550.7 | ||||||
December 31 | ||||||||
Cost | 713.0 | 681.1 | ||||||
Accumulated amortization | (192.4 | ) | (130.4 | ) | ||||
Net book value | 520.6 | 550.7 | ||||||
8. | INVESTMENTS |
December 31, | ||||||||
2009 | 2008 | |||||||
TELEKOM SRBIJA | 155.1 | 155.1 | ||||||
Other | 1.9 | 1.5 | ||||||
Total | 157.0 | 156.6 | ||||||
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2009 | 2008 | 2007 | ||||||||||
TELEKOM SRBIJA | 9.3 | 11.2 | 15.7 | |||||||||
Other available for sale investments | 0.3 | 1.0 | 1.1 | |||||||||
Total | 9.6 | 12.2 | 16.8 | |||||||||
2009 | 2008 | |||||||
Balance at January 1 | 156.6 | 158.4 | ||||||
Other movements | 0.4 | (1.8 | ) | |||||
Balance at December 31 | 157.0 | 156.6 | ||||||
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Germanos | ||||||||||||||||
Cosmofon | Telecom Skopje | |||||||||||||||
1/1–12/5/2009 | 2008 | 1/1–12/5/2009 | 2008 | |||||||||||||
Revenue | 19.1 | 66.2 | 2.5 | 9.8 | ||||||||||||
Total operating expenses | (23.4 | ) | (64.5 | ) | (2.9 | ) | (11.2 | ) | ||||||||
Operating profit/(loss) before financial activities | (4.3 | ) | 1.7 | (0.4 | ) | (1.4 | ) | |||||||||
Financial activities | (1.9 | ) | (1.5 | ) | (0.1 | ) | (0.2 | ) | ||||||||
Profit/(Loss) before tax | (6.2 | ) | 0.2 | (0.5 | ) | (1.6 | ) | |||||||||
Income tax expense | — | — | — | — | ||||||||||||
Profit/(Loss) for the period | (6.2 | ) | 0.2 | (0.5 | ) | (1.6 | ) | |||||||||
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Germanos | ||||||||||||
Telecom | ||||||||||||
Cosmofon | Skopje | Total | ||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 104.9 | 1.1 | 106.0 | |||||||||
Telecommunication licenses | 30.4 | 0.3 | 30.7 | |||||||||
Other non-current assets | — | 0.1 | 0.1 | |||||||||
Total | 135.3 | 1.5 | 136.8 | |||||||||
Current assets | ||||||||||||
Inventories | 3.0 | 1.2 | 4.2 | |||||||||
Trade receivables | 21.6 | 1.3 | 22.9 | |||||||||
Other current assets | 5.2 | 0.3 | 5.5 | |||||||||
Cash and cash equivalents | 1.9 | — | 1.9 | |||||||||
Total | 31.7 | 2.8 | 34.5 | |||||||||
Total assets | 167.0 | 4.3 | 171.3 | |||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Borrowings | 33.2 | 2.0 | 35.2 | |||||||||
Other non-current liabilities | 1.8 | — | 1.8 | |||||||||
Total | 35.0 | 2.0 | 37.0 | |||||||||
Current liabilities | ||||||||||||
Borrowings | 42.1 | — | 42.1 | |||||||||
Trade accounts payable | 16.7 | 5.3 | 22.0 | |||||||||
Other current liabilities | 24.6 | 0.1 | 24.7 | |||||||||
Total | 83.4 | 5.4 | 88.8 | |||||||||
Total liabilities | 118.4 | 7.4 | 125.8 | |||||||||
Net assets disposed of | 48.6 | (3.1 | ) | 45.5 | ||||||||
Selling price | 90.7 | |||
Disposal Expenses | (2.7 | ) | ||
Net proceeds from disposal | 88.0 | |||
Net assets disposed of | (45.5 | ) | ||
Goodwill and other intangible assets write-off in group level | (10.3 | ) | ||
Depreciation reversal for assets held for sale | (8.6 | ) | ||
Total gain on sale of investment | 23.6 | |||
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Selling Price | 90.7 | |||
Less cash and cash equivalents disposed | (1.9 | ) | ||
Less disposal expenses | (2.7 | ) | ||
Net cash inflow from the sale of subsidiary | 86.1 | |||
Loans proceeds in conjunction with disposal of subsidiaries | 78.5 | |||
Settlement of receivables due from disposed subsidiaries | 16.6 | |||
Total cash inflow from the sale of subsidiary | 181.2 | |||
2008 | ||||
ASSETS | ||||
Non-current assets | ||||
Property, plant and equipment | 98.9 | |||
Goodwill | 5.6 | |||
Telecommunication licenses | 36.7 | |||
Total non-current assets | 141.2 | |||
Current assets | ||||
Inventories | 2.6 | |||
Trade receivables | 17.4 | |||
Other current assets | 4.6 | |||
Cash and cash equivalents | 1.9 | |||
Total current assets | 26.5 | |||
Assets classified as held for sale | 167.7 | |||
LIABILITIES | ||||
Trade accounts payable | 10.2 | |||
Deferred tax liability | 1.6 | |||
Other current liabilities | 4.7 | |||
Total liabilities | 16.5 | |||
Liabilities directly associated with the assets classified as held for sale | 16.5 | |||
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Preliminary | ||||||||||||
Book Value | Adjustments | Fair Value | ||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 83.4 | — | 83.4 | |||||||||
Telecommunication licenses (see Note 6) | 21.0 | 52.4 | 73.4 | |||||||||
Intangible assets (see Note 7) | — | 22.0 | 22.0 | |||||||||
Other non-current assets | 0.3 | — | 0.3 | |||||||||
Total | 104.7 | 74.4 | 179.1 | |||||||||
Current assets | ||||||||||||
Inventories | 2.1 | — | 2.1 | |||||||||
Trade receivables | 2.4 | — | 2.4 | |||||||||
Other current assets | 2.9 | — | 2.9 | |||||||||
Cash and cash equivalents | 0.8 | — | 0.8 | |||||||||
Total | 8.2 | — | 8.2 | |||||||||
Total Assets | 112.9 | 74.4 | 187.3 | |||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Borrowings | 122.4 | — | 122.4 | |||||||||
Other non-current liabilities | 7.6 | 1.8 | 9.4 | |||||||||
Total | 130.0 | 1.8 | 131.8 | |||||||||
Current liabilities | ||||||||||||
Trade accounts payable | 6.8 | — | 6.8 | |||||||||
Borrowings | 7.2 | — | 7.2 | |||||||||
Other current liabilities | 4.0 | — | 4.0 | |||||||||
Total | 18.0 | — | 18.0 | |||||||||
Total liabilities | 148.0 | 1.8 | 149.8 | |||||||||
Net assets acquired | (35.1 | ) | 72.6 | 37.5 | ||||||||
Purchase price | 67.5 | |||||||||||
Expenses of acquisition | 3.5 | |||||||||||
Goodwill (see Note 5) | 33.5 | |||||||||||
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Purchase price | 67.5 | |||
Expenses of acquisition (paid) | 1.5 | |||
Less cash acquired | (0.8 | ) | ||
68.2 | ||||
Repayment of borrowings in conjunction with the acquisition | 129.6 | |||
Net cash outflow | 197.8 | |||
2009 | 2008 | |||||||
COSMOTE | 3,132.2 | 3,132.2 | ||||||
GERMANOS | 171.7 | 171.7 | ||||||
OTENET | 12.3 | 12.3 | ||||||
HELLASCOM | (3.3 | ) | (3.3 | ) | ||||
HELLAS-SAT | 1.2 | 1.2 | ||||||
VOICENET | 1.1 | 1.1 | ||||||
AMC | 6.3 | — | ||||||
Total | 3,321.5 | 3,315.2 | ||||||
9. | OTHER NON-CURRENT ASSETS |
December 31, | ||||||||
2009 | 2008 | |||||||
Loans and advances to employees | 82.8 | 65.1 | ||||||
Deferred expenses (long-term) | 21.9 | 29.6 | ||||||
Other | 22.6 | 26.0 | ||||||
Total | 127.3 | 120.7 | ||||||
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10. | TRADE RECEIVABLES |
December 31, | ||||||||
2009 | 2008 | |||||||
Subscribers | 1,737.8 | 1,855.5 | ||||||
International traffic | 85.5 | 144.1 | ||||||
Unbilled revenue | 99.2 | 82.0 | ||||||
