February 22, 2018 / 8:47 AM / a year ago

UPDATE 1-Greece's OTE Telecom core profit drops; Romania hurts

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ATHENS, Feb 21 (Reuters) - Greece’s biggest telecoms operator OTE posted a 1.9 percent drop in fourth-quarter core profit on Thursday, with tough conditions in Romania more than offsetting domestic growth.

The former national monopoly, now 40 percent owned and managed by Germany’s Deutsche Telekom, reported earnings before interest, tax, depreciation and amortisation (EBITDA) of 337 million euros ($413.7 million) for the quarter, down from 343.7 million euros a year earlier.

Heavy spending on new high-speed VDSL broadband services and a fast-growing pay-TV business have helped the group to win back fixed-line customers in Greece, where operations had been dented by a sluggish economy after a seven-year debt crisis and three international bailouts.

It expects capital expenditure to reach 700 million euros this year.

Sales dropped 2.8 percent in the fourth quarter last year to 998 million euros, as a growing Greek fixed-line and mobile business was offset by weakness in Romania.

OTE said that foreign operations showed early signs of stabilisation but were not profitable yet, so the group will continue cost cutting.

The company proposed a dividend of 0.35 euros a share, up from 0.16 euros in 2016. OTE initiated a more generous payout policy this year, saying it would pay about 260 million euros to shareholders.

Its shares trade at 20.5-times its 12-month forward earnings against 10 times for Telefonica and 13.7 times for Telekom Austria. ($1 = 0.8146 euros) (Reporting by Angeliki Koutantou; Editing by Keith Weir)

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