OTE Hellenic Telecommunications Organization Q4 2017 Results
OTE Group Overview Note: The purpose and calculations of all Adjusted data and the Alternative Performance Measures presented are detailed in the Alternative Performance Measures Section of the 2017 Annual Report of the Board of Directors & in the Quarterly Press Releases https://www.cosmote.gr/fixed/en/corporate/ir/financial-results/financial-statements-of-ote-group-and-ote-sa 2
The Group today OTE Group is the largest telecommunications provider in the Greek market and one of the leading telecom groups in Southeast Europe with presence in Greece, Romania and Albania. OTE is among the largest listed companies in the Athens Stock Exchange. OTE Group Key figures (FY 2017) Revenues: 3.9bn Adj.EBITDA: 1.3bn Employees: 20,305 Market Cap: ~ 5.6bn Albania Mobile Business Romania Mobile subscribers: 1.9mn Fixed Business Total access lines*: 2.1mn Broadband subscribers*: 1.2mn TV subscribers: 1.5mn Greece Fixed Business OTE Retail lines: 2.6mn FMC Customers: Mobile Business Mobile subscribers: 504k 4.7mn Broadband Retail subscribers: 1.8mn COSMOTE TV subscribers: 525k Mobile Business Mobile subscribers: 8.0mn OTE OTE Group Corporate Presentation Q4 17 * Including FMC 3
At a Glance Shareholder Structure (Dec 31, 2017) Group Structure Deutsche Telekom 40.0% OTE SA Greece Own Shares 0.3% Private Investors 6.1% Hellenic State 10.0% Institutional Investors 43.6% Telekom Albania 100% Cosmote Greece 99.97% 30% 54% Telekom Romania 100% 100% 94% OTE Globe Greece OTEestate Greece OTESat-Maritel Greece Other 70% Telekom Romania Mobile Listed on the Athens Stock Exchange (Symbol: HTO GA) Outstanding shares: 490,150,389 Standard and Poor's rating on OTE: BB- Fixed-line operations Mobile operations Other operations OTE OTE Group Corporate Presentation Q4 17 4
Our Strategy The 6 Pillars of our strategic plan Technology & IT leadership Best Customer Experience Innovation & Revenue Transformation Lead in Core Business INS /NGA: Massive rollouts of Vectoring; Super Vectoring; FTTH 4G/4G+ coverage everywhere Rural Network Completion IP Transformation IoT-ready network Digital Transformation @Customer: o Digital touch points; Extended functionalities in apps; Service enhancements in O2B and F2R, etc. Push Online Sales Unify customer-handling processes for Fixed and Mobile subscribers Data services monetization Innovative services launch (Smart Home, One Connectivity, etc) IoT & Cloud Solutions Verticals (Shipping, Hotels, Smart Cities, etc) Expand in adjacent markets COSMOTE brand superiority Enhancements on FMC and FMCC propositions COSMOTE TV Growth Defend Wholesale Revenues Operational and Cost Optimization Operations optimization: Digital Transformation @ Company Digital Office Digital Transformation @ Suppliers Cost efficiency programs: IDC Optimization Procurement synergies with DT People Strategy Digital tools to support HR systems and processes, improving employees experience and productivity Design of digital skills development programs (IoT, Big Data, TV, Agile, AI) Culture change in Growth mentality, Convergence between Fixed-Mobile and Digitization OTE OTE Group Corporate Presentation Q4 17 5