1,922.5 | 2,081.6 | |||||||
Less | ||||||||
Allowance for doubtful accounts | (769.5 | ) | (887.4 | ) | ||||
Total | 1,153.0 | 1,194.2 | ||||||
2009 | 2008 | |||||||
Balance at January 1 | (887.4 | ) | (791.5 | ) | ||||
Charge for the year (see Note 24) | (107.0 | ) | (119.8 | ) | ||||
Write-offs | 228.8 | 6.9 | ||||||
Balance from newly acquired subsidiary | (7.7 | ) | — | |||||
Foreign exchange differences | 2.9 | 5.6 | ||||||
Reversal of provision | 0.9 | 5.0 | ||||||
Provision for trade receivables held for sale | — | 6.4 | ||||||
Balance at December 31 | (769.5 | ) | (887.4 | ) | ||||
December 31, | ||||||||
2009 | 2008 | |||||||
Not impaired and not past due | 634.8 | 639.5 | ||||||
Not impaired and past due: | ||||||||
Less than 30 days | 129.3 | 234.1 | ||||||
Between 31 and 180 days | 216.4 | 235.2 | ||||||
More than 180 days | 172.5 | 85.4 | ||||||
Total | 1,153.0 | 1,194.2 | ||||||
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11. | OTHER FINANCIAL ASSETS |
December 31, | ||||||||
2009 | 2008 | |||||||
Marketable securities: | ||||||||
Held to maturity — Bonds | 8.1 | 112.2 | ||||||
Held for trading — Bonds | 3.2 | 3.1 | ||||||
Available for sale — Shares | 14.3 | 11.1 | ||||||
Available for sale — Mutual funds | 4.0 | 3.8 | ||||||
Non — marketable securities: | ||||||||
Available for sale — Securities | 5.8 | 5.7 | ||||||
Total | 35.4 | 135.9 | ||||||
2009 | 2008 | |||||||
Balance at January 1 | 135.9 | 81.2 | ||||||
Additions | 308.0 | 138.0 | ||||||
Sales — maturities | (412.2 | ) | (46.8 | ) | ||||
Foreign exchange differences | (0.4 | ) | (1.0 | ) | ||||
Fair value adjustments | 4.1 | (35.5 | ) | |||||
Balance at December 31 | 35.4 | 135.9 | ||||||
12. | OTHER CURRENT ASSETS |
December 31, | ||||||||
2009 | 2008 | |||||||
Advances to EDEKT, short-term portion (See Note 18) | 35.2 | 35.2 | ||||||
Loan to Auxiliary fund, short-term portion (See Note 18) | 10.1 | 10.0 | ||||||
Due from OTE Leasing customers (See Note 29) | 25.6 | 25.4 | ||||||
Loans and advances to employees | 6.6 | 6.2 | ||||||
VAT recoverable | 5.0 | 22.5 | ||||||
Other prepayments | 59.9 | 59.0 | ||||||
Deferred expenses | 10.0 | 9.5 | ||||||
Other | 103.2 | 93.8 | ||||||
Total | 255.6 | 261.6 | ||||||
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13. | CASH AND CASH EQUIVALENTS |
December 31, | ||||||||
2009 | 2008 | |||||||
Cash in hand | 3.1 | 3.5 | ||||||
Short-term bank deposits | 865.7 | 1,426.2 | ||||||
868.8 | 1,429.7 | |||||||
Held for sale | — | (1.9 | ) | |||||
Total | 868.8 | 1,427.8 | ||||||
14. | SHARE CAPITAL — SHARE PREMIUM |
Shareholder | Number of Shares | Percentage % | ||||||
Hellenic State | 63,371,292 | 12.93 | % | |||||
D.E.K.A. S.A. | 15,052,773 | 3.07 | % | |||||
IKA — ETAM (See Note 18) | 19,606,016 | 4.00 | % | |||||
DEUTSCHE TELEKOM AG | 147,045,118 | 30.00 | % | |||||
Institutional Investors | 194,978,408 | 39.78 | % | |||||
Private Investors | 50,096,782 | 10.22 | % | |||||
Total | 490,150,389 | 100.00 | % | |||||
15. | STATUTORY RESERVE — FOREIGN EXCHANGE AND OTHER RESERVES — RETAINED EARNINGS |
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December 31, | ||||||||
2009 | 2008 | |||||||
Available for sale reserve | 5.2 | 1.7 | ||||||
Net loss on cash flow hedge | (6.8 | ) | (6.3 | ) | ||||
Foreign currency translation | (51.7 | ) | 78.5 | |||||
Balance at December 31 | (53.3 | ) | 73.9 | |||||
16. | DIVIDENDS |
17. | LONG-TERM BORROWINGS |
December 31, | ||||||||||||
2009 | 2008 | |||||||||||
(a | ) | Loan from European Investment Bank / Hellenic State | — | 18.9 | ||||||||
(b | ) | Syndicated loans | 500.0 | 500.0 | ||||||||
(c | ) | Global Medium-Term Note Program | 4,876.5 | 5,464.5 | ||||||||
(d | ) | Other bank loans | 42.1 | 59.2 | ||||||||
Total long-term debt | 5,418.6 | 6,042.6 | ||||||||||
Short-term portion | (32.9 | ) | (633.0 | ) | ||||||||
Long-term portion | 5,385.7 | 5,409.6 | ||||||||||
(a) | LOAN FROM EUROPEAN INVESTMENT BANK / HELLENIC STATE |
(b) | SYNDICATED LOANS |
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(c) | GLOBAL MEDIUM TERM-NOTE PROGRAM |
• | Euro 1,250.0 notes (nominal value) at a fixed rate of 5.0%, issued in August 2003, maturing on August 5, 2013. As of December 31, 2009 the outstanding balance is Euro 1,250.8 (2008: Euro 1,248.8). | |
• | Euro 650.0 notes (nominal value) at a fixed rate of 3.75%, issued in November 2005, maturing on November 11, 2011. As of December 31, 2009 the outstanding balance is Euro 639.7 (2008: Euro 634.4). | |
• | Euro 900.0 notes (nominal value) at a fixed rate of 4.625%, issued in November 2006, maturing on May 20, 2016. As of December 31, 2009 the outstanding balance is Euro 892.5 (2008: Euro 891.5). | |
• | Euro 1,500.0 notes (nominal value) at a fixed rate of 5.375%, issued in February 2008, maturing on February 14, 2011. As of December 31, 2009 the outstanding balance is Euro 1,496.8 (2008: Euro 1,494.2). | |
• | Euro 600.0 notes at a fixed rate of 6.0%, issued in February 2008, maturing on February 12, 2015. As of December 31, 2009 the outstanding balance is Euro 596.7 (2008: Euro 596.3). |
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(d) | OTHER BANK LOANS |
18. | PROVISIONS FOR PENSIONS, STAFF RETIREMENT INDEMNITIES AND OTHER EMPLOYEE BENEFITS |
(a) | Main Pension Fund (TAP-OTE)/IKA-ETAM |
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(b) | Auxiliary Pension Fund/ TAYTEKO |
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December 31, | ||||||||
2009 | 2008 | |||||||
Loans and advances to: | ||||||||
EDEKT | 70.4 | 105.6 | ||||||
Auxiliary Fund | 2.4 | 2.6 | ||||||
Interest bearing loan to Auxiliary Fund | 127.0 | 131.5 | ||||||
Total | 199.8 | 239.7 | ||||||
Loans and advances to: | ||||||||
EDEKT | 35.2 | 35.2 | ||||||
Auxiliary Fund | 0.5 | 0.5 | ||||||
Interest bearing loan to Auxiliary Fund | 9.6 | 9.5 | ||||||
Short-term portion | 45.3 | 45.2 | ||||||
Long-term portion | 154.5 | 194.5 | ||||||
(a) | Provision for Staff Retirement Indemnities |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Current service cost | 19.0 | 18.4 | 18.7 | |||||||||
Interest cost on benefit obligation | 20.2 | 15.5 | 14.5 | |||||||||
Amortization of past service cost | 8.0 | 6.7 | 7.8 | |||||||||
Amortization of unrecognized actuarial loss | 2.8 | 2.7 | 3.8 | |||||||||
Total | 50.0 | 43.3 | 44.8 | |||||||||
2009 | 2008 | |||||||
Defined benefit obligation — beginning of the year | 359.2 | 331.3 | ||||||
Current service cost | 19.0 | 18.4 | ||||||
