HHEELLLLEENNIICC TTEELLEECCOOMMMMUUNNIICCAATTIIOONNSS OORRGGAANNIIZZAATTIIOONN SS..AA.. AANNNNUUAALL FFIINNAANNCCIIAALL RREEPPOORRTT For the period from January 1, 2017 to December 31, 2017 (TRANSLATED FROM THE GREEK ORIGINAL) In accordance wiith Artiiclle 4 of Law 3556/2007 WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f TABLE OF CONTENTS I. STATEMENTS OF MEMBERS OF THE BOARD OF DIRECTORS II. ANNUAL REPORT OF THE BOARD OF DIRECTORS III. AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS IV. ANNUAL FINANCIAL STATEMENTS V. FINANCIAL DATA AND INFORMATION WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f I. STATEMENTS OF MEMBERS OF THE BOARD OF DIRECTORS 3 WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f STATEMENTS OF MEMBERS OF THE BOARD OF DIRECTORS (In accordance with article 4 par. 2 of Law 3556/2007) The members of the Board of Directors of HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A.: 1. Michael Tsamaz, Chairman and Managing Director 2. Charalampos Mazarakis, Board Member 3. Panagiotis Tabourlos, Board Member We confirm that to the best of our knowledge: a. The attached Annual Financial Statements (Consolidated and Separate) of the HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. for the period January 1, 2017 to December 31, 2017, which have been prepared in accordance with the applicable accounting standards, provide a true and fair view of the assets and liabilities, the owners’ equity and the results of the Group and the Company. b. The Annual Report of the Board of Directors provides a true and fair view of the financial position and the performance of the Group and the Company, including a description of the risks and uncertainties they are facing. Maroussi, February 21, 2018 Chairman & Managing Director Board Member Board Member Michael Tsamaz Charalampos Mazarakis Panagiotis Tabourlos The two members of the Board of Directors, who have signed the above statements, have been authorized to do so in accordance with the decision of the Company’s Board of Directors of February 21, 2018. 4 WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f II. ANNUAL REPORT OF THE BOARD OF DIRECTORS 5 WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f TABLE OF CONTENTS A. FINANCIAL AND OPERATIONAL HIGHLIGHTS OF 2017 B. OBJECTIVES & STRATEGY C. SIGNIFICANT EVENTS OF THE YEAR 2017 D. RISKS AND UNCERTAINTIES FOR THE NEXT YEAR Ε. NON FINANCIAL REPORT - SUSTAINABLE DEVELOPMENT F. CORPORATE GOVERNANCE STATEMENT G. MATERIAL TRANSACTIONS WITH RELATED PARTIES H. SIGNIFICANT EVENTS AFTER THE YEAR END I. INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 16 PAR. 9 OF C.L. 2190/1920 REGARDING ACQUIRED OWN SHARES J. INFORMATION ACCORDING TO ARTICLE 4.7 OF LAW 3556/2007 K. ALTERNATIVE PERFORMANCE MEASURES (APMs) 6 WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f ANNUAL REPORT OF THE BOARD OF DIRECTORS The report of the Board of Directors of the HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (hereinafter referred to as “OTE” or the “Company”) was prepared in accordance with articles 43a, 43bb, 107A and 136 of Law 2190/1920, article 4 of Law 3556/2007 and article 2 of Decision 7/448/2007 of the Hellenic Capital Market Commission and refers to the Annual Financial Statements (Consolidated and Separate) as of December 31, 2017, and the year then ended. The OTE Group (the “Group”) apart from the Company also includes subsidiaries over which OTE has direct or indirect control. The Consolidated and Separate Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (E.U.). This report includes the actual depiction of the progress and performance of the Company's business and its financial position, for the period from January 1, 2017 to December 31, 2017, its objectives and its strategy, the significant events which took place in 2017, as well as the most significant events following the year end. The report also contains a description of the main risks and uncertainties for the next year, non-financial information - sustainable development report, the Corporate Governance statement, the material transactions with the Company’s and the Group’s related parties and additional information as required by the respective law. OTE’s Financial Statements (separate and consolidated), Auditor’s Report on the Financial Statements and the Annual Report of the Board of Directors of OTE S.A can be found on the following link: https://www.cosmote.gr/fixed/en/corporate/ir/financial-results/financial-statements-of-ote-group-and-ote-sa. Furthermore, the Financial Statements and the Auditors’ Report on the Financial Statements of the OTE Group consolidated companies that are not listed in the stock exchange (in accordance with Capital Markets Board of Director’s decision 8/754/14.04.2016) can be found on the following link: