Greek Telecom Market : First Quarter 2011

Summary of last quarter's developments in the Greek Telecom Market :

Kathimerini newspaper announced in its Wednesday the 16th of March 2011 edition key changes to the Greek telecom market. These changes include Wind shareholders’ commitment to revamping Wind Hellas operations, Cosmoline’s withdrawal from the Hellenic fixed wireless access market, and Hellenic Telecom’s OTE further downgrading by Moody’s.

Largo commits to Wind Hellas

Mr. Antonio Viana-Baptista, current president of Largo Ltd. and former head of Telefonica Moviles, characterized the group’s investment in Wind Hellas - one of the largest investments in the region (about 420 million Euros) - as long term in nature.
Specifially, Mr Viana-Baptista emphasized shareholder commitment to supporting Wind Hellas management decisions with the goal of making Wind Hellas a first class European grade operation.
Largo Ltd. consists of large scale investment capital, over 80 billion USD worldwide, and maintains that the Wind Hellas recovery will take time and will depend on a number of parameters including the reestablishment of customer confidence; Mr. Viana-Baptista also outlined his confidence in the eventual turnaround of the Greek economy.
Mr. Viana mentioned that Wind Hellas will not require new capital injections and that the mobile telecom operator will proceed to invest about 300 million euro in the next three years to upgrade the network towards broadband wireless communication infrastructure. Mr. Viana requested the Greek government to perform a regional sanity check on wireless license prices to ensure that such licenses are not overpriced;
Wind Hellas intends to renew its wireless operator license, which should be according to Mr. Viana, reasonably priced.

Finally, the new Wind Hellas board of directors includes Mr. G Petridis from Pepsico, Mr. L Komis from Coca Cola and Mr. A. Thomopoulos from ETE.

Cosmoline Wimax License Recalled

Cosmoline, a Greek telecom service provider announced, one day after the Hellenic Regulatory Agency (EETT) recalled the telecom operator’s license, the company’s withdrawal from the Greek wireless access market.
Cosmoline admitted that the company overpaid for the WiMax license that Cosmoline was awarded in 2006 but failed to adequately utilize.
Cosmoline considers WiMax obsolete and had previously requested a change in the license conditions (from the Greek NRA EETT) pertaining to the use of WiMax technology.

Moody’s downgrades Hellenic Telecom OTE

Moody’s proceeded to downgrade Hellenic Telecom OTE from Baa2 to Baa3 status and continues to scrutinize Hellenic Telecom OTE creditworthiness.
Moody’s has pointed out the possibility of a further downgrade of Hellenic Telecom OTE’s creditworthiness if Moody’s detects any liquidity issues in the medium term, ie. within the 2012 to 2013 timeframe.
Moody’s pointed out that the latest OTE downgrading relates to Greece’s recent downgrading from Ba1 to B1, citing the Greek government’s austerity measures and macroeconomic potential as key factors.
These factors, always according to Moody’s, impact consumer behavior and Hellenic Telecom OTE performance.

Sources:
1. Kathimerini, Wind Hellas Article, article by Journalist Vagelis Mandravelis, Wednesday 16 March 2011,pg.24
2. Kathimerini, Cosmoline Article, no Journalist quoted, Wednesday 16 March 2011, pg.24
3. Kathimerini, Hellenic Telecom Article, no Journalist quoted, Wednesday 16 March 2011, pg.32