Full Year ( mn) Quarterly ( mn) --- Revenue trends YoY% --- Revenue trends YoY% Group - Key Financials q -6.4% -3.3% -0.4% 0.1% -1.3% OTE Group - Quarterly Performance -1.3% 0.1% 2.7% 0.1% -1.0% -1.7% -0.7% -2.8% OTE Group - Quarterly Performance 4,054 3,918 3,903 3,908 3,857 929 955 998 1,027 929 939 991 998 35.9% 36.3% 34.4% 33.8% 33.8% 33.3% 32.6% 35.8% 33.5% 32.7% 33.4% 35.2% 33.8% 1,456 1,422 1,343 1,321 1,304 309 311 357 344 304 314 349 337 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenues Adjusted EBITDA Adjusted EBITDA margin Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Revenues Adjusted EBITDA Adjusted EBITDA margin Revenue Contribution Adjusted EBITDA Contribution Albania, 2% Mobile Romania, 10% Other, 8% Fixed Greece, 37% Greece: 73% Albania, 1% Mobile Other, 4% Romania, 4% Fixed Romania, 8% Greece: 87% Fixed Romania, 15% Romania: 25% Mobile Greece, 31% Fixed Greece, 52% Romania: 12% Mobile Greece, 28% Albania: 2% Albania: 1% OTE OTE Group Corporate Presentation Q4 17 6
Greece Overview 7
200% 150% 100% 50% 0% Fixed Line Operations - Greece Market Overview Evolution of Greek Broadband Market* ( 000) 3,790 3,739 3,706 3,675 3,641 3,581 3,533 3,481 73% 75% 76% 77% 77% 78% 79% 80% 58% 59% 60% 62% 63% 64% 65% 67% TV Penetration in Greece* 24% 23% 24% 24% 24% 24% 24% 25% 17% 17% 18% 19% 19% 19% 20% 20% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Total Greek Broadband Market Broadband Penetration in Greece (%) OTE Broadband/OTE Total Fixed lines Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 TV Penetration in Greece (%) * COSMOTE TV on OTE's Fixed line customer base (%) FTTC uptake driving strong Broadband performance; Demand for broadband among OTE s customer base remains strong, as penetration lags the market as a whole Broadband market growth at +4%, despite 5% tax imposed on Fixed - Broadband in Jan 17 OTE achieved strong net additions of 44k retail Broadband customers in the quarter, reaching 124k in the full year *Based on internal market estimates OTE OTE Group Corporate Presentation Q4 17 8
Fixed Line Operations - Greece Key Operational Trends Fixed-Line Market Evolution ( 000) 4,796 4,770 4,741 4,749 4,756 40.5% 42.8% 43.4% 44.0% 44.5% 59.5% 57.2% 56.6% 56.0% 55.5% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 OTE Retail Lines Market Shares Competitors' Lines Market Share Fixed-Line Net Additions ( 000) 30 25 30 17 17 6 17 7 6 1 25 (7) 3 (1) 1 (1) 10 1 3 (9) (9) (5) (4) (1) (4) (2) 1 (5) (8) (3) (10) (2) (5) (1) (5) (3) (4) (9) (7) (18) (4) (10) (9) (18) (8) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Competitors' Lines Net additions Competitors' Lines Net additions OTE Retail Lines Net additions/(disconnections) OTE Retail Lines Net additions/(disconnections) Total Total Fixed Fixed Market Market Lines Lines Net Net additions/(disconnections) Broadband Market Evolution ( 000) Broadband Net Additions ( 000) 3,641 3,790 3,417 3,166 2,889 56.3% 56.8% 55.9% 55.1% 53.6% 43.7% 43.2% 44.1% 44.9% 46.4% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 OTE Retail Broadband Market Share Competitors' Broadband Market Share 64 59 52 48 50 27 64 21 52 18 29 35 59 31 33 7 48 15 3 27 21 18 29 35 31 33 37 32 30 30 15 19 27 34 44 3 37 32 30 30 (1) 19 27 34 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17-1 Q3'17 Q4'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 88.6% 101.9% 86.7% 88.6% 101.9% 58.0% 60.5% 62.3% 51.1% 55.4% 58.0% 60.5% 62.3% 51.1% 55.4% Competitors' Broadband Net adds (disconnections) Competitors' OTE Broadband Retail Broadband Net adds Net (disconnections) additions OTE Retail Broadband Net additions OTE s market Greek Broadband market Net additions Greek Broadband market Net additions share in OTE Broadband net additions Market share Broadband net OTE Broadband net additions Market share additions OTE OTE Group Corporate Presentation Q4 17 9