https://www.cosmote.gr/fixed/en/corporate/ir/financial- statements-of-ote-group-companies A.FINANCIAL AND OPERATIONAL HIGHLIGHTS OF 2017 Financial Highlights: Group Revenues (Euro million) 2017 2016 Change Fixed Line Operations, Greece 1,583.8 1,568.5 +1.0% Mobile Operations, Greece 1,202.3 1,194.2 +0.7% Fixed Line Operations, Romania 607.7 602.5 +0.9% Mobile Operations, Romania 464.9 457.1 +1.7% Mobile Operations, Albania 68.1 77.2 -11.8% Others 451.6 489.7 -7.8% Eliminations (Mobile & Group) (521.3) (481.1) +8.4% TOTAL 3,857.1 3,908.1 -1.3% Other operating income 51.4 55.2 -6.9% Group Adjusted EBITDA (Euro million)* 2017 2016 Change Fixed Line Operations, Greece 677.6 663.6 +2.1% margin 42.8% 42.3% +0.5pp Mobile Operations, Greece 404.0 403.0 +0.2% margin 33.6% 33.7% -0.1pp Fixed Line Operations, Romania 101.9 93.5 +9.0% margin 16.8% 15.5% +1.3pp Mobile Operations, Romania 58.2 81.7 -28.8% margin 12.5% 17.9% -5.4pp Mobile Operations, Albania 8.8 16.1 -45.3% margin 12.9% 20.9% -8pp Others 58.4 69.5 -16.0% margin 12.9% 14.2% -1.3pp Eliminations (Mobile & Group) (5.0) (6.5) -23.1% Group OTE 1,303.9 1,320.9 -1.3% Adjusted EBITDA margin 33.8% 33.8% 0pp * Alternative Performance Measures: For details on purpose and calculations refer to Section K, Alternative Performance Measures Section 7 WorldReginfo - 6b3e0d6f-7e1a-4fa8-ba91-c7ee55914b6f ANNUAL REPORT OF THE BOARD OF DIRECTORS OTE Group’s consolidated revenues stood at Euro 3,857.1 million in 2017, decreased by 1.3%. For a second consecutive year, the Greek fixed-line achieved a positive performance, with revenues up 1.0%, the result of solid performance in both broadband which benefited from the impressive take up of fiber services, and COSMOTE TV revenues, driven by subscriber growth. Greek mobile operations posted a revenue increase of 0.7% in 2017, reflecting data uptake and the Roam Like Home regulation impact. In Romania, fixed-line operations posted total revenues of Euro 607.7 million in 2017, up 0.9% compared to 2016, reflecting higher contribution from fixed-mobile convergence services along with good performance in wholesale services, offsetting declining fixed voice revenues. Revenue in Romania mobile was up by 1.7% in 2017 reaching Euro 464.9 million, driven from increased handset and other mobile revenue. In Albania, revenues declined by 11.8% compared to 2016, mainly due to lower international traffic partially offset by higher retail revenue. All Οther revenues were down 7.8% for the year, mainly reflecting the lower international transit revenue coming from OTE Globe and the completion of the Rural Broadband project in Greece. Total Operating Expenses, excluding depreciation, amortization, impairment and charges related to voluntary leave schemes, other restructuring costs and non-recurring litigations amounted to Euro 2,604.6 million in 2017, down 1.4% compared to 2016. The drop is mainly driven by reduced personnel expenses, down by 3.1% and lower other indirect expenses. Group Adjusted EBITDA stood at Euro 1,303.9 million in 2017, a 1.3% decline compared to 2016, resulting in a 33.8% adjusted EBITDA margin in the period, stable compared to 2016. Consolidated expenses for depreciation, amortization and impairment stood at Euro 937.0 million, a 6.3% or Euro 55.6 million increase. At December 31, 2017, an impairment test was performed for TELEKOM ROMANIA with respect to its carrying value. Αs a result of the impairment test, an impairment loss of Euro 55.5 million was charged in the 2017 consolidated income statement (included in “Depreciation, amortization and impairment” line). At December 31, 2017, an impairment test was also performed for TELEKOM ALBANIA with respect to its carrying value. Αs a result of the impairment test, an impairment loss of Euro 78.4 million was charged in the 2017 consolidated income statement (included in “Depreciation, amortization and impairment” line). An amount of Euro 57.4 million relates to Goodwill and an amount of Euro 21.0 million relates to property, plant and equipment. Interest and related expenses stood at Euro 139.4 million, down 6.7%, mainly reflecting the lower outstanding debt. The Group’s Income Tax expense stood at Euro 151.7 million in 2017, decreased compared to 2016 by 9.9%, reflecting the recognition of losses carried forward and current year losses in Greece mobile. Group Profit of the year (attributable to owners of the parent) stood at Euro 67.2 million in 2017, compared to Euro 140.0 million recorded in 2016. The decline reflects mainly impairment losses in Romania and Albania. In 2017, the Group’s adjusted Free Cash Flow stood at Euro 105.1 million down 77.1% compared to 2016, primarily reflecting the increase in Capital Expenditure as well as higher taxes. The Group’s Adjusted Net Debt (including other financial assets) was Euro 737.1 million at December 31, 2017, up 38.1% compared to December 31, 2016.