Hellenic Telecom Organization S.A. (ADR) ((HLTOY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Hellenic Telecom Organization’s latest earnings call carried an upbeat tone, as management highlighted broad-based growth across fiber, mobile, pay‑TV, and ICT services. While acknowledging structural headwinds in wholesale and the temporary boost from tax one‑offs, executives stressed improving EBITDA, strong free cash flow, and rising shareholder payouts as evidence of solid underlying momentum.
Record FTTH Expansion and Rising Utilization
OTE reported record quarterly fiber-to-the-home additions of 58,000, lifting the FTTH customer base to 567,000. Retail FTTH now makes up 24% of broadband lines, up from 17% a year earlier, with homes passed reaching 2.1 million and network utilization at 34%, supporting the company’s push toward a 2.4 million footprint by 2026.
Fixed Retail Revenue Growth Driven by Fiber and TV
Fixed retail service revenue grew 2.6% in the quarter, supported by faster fiber take‑up and expanding pay‑TV penetration. Rising adoption of Fixed Wireless Access in areas not yet covered by fiber also contributed, helping offset pressure in legacy fixed services and underpinning a steadier top line in the fixed segment.
Pay-TV Delivers Double-Digit Growth
The pay‑TV business posted robust double‑digit revenue growth in the quarter, confirming its role as a key cross‑sell product for OTE’s broadband base. Subscriber numbers rose 7.1% with 19,000 net additions, and management expects tax changes from 2026 to further improve affordability and keep demand on an upward trajectory.
Mobile Momentum and 5G Leadership
Mobile service revenues increased 5.2% in Q4 as the postpaid base expanded 7.2% with a record 60,000 net additions, lifting postpaid to 43% of the mobile base. OTE emphasized its 5G leadership with network coverage above 99% of the population and enhanced 5G+ coverage at roughly 78%, supporting higher-value usage and differentiating its offer.
Data Consumption Surges with Network Upgrades
Average monthly mobile data usage climbed 30% year on year to 18.3 GB per user, reflecting greater 5G device penetration and richer digital habits. This strong growth in consumption underpins revenue resilience and justifies recent network investments, as customers increasingly migrate to higher‑tier plans.
FWA Gains Traction as a Bridge to Fiber
Fixed Wireless Access, launched in 2025, has quickly gained traction with around 55,000 subscribers and management later citing more than 65,000. It mainly serves non‑fiber areas with typical usage between 300 and 400 GB per month, helping OTE defend market share and counter satellite competitors in rural and underserved regions.
System Solutions and ICT Outperformance
Other revenues rose 26.7% in the quarter, led by standout performance in System Solutions, which grew 57.5% year on year. This strength bolsters OTE’s confidence in delivering double‑digit ICT growth in 2026, adding a higher‑margin, business‑focused revenue pillar beyond traditional connectivity services.
Improving Profitability and EBITDA Trajectory
Adjusted EBITDA after leases increased 2.3% in Q4, marking the strongest quarter of the year and confirming improving operational efficiency. Management signaled further margin progress, targeting EBITDA growth of roughly 3% in 2026, supported by AI‑driven cost initiatives and scale benefits from growing high‑value customer segments.
CapEx and Network Investment Remain Elevated
Capital spending reached €174.5 million in Q4 and €612 million for 2025, nearly 9% higher than a year earlier, reflecting accelerated FTTH rollout and 5G standalone deployment. OTE guided for similar capital intensity in 2026 at about €600 million and warned that sustained fiber demand may require additional rollout resources.
Free Cash Flow Strength and Rising Payouts
Free cash flow after leases rose to €168 million in Q4 and €543 million for 2025, underpinning a generous capital return policy. The company announced shareholder remuneration of €532 million for 2025, combining €355 million in dividends and €177 million in buybacks, representing increases of 22% and 16% respectively versus 2024.
Progress on Sustainability Targets
OTE highlighted that the group reached greenhouse gas neutrality in its own operations in 2025, marking a key sustainability milestone. Management framed this as both a risk‑management tool and a differentiator with institutional investors and customers increasingly focused on environmental performance.
Wholesale Revenue Pressure and Structural Shifts
Wholesale revenues declined 5% in the quarter, with national wholesale falling by roughly €15 million over the year and low‑margin international wholesale being phased out. Management expects the international exit to cut revenues by around €170 million in 2026 and €130 million in 2027 but stressed that EBITDA impact should be negligible given the near‑zero margins.
Rising Operating Expenses Tied to Growth
Operating expenses excluding depreciation and one‑offs increased by €65 million in the quarter as costs linked to growth, such as third‑party ICT fees and FTTH connection expenses, moved higher. These were partly offset by personnel savings, and management argued that the incremental spending is largely revenue‑accretive and supports future profitability.
Capital Intensity and Potential Extra Investment
Management acknowledged that the company is in a capex‑heavy phase, with spending at €612 million in 2025 and guidance of about €600 million in 2026. They cautioned that robust demand for fiber could require additional rollout resources, suggesting that high capital intensity may persist longer than previously expected.
One-Off Tax Benefits Distort FCF Optics
Reported free cash flow is boosted by tax one‑offs linked to the Telekom Romania sale, including a roughly €130 million tax break and €40–50 million from lower tax prepayments. OTE emphasized that underlying organic free cash flow for 2026 is expected at €570–580 million, underscoring that headline figures can be materially inflated by non‑recurring items.
Market and Regulatory Uncertainties
The outlook is clouded by external risks, including the timing and cost of the next spectrum auction assumed around 2027 and potential fiber competition from PPC Group. Management also flagged the gradual tapering of EU‑funded projects, which could reduce some ICT and infrastructure demand tailwinds in coming years.
Revenue Trend Ambiguity in Transcript
An inconsistency in the call referenced an 8.7% decrease in Greek revenues while other remarks pointed to growth across key segments, creating confusion on the exact headline trend. Investors will likely look for clarification in the official financial statements and future disclosures to reconcile the apparent discrepancy.
Forward-Looking Guidance and Outlook
For 2026, OTE guides to about 3% EBITDA growth and capital expenditure near €600 million while targeting free cash flow after leases of roughly €750 million, including the Romania tax benefits. The company plans to distribute almost all of prior‑year free cash flow via dividends and buybacks and expects continued FTTH, FWA, mobile, and ICT momentum to support this policy.
OTE’s earnings call painted a picture of a telecom group leaning into growth with heavy investments in fiber and 5G while still generating strong cash and rewarding shareholders. Structural wholesale declines, high capex, and one‑off tax effects temper the story, but underlying demand, rising data usage, and ICT expansion suggest a resilient trajectory if execution stays on track.