NGN Expansion in Greece OTE is achieving the rapid expansion of New Generation Networks with FTTC and 4G/4G+ gradually covering the whole Greek territory FTTC Coverage at ~60% ~13k FTTC Cabinets Mobile (Q4 17 Q4 16) 22% increase in mobile broadband network capacity 75% increase in mobile broadband traffic 23% increase in mobile broadband download speed 4G Nationwide coverage, ahead of competition ~98% population coverage 4G+ Nationwide coverage, ahead of competition ~92% population coverage LTE Advanced Pro 4G++ with 3 Carrier Aggregation & 256 QAM technology with speeds up to 500Mbps Rollout actions on-going in big cities, smaller towns & popular destinations VDSL OTE 4G COSMOTE VoLTE/ VoWiFi (1st operator in Greece) Cosmote customers can use cellphones moving from LTE coverage to indoor areas with low coverage using their WiFi hotspot connection and the reverse (from WiFi to outdoor) OTE OTE Group Corporate Presentation Q4 17 10
Fixed Line Operations - Greece Leader in FTTC take up VDSL subscribers ( 000) FTTC Coverage (%) 350 300 250 200 150 100 50 18 18 19 14 168 186 201 219 VDSL additions in 2017 at 135k 33 252 27 280 32 311 43 354 50 60% 72% 0 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 OTE Retail VDSL OTE VDSL additions 0 2017* 2019 Current phase of FTTC development completed ahead of schedule; 13k FTTC cabinets completed in 2017 New phase of about 4k cabinets planned for 2018 OTE is successfully converting a growing number of customers to higher broadband speeds & premium service Continuing expansion of FTTC network, to meet strong customer demand, with record VDSL net additions of 43k in Q4 17 OTE launched its premium Vectoring service offering broadband speeds of up to 200Mbps High-speed VDSL broadband service had been adopted by 354k subscribers, or 20.1% of OTE s total retail broadband base OTE OTE Group Corporate Presentation Q4 17 *Addressable market 11
Fixed Line Operations - Greece Pay-TV offering by OTE COSMOTE TV Subscribers ( 000) The Market 478 503 505 504 517 525 458 459 25 19 12 13 8 1 2 (1) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 COSMOTE TV Subscribers COSMOTE TV net additions COSMOTE TV Subscribers ( 000) Free-to-air channels content has deteriorated drastically in recent years, widening the quality differential versus competition Exclusive premium content at PayTV offerings Still at low penetration levels (~25% of households, behind EU benchmark) 10% tax imposed on Pay TV services since June 16 Signs of maturity of TV market segment Greek football league rights for 2018 onwards not yet assigned to any provider OTE 136 256 446 353 98 93 503 56 525 Growth of 4.4% on TV subscribers base mainly reflecting pressure on consumer spending & market maturity The service s growth is fueled by extensive, exclusive and diverse content 22 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 COSMOTE TV Subscribers COSMOTE TV net additions Champions League and Europa League 2018-2021 OTE OTE Group Corporate Presentation Q4 17 12
Fixed Line Operations - Greece Financial Overview Full Year ( mn) Quarterly ( mn) --- Revenue trends YoY% --- Revenue trends YoY% -2.9% 1.6% 2.1% 1.0% 1.7% 4.1% 5.4% -2.4% 3.5% 0.3% -1.6% 1.8% -8.6% OTE SA OTE SA 1,557 1,512 1,536 1,569 1,584 379 390 398 402 392 391 392 410 36.5% 39.6% 40.2% 42.3% 42.8% 568 599 618 664 678 42.5% 41.5% 43.0% 42.1% 42.9% 41.7% 42.4% 44.1% 161 162 171 170 168 163 166 181 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenues Adjusted EBITDA Adjusted EBITDA margin Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Revenues Adjusted EBITDA Adjusted EBITDA margin Continuing solid performances in Broadband and pay-tv Broadband benefited from healthy VDSL take-up Slowdown in the decline of voice revenues in Q4 17 Adjusted EBITDA is supported by cost reduction initiatives and revenue growth 4.2% 3.5% 3.1% 1.5% 1.1% 0.7% 1.2% -0.4% 7.7% Q1 '16 Q2 6.6% '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 3.1% 3.5% 4.2% 3.3% 2.9% 3.3% Retail 1.1% Revenue 1.5% 0.1% yoy change 0.7% (%) -0.4% 1.2% -2.2% -4.5% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 Q4 '17 Wholesale Revenue yoy change (%) Retail Revenue yoy change (%) Wholesale Revenue yoy change (%) OTE OTE Group Corporate Presentation Q4 17 13