Interest cost | 20.2 | 15.5 | ||||||
Actuarial loss/(gain) | (2.3 | ) | 11.1 | |||||
Past service cost | 0.7 | 2.5 | ||||||
Foreign exchange differences | (0.8 | ) | — | |||||
Prior service cost arising during the year | 0.2 | — | ||||||
Benefits paid | (38.2 | ) | (19.6 | ) | ||||
Defined benefit obligation — end of the year | 358.0 | 359.2 | ||||||
Unrecognized actuarial losses | (50.3 | ) | (55.3 | ) | ||||
Unrecognized past service costs | (41.2 | ) | (49.0 | ) | ||||
Liability in the statement of financial position | 266.5 | 254.9 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Discount rate | 4.6–9.5 | % | 4.5–6.7 | % | 4.8 | % | ||||||
Assumed rate of future salary increases | 3.5–4.5 | % | 2.5–6.5 | % | 5.5 | % |
(b) | Youth Account |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Current service cost | 19.3 | 19.9 | 21.8 | |||||||||
Interest cost on benefit obligation | 12.6 | 11.8 | 11.8 | |||||||||
Amortization of actuarial loss | 11.3 | 31.8 | 10.7 | |||||||||
Amortization of past service cost | 2.3 | 5.8 | 3.2 | |||||||||
Total | 45.5 | 69.3 | 47.5 | |||||||||
2009 | 2008 | |||||||||||||||||||||||
Post | Other | Post | Other Long | |||||||||||||||||||||
Employment | Long Term | Employment | Term | |||||||||||||||||||||
Benefit | Benefit | Total | Benefit | Benefit | Total | |||||||||||||||||||
Projected benefit obligation — beginning of the year | 194.4 | 83.3 | 277.7 | 200.5 | 85.9 | 286.4 | ||||||||||||||||||
Service cost-benefits earned during the year | 13.5 | 5.8 | 19.3 | 13.9 | 6.0 | 19.9 | ||||||||||||||||||
Interest cost on projected benefit obligation | 8.8 | 3.8 | 12.6 | 8.3 | 3.5 | 11.8 | ||||||||||||||||||
Amortization of unrecognized actuarial loss | 30.0 | 4.8 | 34.8 | 11.1 | 4.8 | 15.9 | ||||||||||||||||||
Benefits paid | (39.7 | ) | (10.4 | ) | (50.1 | ) | (39.4 | ) | (16.9 | ) | (56.3 | ) | ||||||||||||
Projected benefit obligation — end of the year | 207.0 | 87.3 | 294.3 | 194.4 | 83.3 | 277.7 | ||||||||||||||||||
Defined benefit obligation | 207.0 | 87.3 | 294.3 | 194.4 | 83.3 | 277.7 | ||||||||||||||||||
Unrecognized actuarial losses | (79.6 | ) | — | (79.6 | ) | (56.1 | ) | — | (56.1 | ) | ||||||||||||||
Unrecognized past service costs | (3.7 | ) | — | (3.7 | ) | (6.0 | ) | — | (6.0 | ) | ||||||||||||||
Benefit liability | 123.7 | 87.3 | 211.0 | 132.3 | 83.3 | 215.6 | ||||||||||||||||||
Employee’s accumulated contributions | 71.3 | 70.7 | ||||||||||||||||||||||
Liability in the statement of financial position | 123.7 | 87.3 | 282.3 | 132.3 | 83.3 | 286.3 |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Discount rate | 3.9 | % | 5.0 | % | 4.5 | % | ||||||
Assumed rate of future salary increases | 4.5 | % | 4.5 | % | 4.5 | % |
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• | The cost of employer’s and employees’ contributions to TAP-OTE for the period required for the employees to be entitled to pension | |
• | The amount of pensions TAP-OTE will be required to prepay to these employees | |
• | The total cost of employer’s and employees’ contributions to the Auxiliary Fund for the period required for the employees to be entitled to pension | |
• | The amount of pensions the Auxiliary Fund will be required to prepay to these employees | |
• | The total cost of employees’ contributions to Auxiliary Fund for the Lump-Sum benefit | |
• | The total cost of bonuses based on the collective labor agreement signed on July 20, 2005 and | |
• | The termination payments upon retirement of the employees (staff retirement indemnities). |
• | The Hellenic State retains the option to repurchase a part or the total of the transferred shares. This option can be exercised at any time, following a written declaration to IKA-ETAM, stating at a minimum the number of shares that will be repurchased and the time period, as one or a series of transactions. | |
• | If IKA-ETAM, for any reason, decides to sell all or a part of the shares, it is obliged to communicate this intention in writing to the Hellenic State. The Hellenic State retains the right to repurchase part or the whole of the shares that IKA-ETAM intends to sell. To exercise this right, the Hellenic State must provide written notice of its intentions within one month from notification. If the Hellenic State does not wish to exercise its right or does not exercise its rights within one month, then IKA-ETAM can sell freely those shares. | |
• | The Hellenic State has the exclusive obligation to repurchase the shares that IKA-ETAM intends to sell if the reason for the sale is to fund the pensions of the participants in OTE’s Voluntary Leave Scheme based on article 74 of L3371/2005. In this instance, IKA-ETAM must provide specific economic analysis that |
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evidences its inability to fulfill its obligation to disburse pensions to the above mentioned participants without the sale of the shares. |
• | In all the afore-mentioned cases (call optionand/or put option) the value of the total of the transferred shares will be calculated based on the closing price of the share of OTE at the signing date (i.e. Euro 10.30 (in absolute amount) per share). | |
• | If IKA-ETAM sells the shares to a third party without complying with all the afore-mentioned terms, IKA-ETAM is obliged to pay to the Hellenic State an amount equal to 10 times the consideration received from the sale to the third party as a financial penalty and compensation which is agreed as fair. | |
• | If OTE decides to increase its share capital with a preference right in favor of the existing owners, or issues convertible bonds and IKA-ETAM decides to exercise these rights, IKA-ETAM is required to inform the Hellenic State in writing. The Hellenic State retains the right to request IKA-ETAM to transfer, through an over the counter transaction, the additional shares obtained. In this case IKA-ETAM is obliged to transfer the shares obtained at the price obtained, otherwise it is obliged to pay compensation equal to 10 times the consideration invested for participating in the share capital increase and terms mentioned in the preceding paragraph will apply. | |
• | IKA-ETAM undertakes to exercise its voting rights corresponding to the above shares, in coordination with the Hellenic State and has to instruct individuals who will be authorized to exercise the voting rights at any General Assembly of the OTE’s shareholders on its behalf in the same way the Hellenic State does. Otherwise, IKA-ETAM has to pay to the Hellenic State a penalty equal to the listed price of the transferred shares at the date of the General Assembly of the OTE’s shareholders as well as any other compensation for any consequential loss the Hellenic State suffers. |
