WHO WE ARE OTE Group is Greece's leading telecommunications organization and one of the pre-eminent players in SE Europe. A member of the Deutsche Telekom Group (Deutsche Telekom holds a 40% share in OTE), the OTE Group consists of the parent company, OTE SA, and its subsidiaries. The OTE Group offers fixed-line services (voice, Internet, and data), TV and mobile telephony services in Greece and Romania, as well as mobile telephony services in Albania. OTE offers services to residential and business customers, as well as telecom providers. The Group is also involved in a range of activities in Greece, notably in real-estate, professional training and offers telecom solutions for the Greek and global shipping industry. TOGETHER WE ARE ONE At OTE, communication reliability and quality has always been at the epicenter of our activities, so that one can enjoy seamless communication in all its forms and with all its benefits. Believing in the importance of togetherness and dialogue with you, our customer, we will try even more to create the communication of the future based on your individual and essential needs. Together we communicate, together we create. 6 ΟΤΕ GROUP OPERATIONS ΟΤΕ SA Greece COSMOTE ROMTELECOM OTEGLOBE 100% 54% 100% Greece Romania Greece COSMOTE OTE SAT–MARITEL 70% 30% 94.08% Romania Greece AMC OTE ESTATE 99.76% 100% Albania Greece Zapp GERMANOS OTE PLUS 100% 100% 100% Romania S.E. Europe Greece OTE ACADEMY 100% Greece ΟΤΕ INSURANCE 100% Greece OTHER OPERATIONS ARE Greece WE WHO 1. Fixed line telephony Mobile telephony 7 Other operations FIXED-LINE services ΟΤΕ • Parent company of the OTE Group • Country of operation: Greece • Fixed-line services for residential and business customers (voice, broadband services, services for telecom operators) • Fixed-line subscribers: 2,852,060 • Broadband services subscribers: 1,261,590 ROMTELECOM • Country of operation: Romania • Telecom incumbent, offers fixed-line services (voice, broadband services, ICT) • Fixed-line subscribers: 2,252,563 • Broadband services subscribers: 1,249,987 OTEGLOBE • Country of operation: Greece • International telephony, Internet and data services (wholesale) MOBILE TELEPHONY COSMOTE • Country of operation: Greece • Mobile services for residential and business customers (voice, mobile Internet-3G/4G) • Mobile telephony subscribers: 7,476,980 AMC • Country of operation: Albania • Mobile telephony services for residential and business customers (voice, mobile Internet 3G/4G) • Mobile telephony subscribers: 2,058,407 COSMOTE ROMANIA • Country of operation: Romania • Mobile services for residential and business customers (voice, Mobile Internet-3G/4G) • Mobile telephony subscribers: 6,091,455 PAY TV services PAY-TV services-OTE • Country of operation: Greece • Pay-TV services via broadband connection and via satellite • TV subscribers: 255,912 8 PAY-TV Services-Romtelecom • Country of operation: Romania • Pay-TV services • TV subscribers: 1,353,421 OTHER operations IN Greece ΟΤΕPLUS • Country of operation: Greece • Consulting services for telecommunications technologies and strategic, organizational and operational issues for businesses OTE SAT-MARITEL • Country of operation: Greece • Inmarsat and Iridium satellite services and integrated telecommunications solutions for the Greek and international shipping industry OTE ESTATE • Country of operation: Greece • Management and commercial development of OTE Group’s real estate portfolio OTE ACADEMY • Country of operation: Greece • Professional training services OTE Insurance • Country of operation: Greece • Insurance services for persons and legal entities ARE WE WHO 1. 9 OUR ENVIRONMENT - INDustrY TRENDS KEY TRENDS IN THE EUROPEAN • Need to move (through investments in infrastructure and regula- telecommunications MARKET tory support) from markets that are exhibiting signs of saturation to developing markets, such as the fixed-line and mobile telepho- ny data services, ICT services and pay-TV markets. • Mergers and acquisitions (Μ&Α): is a key theme, with European telecom operators more interested in disposing peripheral assets and strengthening their operations via in-country consolida- Opportunities for ΟΤΕ - A FINANCIALLY robust tion rather than international geographical expansion. Domestic companY, WITH EXTENSIVE investments IN incumbent operations represent the majority of value in the infrastructure AND special emphasis ON European sector, approximately 60% of incumbent EV on customers average. Low revenues in the industry are also a key trend (compared to the respective industries of America and Asia) along however with high demand for data services and increased data • ΟΤΕ has proceeded with the reduction of fixed-line costs through traffic. Need for investment (in billions) in infrastructure which will successful voluntary exits schemes – since 2008 when the financ- cover the increasing demand (and speeds requirements) for data ial crisis was