14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 900 800 700 600 500 400 300 200 100 0 OTE S.A Headcount & Employee Cost Evolution Headcount Evolution Personnel Cost Evolution ( m) 764 714 658 11,369 10,925 10,569 8,750 2,010 2,040 2,063 6,878 6,924 6,486 6,365 6,326 31.7% 32.9% 34.4% 541 31.8% 445 28.5% 315 332 20.8% 21.6% 308 286 19.7% 18.1% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 * Excl. employees transferred from OTE subsidiaries to OTE S.A Personnel Expenses ( mn) Personnel Expenses/Revenues Significant Personnel Cost Reduction achieved through constant efficiency gains, implemented by voluntary leave schemes in prior years New Voluntary Scheme completed within 2017 with annual net savings of approximately 14m on group level OTE OTE Group Corporate Presentation Q4 17 14
Amounts in EURO million 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 25.0 % 20.0 % 15.0 % 10.0 % 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% Mobile Greece - Financials Full Year ( mn) Quarterly ( mn) --- Revenue trends YoY% --- Revenue trends YoY% -12.3% 1,337-1.8% -2.8% -6.4% Cosmote Greece - Quarterly Performance 1,251 1,228 1,194 1,202 0.7% -5.7% 277 0.1% -1.8% -1.2% -3.9% Cosmote Greece - Quarterly Performance 319 307 291 274 0.5% 1.1% 293 323 313 2.1% 37.4% 36.7% 35.7% 33.7% 33.6% 500 459 438 403 404 33.2% 33.3% 92 97 35.7% 114 32.6% 31.8% 100 87 34.1% 100 38.0% 123 30.1% 94 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenues Adjusted EBITDA Adjusted EBITDA margin Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Revenues Adjusted EBITDA Adjusted EBITDA margin Blended ARPU Blended Evolution ARPU Evolution ( /month) Maintaining leading position Investing to maintain network superiority in terms of 10.6 11.1 12.0 10.6 10.1 10.8 12.0 10.8 coverage and speeds Solid growth in Data revenues and Data consumption -4.4% -5.7% -3.8% -7.0% -4.7% -2.2% 0.0% 2.1% reflecting extensive 4G and 4G+ footprints Positive Service revenues after several years of contraction Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Blended ARPU ( /Month) YoY Growth (%) OTE OTE Group Corporate Presentation Q4 17 15
90 80 70 60 50 40 30 20 10 0 25.0 % 20.0 % 15.0 % 10.0 % 5.0% 0.0% 70% 60% 50% 40% 30% 20% 10% 0% Mobile Greece Data Penetration Data Revenues / Service Revenues Smartphone penetration 20.8% 20.2% 46 47 Data Revenues Cosmote Greece 23.2% 21.4% 55 58 55 53 25.2% 24.7% 25.3% 26.1% 67 63 Smartphone Penetration Cosmote Greece 53% 54% 56% 57% 59% 59% 63% 64% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Data Revenues Cosmote Greece as % of Service Revenues Smartphone penetration % (Cosmote base) First to roll out LTE Network - Leader with superior coverage capacity versus competition First to launch 4G+ mobile broadband network and VoLTE/ VoWiFi services Increase in Data users achieving 51% penetration in active base Significant growth potential fueled by growing demand for data services and smartphone penetration Data revenues growth reaching 26% of service revenues Launch of new category-based data bundles, addressing the specific needs and online habits of various users OTE OTE Group Corporate Presentation Q4 17 16