• | OTE’s employees who: (i) have submitted a written application to participate in the Voluntary Leave Scheme, within the deadlines defined in par.2, article 74 of Law 3371/2005 and, (ii) do not submit an irrevocable application within one (1) month from the law’s enactment that would recall the initial application submitted, are considered to be retired based on the article 74 of Law 3371/2005 within three (3) months from the expiration of the deadline described in ii) above. | |
• | The cost that will arise from a) the employer’s and the employee’s contributions to IKA-ETAM (both for the sections of pensions and medical benefits) for the factitious time recognized to these employees and b) the pensions that IKA-ETAM’s pension section will be required to pay to these employees based on the above, will be covered by OTE. | |
• | The cost that will arise from the employer’s and the employee’s contributions to TAYTEKO for the factitious time recognized to these employees as well as the pensions that TAYTEKO (Auxiliary Insurance Sector for OTE Personnel) will be required to pay to these employees based on the above, will be covered by OTE. | |
• | The cost that will arise from the employer’s and the employee’s contributions to TAYTEKO (Health Insurance Sector for OTE Personnel) for the factitious time recognized to these employees, will be covered by OTE. | |
• | For the Lump Sum benefits that TAYTEKO will be required to pay to these employees, OTE should grant a long-term loan to TAYTEKO. |
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2009 | 2008 | |||||||
Short-term portion | 149.0 | 275.8 | ||||||
Long-term portion | 109.9 | 107.2 | ||||||
Total | 258.9 | 383.0 | ||||||
2009 | 2008 | |||||||
Balance at January 1 | 383.0 | 417.7 | ||||||
Payments during the year | (96.1 | ) | (42.8 | ) | ||||
Release of liability due to transfer of 4% to IKA-ETAM | (201.9 | ) | — | |||||
Voluntary Leave Scheme cost | 152.0 | — | ||||||
Payments related to provision for staff retirement indemnities | (13.9 | ) | — | |||||
Adjustment due to time value of money | 35.8 | 8.1 | ||||||
Balance at December 31 | 258.9 | 383.0 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Release of liability due to transfer of 4% to IKA ETAM | 201.9 | — | — | |||||||||
Voluntary Leave Scheme cost | (152.0 | ) | — | — | ||||||||
Other early retirement programs’ cost | (19.6 | ) | (50.2 | ) | (22.1 | ) | ||||||
Total | 30.3 | (50.2 | ) | (22.1 | ) | |||||||
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19. | OTHER NON-CURRENT LIABILITIES |
December 31, | ||||||||
2009 | 2008 | |||||||
Provision for employees’ contributions under early retirement programs | 7.1 | 4.4 | ||||||
Asset retirement obligation | 8.5 | 5.9 | ||||||
Provision for obligation of free units | 36.1 | 37.0 | ||||||
Deferred revenue (long-term) | 8.0 | 18.0 | ||||||
Unpaid balance of 3G license | 6.9 | — | ||||||
Derivative financial instrument | 4.3 | 3.9 | ||||||
Other | 7.0 | 5.4 | ||||||
Total | 77.9 | 74.6 | ||||||
20. | SHORT-TERM BORROWINGS |
• | Loan ofE-VALUE S.A. of Euro 2.0, maturing on July 2010 with an interest rate Euribor + 0.90%. The outstanding balance of this loan as of December 31, 2009 amounts to Euro 2.0 (December 31, 2008: Euro 0.3). | |
• | Loan of OTE PLUS with an outstanding balance as of December 31, 2009 amounting to Euro 1.3 (December 31, 2008: Euro 4.1). | |
• | Loan of VOICENET with an outstanding balance as of December 31, 2009 amounting to nil (December 31, 2008: Euro 0.7). |
21. | INCOME TAXES — DEFERRED TAXES |
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Company | Open Tax Years | |
OTE | From 2009 | |
COSMOTE | From 2009 | |
OTE INTERNATIONAL INVESTMENTS LTD | From 2003 | |
HELLAS SAT | From 2008 | |
COSMO-ONE | From 2002 | |
VOICENET | From 2004 | |
HELLASCOM | From 2007 | |
OTE PLC | From 2005 | |
OTE SAT-MARITEL | From 2004 | |
OTE PLUS | From 2008 | |
OTE ESTATE | From 2008 | |
OTE GLOBE | From 2007 | |
OTE INSURANCE | From 2007 | |
OTE ACADEMY | From 2007 | |
HATWAVE | From 1996 | |
OTE INVESTMENTS SERVICES S.A. | From 2005 | |
ROMTELECOM | From 2006 | |
AMC | From 2008 | |
GLOBUL | From 2005 | |
COSMOTE ROMANIA | From 2007 | |
GERMANOS | From 2008 | |
E-VALUE S.A. | From 2003 | |
GERMANOS TELECOM ROMANIA S.A. | From 2003 | |
SUNLIGHT ROMANIA S.R.L. -FILIALA | From 2005 | |
GERMANOS TELECOM BULGARIA A.D. | From 2005 | |
MOBILBEEEP LTD | From 2005 | |
HELLAS SAT S.A. | From 2008 | |
CHA | From 2007 | |
COSMO-HOLDING CYPRUS | From 2006 | |
COSMOHOLDING ROMANIA LTD | From 2009 (incorporation) | |
ZAPP | From 2009 | |
OTE PROPERTIES | From 2008 (incorporation) | |
OTE PLUS BULGARIA | Tax exempt | |
E-VALUE LTD | From 2009 (incorporation) |
• | The tax audit of the Company for the fiscal years2006-2008 was completed in early May 2010 and the tax authorities imposed additional taxes amounting to Euro 57.7. The Company has accepted a partial settlement for an amount of Euro 37.7. Furthermore, based on the findings of the tax audit, the Company has reassessed the income tax expense for the year 2009 and an additional tax expense of Euro 6.3 was required. The amount settled with the tax authorities, the additional estimate for 2009, less the previously established provision for open tax years of Euro 14.0 resulted in an amount of Euro 30.0 being charged to the |
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2009 income statement. The remaining amount of taxes imposed (Euro 20.0) relate to costs associated with OTE’s Voluntary Leave Scheme and the early retirement programs. OTE decided not to include this particular item in the partial settlement and intends to appeal against the tax authorities’ position before the administrative courts. Based on the respective law, the Company will be required to pay an advance of approximately Euro 5.0 (25% of the assessed taxes and penalties) in order to appeal, which will be reimbursed to the Company in the event of a favorable court outcome. Based on the management’s assessment, OTE considers there are good grounds to believe that OTE will win this case in court. |
• | The tax audit of COSMOTE for the fiscal years2006-2008 was completed in May 2010, without any significant impact to the Group. | |
