US fund takes stake in OTE, drawn by dividend

OTE’s big dividend for 2020, combined with the certainty of an additional dividend within the year due to the sale of Telekom Romania to France’s Orange, is drawing institutional portfolios to the Greek company.
It was announced yesterday that the Boston-based American Massachusetts Financial Services Company (MFS), which manages a portfolio of over 600 billion dollars, now controls more than 5% of OTE.
A few days ago, OTE announced that the dividend for 2020 will increase by almost 23% compared to last year, distributing to shareholders total free cash flows.

A total dividend of 0.68 euros per share will be distributed compared to 0.55 euros per share for the fiscal year 2019. However, the shareholders of the group expect an additional dividend from revenues in coming months that will be due to the sale of subsidiary of Telekom Romania in Romania.
The agreement with Orange amounts to 497 million euros and OTE will receive 268 million euros (excluding cash and borrowing) since a significant percentage of the fixed telephony company was owned by the Romanian state. The management of the organization has clarified that in the case of Telekom Romania it will follow the example of Telekom Albania. The proceeds, after excluding expenses in order to complete the transaction, will be returned to shareholders as an extra dividend.

In addition to the dividend, institutional investors see OTE as showing resilience to competitors who failed to use the pandemic to expand their market share. On the contrary, as can be seen from the results of each quarter during 2020, OTE has taken the lion's share of the net new broadband connections. In the fourth quarter of 2020, 46,000 net new connections were added to the total broadband market in Greece and OTE got 41,000 of them. Last year, OTE added 12,000 subscribers to the subscription television platform Cosmote TV. Mobile had relatively small subscriber losses, just 5.9%, in 2020.

For as long as its two competitors, Vodafone Hellas and Wind Hellas, find it difficult to face OTE, it will continue to gather almost 90% of profits in the Greek telecommunications market.

Things do not look to change until the strategy of Forthnet and its new owner, United, are made clear. Forthnet may now have a new CEO, the former corporate customer manager of Wind Panagiotis Georgiopoulos, but the shareholders are still dealing with the delisting from the stock exchange. The strategic plan will be presented later, after the market steadies from the pandemic crisis.