International Overview (Romania-Albania) 17
2,500.0 2,000.0 1,500.0 1,000.0 500.0 0.0 2,500.0 2,000.0 1,500.0 1,000.0 500.0 0.0 2,000.0 1,800.0 1,600.0 1,400.0 1,200.0 1,000.0 800.0 600.0 400.0 200.0 0.0 500.0 400.0 300.0 200.0 100.0 0.0 Fixed Line Operations - Romania Telekom Romania key Metrics Fixed Lines (000) Broadband Lines (000) 40.0% 40.0% 2,182 2,183 2,165 2,151 2,128 2,118 2,101 2,098 25.0% 25.0% 1,196 1,194 1,188 1,186 1,180 1,186 1,185 1,180 10.0% 10.0% 1.0% 1.0% 0.2% -1.3% -2.5% -3.0% -3.0% -2.5% -5.0% -1.8% -1.2% -1.1% -1.5% -1.3% -0.7% -0.3% -0.5% -5.0% -20.0% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17-20.0% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Fixed Telephony lines Fixed Telephony lines y-o-y % Broadband lines Broadband Lines y-o-y % TV Subscribers (DTH. IPTV & Cable - 000) FMC customers (000) 40.0% YoY change +36%: 1,449 1,461 1,461 1,464 1,457 1,471 1,473 1,470 2.5% 2.8% 2.1% 0.8% 0.6% 0.6% 0.8% 0.4% 25.0% 10.0% -5.0% 270 310 338 371 398 425 456 504-20.0% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 TV subscribers (DTH, IPTV & Cable) TV subscribers (DTH, IPTV & Cable) y-o-y% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 FMC Note: FMC customers Included in Voice and Broadband subscribers OTE OTE Group Corporate Presentation Q4 17 18
Fixed Line Operations - Romania Telekom Romania Financial Overview Full Year ( mn) Quarterly ( mn) --- Revenue trends YoY% --- Revenue trends YoY% -1.6% -0.1% -1.2% 0.1% 0.9% RomTelecom - Quarterly Performance -7.8% -0.7% 3.9% 4.9% 4.6% 1.4% 2.2% RomTelecom - Quarterly Performance -3.9% 610 609 602 603 608 26.1% 26.3% 19.7% 15.5% 16.8% 159 160 118 94 102 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenues Adjusted EBITDA Adjusted EBITDA margin 167 150 160 149 143 152 152 137 19.8% 15.0% 17.0% 14.9% 16.8% 19.0% 16.3% 10.2% 30 28 21 15 21 25 29 26 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Revenues Adjusted EBITDA Adjusted EBITDA margin Expanding its FTTH coverage, currently reaching c.2.6 million households to meet strong competition Solid performance of company s fixed-mobile convergent (FMC) solution; FMC customers rose 36% y-o-y to 504k Pressure wherever Telekom Romania operates legacy broadband networks (xdsl) OTE OTE Group Corporate Presentation Q4 17 19
7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 30.0 % 20.0 % 10.0 % 0.0% -10.0% -20.0% -30.0% Mobile Romania - Financials Full Year ( mn) Quarterly ( mn) --- Revenue trends YoY% --- Revenue trends YoY% -0.9% 459-0.2% -4.2% Cosmote Romania - Quarterly Performance 439 439 4.2% 457 465 1.7% 9.5% 4.9% 2.7% 0.7% -4.6% -3.3% Cosmote Romania - Quarterly Performance 122 113 110 112 108 107-0.9% 111 14.4% 140 25.9% 24.0% 119 106 19.9% 17.9% 87 82 12.5% 58 16.2% 19.8% 21.3% 18 22 24 14.5% 14.6% 13.0% 12.6% 10.5% 18 16 14 14 15 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenues Adjusted EBITDA Adjusted EBITDA margin Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Revenues Adjusted EBITDA Adjusted EBITDA margin Operating in an intensely competitive environment Focus on investments on higher-arpu segments Steps to improve performance, including enhanced 4G coverage, refocused sales efforts, and cost optimization Blended ARPU Evolution ( /month) Blended ARPU Evolution 4.7 4.7 4.8 4.7 4.7 5.1 7.9% 2.4% 1.7% 0.0% -2.8% 0.3% 5.5 14.9% 27.7% 6.0 Strong increase in data and visitor revenues ARPU positively affected from the cleanup of inactive base Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Blended ARPU ( /Month) YoY Growth (%) OTE OTE Group Corporate Presentation Q4 17 20