• | The tax audit of OTE PLUS for the fiscal years2005-2007 was completed during 2009, without any impact to the Group. | |
• | The tax audit of GERMANOS for the fiscal years2004-2007 was completed during 2009 without any impact to the Group, as the additional taxes imposed of approximately Euro 17.0 were payable by this company’s previous owner who paid the amounts due in March 2010. | |
• | The tax audit of OTE ESTATE for the fiscal years 2003 — 2007 was completed during 2009, without any significant impact to the Group. | |
• | The tax audit of OTE SAT — MARITEL for the fiscal years 2004 — 2006 was completed in June 2010, without any significant impact to the Group. | |
• | The tax audit of AMC for fiscal years 2006 and 2007 was completed during 2009, without any impact to the Group. | |
• | The tax audit ofE-VALUE S.A. for the fiscal years2003-2005 is in progress. | |
• | The tax audit, being part of the liquidation process of OTE PLUS-BULGARIA was finalized on January 11, 2010, without any tax impact to the Group. | |
• | ROMTELECOM is currently subject to a tax audit focusing in import transactions for the period2006-2009. |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Current income tax | 263.4 | 311.7 | 341.5 | |||||||||
Special contribution (Law 3808/2009) | 113.1 | — | — | |||||||||
Deferred income tax | 33.5 | (65.5 | ) | 40.3 | ||||||||
Total income tax | 410.0 | 246.2 | 381.8 | |||||||||
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2009 | 2008 | 2007 | ||||||||||
Profit before tax | 780.7 | 844.0 | 1,154.8 | |||||||||
Statutory tax rate | 25 | % | 25 | % | 25 | % | ||||||
Tax at statutory rate | 195.2 | 211.0 | 288.7 | |||||||||
Effect of different rates in different countries | (17.3 | ) | (2.1 | ) | 16.5 | |||||||
Effect of changes to tax rates | 12.6 | (9.7 | ) | 2.6 | ||||||||
Expenses non-deductible for tax purposes | 29.9 | 36.6 | 16.0 | |||||||||
Losses from consolidated subsidiaries not deductible | 11.6 | 11.9 | 19.2 | |||||||||
Special contribution (Law 3808/2009) | 113.1 | — | — | |||||||||
Tax on dividends (Law 3697/2008) | 30.3 | — | — | |||||||||
Differences arising from tax audits | 30.0 | 7.9 | 48.8 | |||||||||
Untaxed reserve (Law 3299/2004) | — | (7.5 | ) | (7.5 | ) | |||||||
Other | 4.6 | (1.9 | ) | (2.5 | ) | |||||||
Income tax | 410.0 | 246.2 | 381.8 | |||||||||
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Statement of Financial Position | Income Statement | |||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | ||||||||||||||||
Voluntary leave scheme | 61.2 | 95.6 | (34.4 | ) | (11.2 | ) | (61.1 | ) | ||||||||||||
Staff retirement indemnities | 46.6 | 42.8 | 3.8 | (8.2 | ) | 5.7 | ||||||||||||||
Youth Account | 46.9 | 49.8 | (2.9 | ) | (0.9 | ) | (0.9 | ) | ||||||||||||
Employee benefits | 22.1 | 44.9 | (22.8 | ) | 0.5 | 5.3 | ||||||||||||||
Property, plant and equipment | 81.5 | 83.9 | (2.4 | ) | 10.3 | 6.7 | ||||||||||||||
Provisions | 92.3 | 75.7 | 13.3 | 42.4 | (16.4 | ) | ||||||||||||||
Carry forward tax losses | 20.9 | 20.4 | 0.5 | (0.5 | ) | 4.7 | ||||||||||||||
Deferred income | 8.3 | 5.4 | 2.9 | (0.7 | ) | (1.1 | ) | |||||||||||||
Fair value adjustment on acquisitions | 24.2 | 41.4 | (17.2 | ) | (2.4 | ) | (2.4 | ) | ||||||||||||
Other | 22.0 | 14.1 | 7.9 | (9.8 | ) | (2.3 | ) | |||||||||||||
Deferred tax asset (before offset) | 426.0 | 474.0 | ||||||||||||||||||
Offset of deferred tax liabilities | (172.4 | ) | (187.2 | ) | ||||||||||||||||
Deferred tax asset (after offset) | 253.6 | 286.8 | ||||||||||||||||||
Deferred tax liabilities (before offset) | ||||||||||||||||||||
Property, plant and equipment | (166.9 | ) | (166.3 | ) | (0.6 | ) | 29.9 | 3.9 | ||||||||||||
Capitalized interest | (22.1 | ) | (27.1 | ) | 5.0 | 6.6 | 5.3 | |||||||||||||
Unbilled revenue | (0.2 | ) | (5.6 | ) | 5.4 | (5.4 | ) | 0.4 | ||||||||||||
Loan fees | (2.3 | ) | (3.5 | ) | 1.2 | — | (0.8 | ) | ||||||||||||
Fair value adjustment on acquisition | (79.3 | ) | (89.0 | ) | 9.7 | 21.2 | 3.7 | |||||||||||||
Other | (15.3 | ) | (12.4 | ) | (2.9 | ) | (6.3 | ) | 9.0 | |||||||||||
(286.1 | ) | (303.9 | ) | |||||||||||||||||
To be offset against deferred tax asset | 172.4 | 187.2 | ||||||||||||||||||
Deferred tax liabilities (after offset) | (113.7 | ) | (116.7 | ) | ||||||||||||||||
Deferred tax income/(expense) | (33.5 | ) | 65.5 | (40.3 | ) | |||||||||||||||
Deferred tax assets, net | 139.9 | 170.1 | ||||||||||||||||||
2009 | 2008 | |||||||
Deferred tax (net) — beginning of the year | 170.1 | 94.6 | ||||||
Tax charged to the income statement | (33.5 | ) | 65.5 | |||||
Foreign exchange differences | 3.3 | 10.0 | ||||||
Deferred tax (net) — end of the year | 139.9 | 170.1 | ||||||
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Year | Amount | |||
2010 | 19.4 | |||
2011 | 50.0 | |||
2012 | 88.0 | |||
2013 | 79.7 | |||
2014 and onwards | 16.1 | |||
Total | 253.2 | |||
22. | OTHER CURRENT LIABILITIES |
December 31, | ||||||||
2009 | 2008 | |||||||
Amount due to MICROSTAR Ltd | — | 160.3 | ||||||
Employer contributions | 60.4 | 63.6 | ||||||
Payroll | 36.3 | 34.0 | ||||||
Other taxes — duties | 111.9 | 102.4 | ||||||
Interest payable | 158.2 | 164.0 | ||||||
Provision for employees’ contributions under early retirement programs | 3.4 | 3.4 | ||||||
Provisions for litigation and other liabilities | 109.8 | 110.5 | ||||||
Customer advances | 46.9 | 55.6 | ||||||
Liability of acquiring non-controlling interests (see Note 8) | 10.0 | — | ||||||
Other | 149.0 | 144.4 | ||||||
Total | 685.9 | 838.2 | ||||||
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2009 | 2008 | |||||||
Balance at January 1 | 110.5 | 126.8 | ||||||
Addition during the year (see Note 24) | — | 2.1 | ||||||
Foreign exchange differences | (0.1 | ) | — | |||||
Utilized | (0.6 | ) | (10.9 | ) | ||||
Unused amounts reversed | — | (7.5 | ) | |||||
Balance at December 31 | 109.8 | 110.5 | ||||||
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23. | REVENUE |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Domestic Telephony | ||||||||||||
Monthly network service fees | 845.9 | 910.7 | 988.1 | |||||||||
Local and long-distance calls | ||||||||||||
— Fixed to fixed | 461.9 | 481.9 | 565.5 | |||||||||
— Fixed to mobile | 249.5 | 325.3 | 378.3 | |||||||||
711.4 | 807.2 | 943.8 | ||||||||||
Other | 62.3 | 96.3 | 90.3 | |||||||||
1,619.6 | 1,814.2 | 2,022.2 | ||||||||||
International Telephony | ||||||||||||