slowly setting in in Greece, by about 45% transfer and the development of the relevant markets • Through a successful plan for refinancing its debt and the effi- • Regulation on a European level (the need for clear, European cient management of its operations portfolio (sale of Hellas Sat regulation regarding the development of telecommunications) and Globul), the company is in a solid financial position hinders the development of the industry, its main features being • ΟΤΕ is the only telecoms operator in Greece that is developing an legislative complexity (as a result of the co-existence of national NGA network with FTTC (Fiber To The Cabinet), and thus has the and European regulatory frameworks), interventionist policy with greatest availability of VDSL services in the country. ΟΤΕ Group respect to process and access, as well as the favourable treatment carries out 60% of the total investments in infrastructure in of providers who do not invest in infrastructure (lack of regula- Greece tion for OTTs -Over the top content providers) • Besides the further developments of its VDSL services, ΟΤΕ fo • Expected improvement of the operational performance of provi- cuses on growing its ΤV, 4G, and ICT businesses. OTE’s TV ders triggered by the slowly improving macroeconomic enviro- customers posted an increase of 114% in 2013 on an annual basis. nment. • The training of personnel; new, state of the art media/tools for communicating with customers and handling their requests and > Fixed telephony: fault reports, the upgrade of customer service centers and quality • The European fixed-line services (voice and Internet) market certifications in customer management –are some of the compa- shows signs of saturation, with high percentages of penetration ny’s achievements in 2013, as part of its strategy for offering • There is an increased demand for data services, and information best-in-class customer experience. and communication technology (ICT) services • Pay-TV services continue to post growth. > Mobile telephony: • Need for price stabilization, as part of the continued drop of pri- ces on a European level over the past 10 years, and need to dive- rsify products and services from the competition • Need for an integrated radio spectrum policy throughout the European Union • Emphasis on 4G services and need to meet the increasing de- mand for “fast” data services. OTE Group carries out 60% of the total investments in infrastructure in Greece KEY TRENDS IN THE GREEK telecommunications MARKET Increase in OTE TV's 114% subscribers in 2013 • Adverse macroeconomic environment (unemployment, austerity measures, reduced consumer spending). Intense competition and aggressive offers on the part of the competition have increased, as a result of this environment. There is a need for telecom ope- Reduction of fixed-line rators to diversify in terms of quality of services and customer 45% costs since 2008 contact • Regulation continues to hinder growth: excessive regulation in fixed telephony, discouraging for investments in next generation networks, lack of a regulatory framework for ΙP technology/infra- 10 structure CONTENTS WHO WE ARE Fixed-line services • Fixed-line services in Greece (OTE) 55 • Who we are 6 • Services for telecom operators in Greece (OTE) 64 • OTE Group operations 7 • International telephony, Internet & data services 68 (ΟΤΕGLOBE) • Our environment - Industry trends 10 • Fixed-line services in Romania (Romtelecom) 69 • Contents 11 Pay-TV services 74 2013 AT A GLANCE • Pay-TV services in Greece (ΟΤΕ) • Pay-TV services in Romania (Romtelecom) 76 • OTE Group financial performance: Improved 14 performance continues with solid cash flow and reduced debt in 2013 Mobile telephony services • OTE Group operational performance: Solid growth of 19 • Mobile telephony services in SE Europe 78 Pay-TV services • Mobile telephony services in Greece (COSMOTE) 79 • How the investment community saw us in 2013 21 • Mobile telephony services in Romania (COSMOTE 84 • 2013: A year of great achievements for OTE Group 24 Romania) • Strategic Plan 27 • Mobile telephony services in Albania (AMC) 87 • Message from the Chairman 28 Other operations in Greece • Real estate management and development services 89 (ΟΤΕEstate) OUR ACTIVITIES IN 2013 • Professional training services (OTEAcademy) 92 • Telecommunications services for the Greek and global 94 • Technological development based on Next 32 shipping industry (OTESat-Maritel) Generation Networks • Consulting services for telecommunications 95 • Regulatory developments on a European and 37 technologies and business topics (OTEPlus) national level • Our people, our driving force in the transformation 39 of our company ARE • Corporate Responsibility: Strengthening 45 ANNUAL FINANCIAL REPORT 96 WE communication with our stakeholders for sustainability issues throughout 2013 WHO • Corporate governance for the protection of 50 1. shareholders’ interests 11.