5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 80.0 % 60.0 % 40.0 % 20.0 % 0.0% -20.0% -40.0% -60.0% Mobile Albania -Financials Full Year ( mn) Quarterly ( mn) --- Revenue trends YoY% --- Revenue trends YoY% -2.7% -5.5% 1.5% Cosmote Albania - Quarterly Performance -6.7% -11.8% 25.8% 16.2% -11.8% -23.4% -36.5% Cosmote Albania - Quarterly Performance -14.4% -7.2% 0.0% 86 82 83 77 39.1% 36.6% 24.9% 20.9% 34 30 21 16 68 12.9% 9 21 20 19 17 20.5% 26.4% 18.6% 17.4% 4 5 4 3 16 5.1% 1 17 18 17 12.2% 13.9% 19.8% 2 3 3 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenues Adjusted EBITDA Adjusted EBITDA margin Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Revenues Adjusted EBITDA Adjusted EBITDA margin Blended ARPU Evolution ( /month) Blended ARPU Evolution Ongoing decline of international incoming traffic due to retail price shifts in foreign markets; Introduce a number of changes in tariff bundles to 4.0 3.9 50.4% 39.1% 3.6 3.2 3.0 3.2 3.4 3.1 partly offset this drop Unchanged service revenues in the quarter, reflecting the rationalization of the market, focusing -0.8% -35.8% -25.8% -17.0% -6.9% -1.0% increasingly on outgoing revenues Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Blended ARPU ( /Month) YoY Growth (%) OTE OTE Group Corporate Presentation Q4 17 21
20 15 10 5 0 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 25.0 % 20.0 % 15.0 % 10.0 % 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% 25.0 % 15.0 % 5.0% -5.0% -15.0% -25.0% Mobile International Data Penetration Romania - Data / Service Revenues Data Revenues Cosmote Romania 16.8% 16.7% 17.9% 17.8% 18.1% 17.6% 23.8% 21.6% 18 18 Smartphone-centric operator with ongoing development of 3G & 4G services portfolio 13 13 14 13 13 13 New propositions under #netliberare campaign offer affordable internet access providing unlimited data to access streaming or social networking applications Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Data Revenues as % of Service Revenues 4G National Roaming Agreement in place since Q2 16 Albania - Data / Service Revenues Data Revenues Cosmote Albania 11.5% 2 13.8% 3 19.0% 20.4% 21.6% 16.9% 4 3 3 3 25.8% 27.7% 4 5 Growth rate in data revenues is accelerating quarter after quarter - 46% increase in mobile data revenues in Q4 17 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Extensive 4G network rollout Data Revenues as % of Service Revenues OTE OTE Group Corporate Presentation Q4 17 22
Cashflow Review 23
OTE Group Debt & Liquidity Profile Debt Maturity Profile Nominal Amounts ( mn) Debt & Cash Evolution ( mn) Net Debt/EBITDA 1,303 Cash & Other Financials Total: 766m 130 46 590 Feb'18 Total: 526m 130 46 350 Dec'19 As of December 31, 2017 Total: 746m 46 700 Jul'20 2018 2019 2020 2021 Bonds Bank Loans Cosmote Bank Loans OTE Total: 12m 12 0.6x 0.6x 0.6x 0.6x 0.5x 0.4x 0.4x 0.4x 2,190 1,779 2,166 2,125 2,062 2,042 1,951 2,041 853 736 794 534 573 527 649 737 (1,337) (1,043) (1,372) (1,591) (1,489) (1,514) (1,303) (1,304) Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 2018 OTE PLC Bond of 590m was fully paid on 07 February 2018 Gross Debt Cash & Other financial assets Adjusted Net Debt OTE PLC Bonds Overview OTE PLC Bond 2019 - Yield OTE PLC Bond 2020 - Yield Maturity: Dec 2019 Outstanding Amount: 350m Coupon: 4.375% Source: Bloomberg Data as of Jan 30, 2018 OTE OTE Group Corporate Presentation Q4 17 Maturity: July 2020 Outstanding Amount: 700m Coupon: 3.5% 24