International traffic | 84.9 | 93.8 | 108.1 | |||||||||
Dues from international operators | 113.3 | 136.6 | 146.8 | |||||||||
Dues from mobile operators | 52.9 | 56.5 | 49.6 | |||||||||
251.1 | 286.9 | 304.5 | ||||||||||
Mobile Telephony | 2,396.2 | 2,470.8 | 2,210.0 | |||||||||
Other Revenue | ||||||||||||
Prepaid cards | 37.3 | 52.2 | 76.2 | |||||||||
Leased lines and Data ATM communications | 319.4 | 336.6 | 272.1 | |||||||||
Integrated Services Digital Network (ISDN) | 141.7 | 147.5 | 166.1 | |||||||||
Sales of telecommunication equipment | 438.0 | 617.2 | 679.8 | |||||||||
Internet/ADSL | 297.7 | 226.9 | 225.7 | |||||||||
Co-location/Local Loop | 122.1 | 91.7 | 30.8 | |||||||||
Metro Ethernet & IP CORE | 31.9 | 23.6 | 11.0 | |||||||||
Provision for services | 116.4 | 120.4 | 68.3 | |||||||||
Interconnection charges | 88.9 | 119.4 | 108.2 | |||||||||
Miscellaneous | 123.8 | 99.9 | 144.9 | |||||||||
1,717.2 | 1,835.4 | 1,783.1 | ||||||||||
Total Revenue | 5,984.1 | 6,407.3 | 6,319.8 | |||||||||
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24. | OTHER OPERATING EXPENSES |
2009 | 2008 | 2007 | ||||||||||
Third party fees | 234.2 | 208.4 | 183.5 | |||||||||
Cost of telecommunication materials, repairs and maintenance | 182.2 | 191.5 | 201.8 | |||||||||
Advertising and promotion costs | 216.8 | 212.9 | 208.3 | |||||||||
Utilities | 163.7 | 142.0 | 127.3 | |||||||||
Provision for doubtful accounts (see Note 10) | 107.0 | 119.8 | 88.0 | |||||||||
Other provisions (see Note 22) | — | 2.1 | 18.1 | |||||||||
Travel costs | 18.0 | 18.1 | 18.9 | |||||||||
Commissions to independent commercial distributors | 238.4 | 253.4 | 244.1 | |||||||||
Payments to Audiotex providers | 9.5 | 8.7 | 14.3 | |||||||||
Rents | 101.8 | 90.9 | 88.0 | |||||||||
Taxes, other than income tax | 56.2 | 51.7 | 56.3 | |||||||||
Transportation costs | 11.2 | 11.8 | 13.0 | |||||||||
Other | 57.5 | 44.5 | 65.3 | |||||||||
Total | 1,396.5 | 1,355.8 | 1,326.9 | |||||||||
25. | EARNINGS PER SHARE |
2009 | 2008 | 2007 | ||||||||||
Profit attributable to owners of the parent | 374.0 | 601.8 | 662.6 | |||||||||
Weighted average number of shares for basic earnings per share | 490,150,389 | 490,150,389 | 490,150,389 | |||||||||
Share options | — | 6,008,060 | — | |||||||||
Weighted average number of shares adjusted for the effect of dilutions | 490,150,389 | 496,158,449 | 490,150,389 | |||||||||
Basic earnings per share | 0.7630 | 1.2278 | 1.3518 | |||||||||
Diluted earnings per share | 0.7630 | 1.2129 | 1.3518 |
26. | OPERATING SEGMENT INFORMATION |
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• | OTE is a provider of local, long-distance and international fixed-line voice telephony and internet access services in Greece. | |
• | COSMOTE group is a provider of mobile telecommunications services in Greece, Albania, Bulgaria and Romania (and in FYROM until May 2009). | |
• | ROMTELECOM is a provider of local, long-distance and international fixed-line voice telephony and internet access services in Romania. |
OTE | Cosmote Group | Romtelecom | Other | Total | Eliminations | Group | ||||||||||||||||||||||
2009 | ||||||||||||||||||||||||||||
Revenue from external customers | 2,204.8 | 2,843.3 | 790.3 | 145.7 | 5,984.1 | — | 5,984.1 | |||||||||||||||||||||
Intersegment revenue | 207.6 | 192.6 | 17.4 | 271.0 | 688.6 | (688.6 | ) | — | ||||||||||||||||||||
Interest income | 17.4 | 24.5 | 15.4 | 283.7 | 341.0 | (279.4 | ) | 61.6 | ||||||||||||||||||||
Interest expense | (225.8 | ) | (115.8 | ) | (1.8 | ) | (261.3 | ) | (604.7 | ) | 279.5 | (325.2 | ) | |||||||||||||||
Depreciation and amortization | (424.4 | ) | (458.3 | ) | (227.9 | ) | (45.5 | ) | (1,156.1 | ) | 0.8 | (1,155.3 | ) | |||||||||||||||
Dividend income | 9.6 | — | — | — | 9.6 | — | 9.6 | |||||||||||||||||||||
Income tax expense | (164.6 | ) | (180.9 | ) | (31.4 | ) | (33.1 | ) | (410.0 | ) | — | (410.0 | ) | |||||||||||||||
Operating profit | 306.5 | 611.9 | 24.6 | 58.5 | 1,001.5 | (0.6 | ) | 1,000.9 | ||||||||||||||||||||
Profit for the year | 247.5 | 377.7 | (18.4 | ) | 49.6 | 656.4 | (285.7 | ) | 370.7 | |||||||||||||||||||
Operating profit before depreciation, amortization and cost of early retirement program | 692.0 | 1,070.2 | 261.1 | 104.0 | 2,127.3 | (1.4 | ) | 2,125.9 | ||||||||||||||||||||
Investments | 156.4 | 0.4 | — | 0.2 | 157.0 | — | 157.0 | |||||||||||||||||||||
Segment assets | 8,211.5 | 4,360.5 | 1,737.2 | 6,955.9 | 21,265.1 | (10,971.1 | ) | 10,294.0 | ||||||||||||||||||||
Segment liabilities | 4,797.0 | 3,438.0 | 261.3 | 5,766.7 | 14,263.0 | (5,918.7 | ) | 8,344.3 | ||||||||||||||||||||
Expenditures for segment assets | 272.6 | 399.2 | 187.2 | 31.9 | 890.9 | — | 890.9 | |||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Revenue from external customers | 2,362.1 | 3,064.5 | 850.5 | 130.2 | 6,407.3 | — | 6,407.3 | |||||||||||||||||||||
Intersegment revenue | 227.6 | 197.2 | 19.3 | 252.5 | 696.6 | (696.6 | ) | — | ||||||||||||||||||||
Interest income | 36.3 | 29.9 | 16.2 | 308.4 | 390.8 | (318.5 | ) | 72.3 | ||||||||||||||||||||
Interest expense | (194.8 | ) | (145.8 | ) | (7.6 | ) | (301.3 | ) | (649.5 | ) | 305.8 | (343.7 | ) | |||||||||||||||
Depreciation and amortization | (465.0 | ) | (416.6 | ) | (253.6 | ) | (77.9 | ) | (1,213.1 | ) | 0.1 | (1,213.0 | ) | |||||||||||||||
Dividend income | 12.2 | — | — | — | 12.2 | — | 12.2 | |||||||||||||||||||||
Income tax expense | (83.2 | ) | (148.5 | ) | 9.6 | (24.1 | ) | (246.2 | ) | — | (246.2 | ) | ||||||||||||||||
Operating profit | 312.2 | 725.6 | — | 21.6 | 1,059.4 | (1.7 | ) | 1,057.7 | ||||||||||||||||||||
Profit for the year | 363.3 | 470.6 | (10.8 | ) | 20.9 | 844.0 | (246.2 | ) | 597.8 |
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OTE | Cosmote Group | Romtelecom | Other | Total | Eliminations | Group | ||||||||||||||||||||||
Operating profit before depreciation, amortization and cost of early retirement program | 789.4 | 1,142.2 | 291.6 | 99.5 | 2,322.7 | (1.8 | ) | 2,320.9 | ||||||||||||||||||||
Investments | 156.4 | 0.1 | — | 0.1 | 156.6 | — | 156.6 | |||||||||||||||||||||
Segment assets | 8,873.0 | 4,806.2 | 1,873.2 | 7,742.3 | 23,294.7 | (11,869.5 | ) | 11,425.2 | ||||||||||||||||||||
Segment liabilities | 5,349.0 | 3,844.9 | 302.7 | 6,509.8 | 16,006.4 | (6,754.4 | ) | 9,252.0 | ||||||||||||||||||||
Expenditures for segment assets | 300.7 | 499.6 | 125.7 | 38.0 | 964.0 | — | 964.0 | |||||||||||||||||||||
2007 | ||||||||||||||||||||||||||||
Revenue from external customers | 2,452.9 | 2,878.6 | 843.3 | 145.0 | 6,319.8 | — | 6,319.8 | |||||||||||||||||||||
Intersegment revenue | 229.8 | 181.7 | 28.6 | 226.1 | 666.2 | (666.2 | ) | — | ||||||||||||||||||||
Interest income | 47.5 | 21.6 | 10.1 | 191.3 | 270.5 | (192.7 | ) | 77.8 | ||||||||||||||||||||
Interest expense | (98.6 | ) | (145.3 | ) | (5.4 | ) | (185.0 | ) | (434.3 | ) | 195.6 | (238.7 | ) | |||||||||||||||
Depreciation and amortization | (507.0 | ) | (367.9 | ) | (255.8 | ) | (42.5 | ) | (1,173.2 | ) | 1.4 | (1,171.8 | ) | |||||||||||||||
Dividend income | 16.8 | — | — | — | 16.8 | — | 16.8 | |||||||||||||||||||||
Income tax expense | (212.4 | ) | (145.6 | ) | (2.4 | ) | (21.4 | ) | (381.8 | ) | — | (381.8 | ) | |||||||||||||||
Operating profit | 314.3 | 618.0 | 44.8 | 71.7 | 1,048.8 | (1.9 | ) | 1,046.9 | ||||||||||||||||||||
Profit for the year | 579.7 | 361.3 | 15.5 | 55.2 | 1,011.7 | (238.7 | ) | 773.0 | ||||||||||||||||||||
Operating profit before depreciation, amortization and cost of early retirement program | 843.4 | 985.9 | 300.6 | 114.2 | 2,244.1 | (3.3 | ) | 2,240.8 | ||||||||||||||||||||
Investments | 157.8 | — | — | 0.6 | 158.4 | — | 158.4 | |||||||||||||||||||||
Segment assets | 8,360.7 | 4,428.2 | 2,140.2 | 7,089.2 | 22,018.3 | (10,319.1 | ) | 11,699.2 | ||||||||||||||||||||
Segment liabilities | 4,811.7 | 3,680.3 | 376.2 | 5,749.6 | 14,617.8 | (5,973.2 | ) | 8,644.6 | ||||||||||||||||||||
Expenditures for segment assets | 297.0 | 564.5 | 207.2 | 32.6 | 1,101.3 | — | 1,101.3 |
Revenues from External Customers | Non – Current Assets | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
Greece | 4,189.6 | 4,498.3 | 4,582.1 | 4,075.5 | 4,161.9 | 4,558.2 | ||||||||||||||||||
Albania | 125.3 | 161.9 | 158.1 | 160.6 | 183.1 | 180.3 | ||||||||||||||||||
Bulgaria | 423.9 | 469.4 | 422.7 | 644.8 | 668.2 | 654.2 | ||||||||||||||||||
Romania | 1,206.4 | 1,188.2 | 1,072.8 | 2,083.7 | 2,022.8 | 2,259.4 | ||||||||||||||||||
Other | 38.9 | 89.5 | 84.1 | 95.1 | 242.1 | 239.7 | ||||||||||||||||||
Total | 5,984.1 | 6,407.3 | 6,319.8 | 7,059.7 | 7,278.1 | 7,891.8 | ||||||||||||||||||
27. | RELATED PARTY DISCLOSURES |
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2009 | ||||||||
Group’s | Group’s | |||||||
Sales | Purchases | |||||||
DEUTSCHE TELEKOM AG | 10.6 | 8.4 | ||||||
MAKEDONSKI TELEKOMMUNIKACII A. | 0.6 | 0.7 | ||||||
HT HRVATSKE | 0.3 | 0.6 | ||||||
COMBRIDGE | 4.5 | 0.1 | ||||||
DETEKON | — | 0.6 | ||||||
ORBITEL | — | 0.5 | ||||||
T-SYSTEMS | 1.2 | — | ||||||
T-Mobile Deutschland | 2.0 | 0.7 | ||||||
T-Mobile Czech | 0.3 | 0.1 | ||||||
T-Mobile UK | 0.8 | 0.4 | ||||||
T-Mobile Austria | 0.2 | 0.1 | ||||||
T-Mobile Netherlands | 0.4 | 0.1 | ||||||
T-Mobile USA | 0.3 | 0.4 | ||||||
T-Mobile Hungary | 0.1 | 0.1 | ||||||
T-Mobile Macedonia | 0.2 | 0.1 | ||||||
T-Mobile Hrvatska | 0.1 | 0.1 | ||||||
PCT POLSKA TELEFONIA | 0.4 | — | ||||||
Total | 22.0 | 13.0 | ||||||
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�� | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Amounts | Amounts | Amounts | Amounts | |||||||||||||
owed to | owed by | owed to | owed by | |||||||||||||
Group | Group | Group | Group | |||||||||||||
DEUTSCHE TELEKOM AG. | 6.9 | — | 6.5 | 7.5 | ||||||||||||
MAKEDOSNKI TELEKOMMUNIKACII A. | 0.1 | — | — | — | ||||||||||||
DETEKON | — | 0.1 | — | — | ||||||||||||
COMBRIDGE | 0.6 | — | — | — | ||||||||||||
ORBITEL | — | 0.1 | — | — | ||||||||||||
T-SYSTEMS | 0.1 | — | — | — | ||||||||||||
T-Mobile Deutschland | — | 0.6 | — | — | ||||||||||||
T-Mobile Hungary | 0.1 | 0.2 | — | — | ||||||||||||
T-Mobile Czech | 0.1 | 0.2 | — | — | ||||||||||||
T-Mobile UK | 0.1 | 0.7 | — | — | ||||||||||||
T-Mobile Austria | — | 0.3 | — | — | ||||||||||||
T-Mobile Netherlands | — | 0.3 | — | — | ||||||||||||
T-Mobile USA | 1.9 | 3.8 | — | — | ||||||||||||
T-Mobile Macedonia | 0.2 | 0.1 | — | — | ||||||||||||
PCT POLSKA TELEFONIA | — | — | — | — | ||||||||||||
Total | 10.1 | 6.4 | 6.5 | 7.5 | ||||||||||||
28. | SHARE OPTION PLAN |
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• | The Modified Share Option Plan is comprised of Basic options (i.e. those granted when a participant first enters the scheme) and Additional options (i.e. those granted on an annual basis to participants). The Share options are granted by the Board of Directors. | |
• | Options under the Modified Share Option Plan are granted at a preferential price. For options granted for year 2009 the preferential price is Euro 19.49 (absolute number). | |
• | The executives of the Group, to whom Share options are granted, may acquire the shares at the preferential grant price or at a discount (percentage) on the preferential grant price, depending on the executive’s hierarchical level at the time of exercising the Rights, and (i) the achievement of certain targets of both the entity employing them and the Group and (ii) high individual performance by the eligible executive. | |
• | For top level management, the potential discount is 15%, 20% or 25% if the targets have been achieved (otherwise no discount) and for middle level management, the potential discount is 10%, 15% or 20% if the targets have been achieved (otherwise no discount). |
• | The Basic options vest gradually (40% upon the completion of the year of the grant, 30% upon the completion of the second year and 30% upon the completion of the third year). Following a modification to the plan on July 10, 2009, Basic vested Rights may be exercised by the eligible executive in their entirety or partially during April and October of each calendar year following the vesting year (and up to October of the 7th calendar year (instead of the 4th) from the date of their grant). | |
• | Following a modification to the plan on July 10, 2009 the Additional vested Rights may be exercised by the eligible executive in their entirety or partially during April and October of up to the 3rd calendar year (instead of the first calendar year) following the vesting year. | |
• | In case the said vested Rights are not exercised within the aforementioned time frames they are lost. According to the terms of the plan, vesting of the options depends on the participant remaining in the service of the company. The total number of Stock Option Rights, which may be granted under the Modified Share Option Plan, cannot exceed 15,500,000 Rights, which corresponds to approximately 3.16% of OTE’s shares outstanding at the time of its approval. |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Expense arising from share-based payment transactions | 7.2 | 12.0 | 3.3 | |||||||||