OTE Group Cash Flow Trends Full Year ( mn) Quarterly ( mn) 1,220 1,140 1,077 1,086 424 749 583 507 459 903 105 189 24 263 125 209 26 283 174-11 273 50 148-28 308 95 (471) (557) (570) (627) (798) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 (138) (165) (141) (184) (185) (176) (213) (223) Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Adj. Net Operating Cash Flow CapEx (excluding Spectrum) Adj. Net Operating Cash Flow CapEx (excluding Spectrum) Adj. FCF (excl. Spectrum & VES & SF) Adj. FCF (excl. Spectrum & VES & SF) Group s adjusted Free Cash Flow stood at 105.1mn in 2017,in line with guidance, primarily reflecting the increase in Capital Expenditures as well as higher taxes paid; gradual return to normalized Capex and FCF level set to start in 2018 2018 Guidance Adjusted Capex at ~ 700mn Adjusted Free Cash Flow at ~ 350mn Reported Free Cash Flow at ~ 260mn OTE OTE Group Corporate Presentation Q4 17 25
OTE Remuneration Policy Dividend Evolution ( /share) Estimated 2018 Remuneration ( mn) 119% 60% 0.35 * Total Remunaration (est.) 100% FCF Distribution 262 0.08 25% 0.10 0.16 Share Buy Back (est.) 90 FY 2014 FY 2015 FY 2016 FY 2017 Dividends (est.) 172 Dividend per Share ( ) change (%) y-o-y Shareholder Remuneration Policy 100% FCF distribution through a combination of dividend payout and Share Buyback Programs; Based on our current projection for 2018, the estimated aggregate shareholder remuneration amount will reach ~ 260m; The split between ordinary dividends and share buybacks is targeted approximately at 65%/35%; Proposed 2017 dividend of 0.35 per share (up from 0.16 LY); 90mn 2018 Share Buyback Program to be launched on March 2018; OTE OTE Group Corporate Presentation Q4 17 * The BoD will propose to the Annual General Assembly of the Shareholders the distribution of a dividend of 0.35 /share 26
IMPORTANT NOTICE - DISCLAIMER: This presentation is provided to persons who are entitled to receive it in accordance with the laws and regulations of appropriate jurisdictions. This presentation is provided for information purposes only and does not constitute an offer or an invitation to buy or sell or subscribe to any securities or a solicitation of an offer to buy or sell or subscribe for any security or instrument or to participate in any trading strategy. No part of this presentation may be construed as constituting investment advice or recommendation to enter into any transaction or as providing the basis for any credit or other evaluation. No representation or warranty is given with respect to the accuracy or completeness of the information, estimations, provisions, future expectations or other data, contained in this presentation, and no claim can be made that any transaction of any security will conform to any terms that may be contained herein. Under no circumstance, should OTE, or any of its directors, officers or employees be held liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any information contained in this presentation. Information contained herein may change without notice and OTE undertakes no obligation to update it. Before entering into any transaction, investors should determine any economic, trading and financial risks, restrictions and benefits, as well as any legal, tax, accounting consequences of doing so, and their ability to assume such risks, without reliance on the information contained in this presentation. You should consult a professional financial advisor before entering in any transactions in securities mentioned herein. Thank you For more information please contact OTE Investor Relations: Tel: +30 210 611 1574 Fax: +30 210 611 1030 E-mail:iroffice@ote.gr or visit: https://www.cosmote.gr/fixed/en/corporate/ir OTE OTE Group Corporate Presentation Q4 17 27