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2009 | 2008 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Number of | Average | Number of | Average | |||||||||||||
Options | Exercise Price | Options | Exercise Price | |||||||||||||
Outstanding at the beginning of the year | 6,008,060 | 15.66 | 3,440,290 | 15.20 | ||||||||||||
Granted | 3,225,670 | 16.21 | 3,141,620 | 16.10 | ||||||||||||
Forfeited | (559,130 | ) | 16.23 | (573,850 | ) | 15.26 | ||||||||||
Exercised | — | — | — | — | ||||||||||||
Expired at the end of the year | — | — | — | — | ||||||||||||
Outstanding at the end of the year | 8,674,600 | 15.59 | 6,008,060 | 15.66 | ||||||||||||
Exercisable at the end of the year | 4,485,370 | 15.05 | 2,315,920 | 15.14 |
Share Price at | ||||||||||||
Plan | Year of Issuance | Options Granted | Grant Date | Comments | ||||||||
Plans of COSMOTE group | Original grant dates range from 27/10/05-31/10/07 | 3,440,290 | 15.48 | modified on 09/07/08 and on 10/07/09 | ||||||||
2008 OTE plan | 06/02/08 | 3,141,620 | 21.38 | modified on 09/07/08 and on 10/07/09 | ||||||||
2009 OTE plan | 06/03/09 | 3,225,670 | 10.40 | modified on 10/07/09 |
2009 | 2008 | |||||||
Weighted average share price | 10.40 | 21.38 | ||||||
Weighted average exercise price | 16.57 | 22.05 | ||||||
Weighted average expected volatility | 24.0 | % | 24.0 | % | ||||
Weighted average exercise period | 3.5 years | 2.5 years | ||||||
Weighted average risk free rate | 2.5 | % | 4.1 | % | ||||
Weighted average expected dividend | 0.75 | 0.75 | ||||||
Weighted average option value | 0.28 | 2.20 |
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29. | LITIGATION AND CLAIMS — COMMITMENTS |
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December 31, | ||||||||
2009 | 2008 | |||||||
Property, plant and equipment | 369.2 | 149.7 |
December 31, | ||||||||
2009 | 2008 | |||||||
Up to 1 year | 107.5 | 113.5 | ||||||
1 to 5 years | 303.8 | 239.6 | ||||||
Over 5 years | 201.6 | 290.9 |
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30. | FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT |
Carrying Amount | Fair Value | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Financial Assets | ||||||||||||||||
Available-for-sale | 24.1 | 20.6 | 24.1 | 20.6 | ||||||||||||
Held for trading | 3.2 | 3.1 | 3.2 | 3.1 | ||||||||||||
Held to maturity | 8.1 | 112.2 | 8.1 | 113.4 | ||||||||||||
Trade receivables | 1,153.0 | 1,194.2 | 1,153.0 | 1,194.2 | ||||||||||||
Loan to Auxiliary Fund | 129.4 | 134.1 | 132.3 | 120.7 | ||||||||||||
Other loans | 89.4 | 71.3 | 89.4 | 71.3 | ||||||||||||
Cash and cash equivalents | 868.8 | 1,427.8 | 868.8 | 1,427.8 | ||||||||||||
Derivative financial instruments | 7.4 | 6.2 | 7.4 | 6.2 | ||||||||||||
Financial Liabilities | ||||||||||||||||
Long-term borrowings | 5,385.7 | 5,409.6 | 5,520.0 | 5,094.3 | ||||||||||||
Short-term borrowings | 36.2 | 638.1 | 35.5 | 628.3 | ||||||||||||
Trade accounts payable | 813.2 | 943.9 | 813.2 | 943.9 | ||||||||||||
Derivative financial instruments | 4.3 | 3.9 | 4.3 | 3.9 |
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Fair Value | Fair Value | |||||||||
2009 | 2008 | Hierarchy | ||||||||
Financial Assets | ||||||||||
Available-for-sale shares | 14.3 | 11.1 | Level 1 | |||||||
Available-for-sale mutual funds | 4.0 | 3.8 | Level 1 | |||||||
Available-for-sale securities | 5.8 | 5.7 | Level 3 | |||||||
Held for trading bonds | 3.2 | 3.1 | Level 1 | |||||||
Other loans | 89.4 | 71.3 | Level 2 | |||||||
Derivative financial instruments | 7.4 | 6.2 | Level 2 | |||||||
Financial Liabilities | ||||||||||
Derivative financial instruments | 4.3 | 3.9 | Level 2 |
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Less than 1 Year | 1 to 2 Years | 2 to 5 Years | Over 5 Years | Total | ||||||||||||||||
December 31, 2009 | ||||||||||||||||||||
Medium term bonds OTE PLC | 245.1 | 2,395.1 | 1,607.9 | 1,619.3 | 5,867.4 | |||||||||||||||
Syndicated loan OTE PLC | 30.8 | 33.8 | 448.7 | — | 513.3 | |||||||||||||||
Borrowings — Rom Telecom | 8.4 | 9.1 | 16.9 | 12.6 | 47.0 | |||||||||||||||
Other Borrowings | 3.3 | — | — | — | 3.3 | |||||||||||||||
Trade accounts payable | 813.2 | — | — | — | 813.2 | |||||||||||||||
Total | 1,100.8 | 2,438.0 | 2,073.5 | 1,631.9 | 7,244.2 | |||||||||||||||
Less than 1 Year | 1 to 2 Years | 2 to 5 Years | Over 5 Years | Total | ||||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Medium term bonds OTE PLC | 872.3 | 245.1 | 3,925.4 | 1,696.9 | 6,739.7 | |||||||||||||||
Syndicated loan OTE PLC | 21.4 | 46.8 | 508.3 | — | 576.5 | |||||||||||||||
Borrowings — Rom Telecom | 16.8 | 8.2 | 21.5 | 15.1 | 61.6 | |||||||||||||||
European Investment Bank | 20.5 | — | — | — | 20.5 | |||||||||||||||
Other Borrowings | 5.3 | 2.0 | — | — | 7.3 | |||||||||||||||
Trade accounts payable | 943.9 | — | — | — | 943.9 | |||||||||||||||
Total | 1,880.2 | 302.1 | 4,455.2 | 1,712.0 | 8,349.5 | |||||||||||||||
• | As at December 31, 2009: Euro 5,400. | |
• | As at December 31, 2008: Euro 6,000. |
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December 31, | ||||||||
2009 | 2008 | |||||||
Variable interest rate | 503.3 | 1,099.3 | ||||||
Fixed interest rate | 4,918.6 | 4,948.4 | ||||||
TOTAL | 5,421.9 | 6,047.7 | ||||||
2009 | 2008 | |||||||
Profit before tax | 4.7 | 3.3 | ||||||
Equity | — | 3.0 |
Effect on Profit Before Tax | ||||||||
Change in Functional Currency Exchange Rate | 2009 | 2008 | ||||||
+10% | 12.4 | 7.2 | ||||||
−10% | (12.4 | ) | (7.2 | ) |
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December 31, | ||||||||
2009 | 2008 | |||||||
Net Debt | ||||||||
Borrowings | 5,421.9 | 6,047.7 | ||||||
Cash and cash equivalents | (868.8 | ) | (1,427.8 | ) | ||||
Other financial assets | (35.4 | ) | (135.9 | ) | ||||
Net debt | 4,517.7 | 4,484.0 | ||||||
Equity | 1,949.7 | 2,173.2 | ||||||
Gearing ratio | 2.32 | x | 2.06 | x | ||||
31. | RECLASSIFICATIONS |
32. | EVENTS AFTER THE FINANCIAL POSITION DATE |
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• | Non-distributed profits are taxed at a tax rate of 24% (reduced annually by 1 percentage point until it reaches 20% by 2014) |
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• | Distributed profits are taxed at a tax rate of 40%. | |
• | No further withholding tax is imposed on dividends. |
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