Author: Michael Tsamaz, Chairman and CEO, OTE Group
19 Jul 2017
There are two ways to face a crisis: lose heart, panic, become introverted, and hope for the best; or keep calm, treat it as an opportunity, come up with a concrete strategy, and get to business. In our company, we pursue the latter without the slightest flicker of doubt. The results have rewarded us.
OTE Group, a member of the Deutsche Telekom Group, is the technology powerhouse of Greece and the enabler of the country’s digital transformation. The company offers a full range of services, from fixed and mobile telephony, broadband and wholesale telecommunication services, to pay-TV, ICT solutions and marine communications. Together with its subsidiaries in Romania and Albania, it is one of the leading telecommunications groups in south-eastern Europe.
To get to this point, the group had to go through tough times and a radical structural overhaul, transforming from a state monopoly into a modern, competitive company. What’s more, all this was achieved against the backdrop of a severe financial and social crisis, and a volatile geopolitical environment.
In 2010, OTE’s fixed-line segment was trapped in a vicious cycle of low competitiveness due to its eroding financial results, hostile regulatory environment, and fierce competition. Due to the Greek financial crisis and the inability to raise capital from the market, OTE’s inherited debt and solvency were at risk.
A concrete plan was set in 2011 to get us through this period, which aimed to fix the basics, progressively focus on growth, and ultimately lead us into the digital era. Our multi-layered turnaround strategy was based on six pillars: technological superiority, industry-leading customer experience, new revenue streams and enhanced leadership in core business, on the back of operational and cost optimisation and a modern human resources strategy. We took bold decisions and changed more or less everything in the group.
The first milestone along this path was ensuring sustainability, through the liquidation of assets that didn’t conform to our long-term strategy, alongside a successful bond issuance that defied the turbulent market environment at the time. Notably, OTE is one of the few Greek companies to have access to international markets. Currently, OTE’s bonds are trading at levels well below three percent. Additionally, a personnel cost rationalisation programme through voluntary exit schemes was implemented in a socially responsible manner.
In 2010, OTE’s fixed-line segment was trapped in a vicious cycle of low competitiveness due to its eroding financial results, hostile regulatory environment, and fierce competition
The second achievement was capitalising on our competitive advantage: network superiority. We did this by investing in new generation networks to reinforce the quality of services and to be one step ahead of the competition.
To reinvent OTE, we had to establish a new customer-centric philosophy, and transform our internal and customer-facing processes and systems. We also had to change how our people positioned themselves within the company and towards the customer. To that end, the company implemented a strategic, multilayered, cross-sectional, internal communications plan to spread the strategy and inspire people.
The operational integration of fixed and mobile operations contributed to the optimisation and centralisation of functions and services, added more clarity on roles, and raised organisational effectiveness. The establishment of the common fixed-mobile brand COSMOTE in 2015 and the launch of converged programmes offering a whole new world of communication, entertainment and benefits for our customers was the natural result of OTE Group’s transformation. A cornerstone of this successful transformation was top management’s commitment, while the establishment of sustainable growth policies for the group, its employees, the economy, society and the environment have been the key result for everyday operations.
The new group
OTE Group today leads the Greek market in fixed and mobile telecommunications, broadband, ICT and pay-TV, offering best in-class services and constantly increasing value for customers and shareholders. Having reduced its headcount by 24 percent and personnel costs by 37 percent, as well as overall costs by more than 25 percent in six years, the group operates in a lean and efficient way and delivers solid financial performance.
In 2016, OTE Group reported consolidated revenues of about €4bn, €1.3bn adjusted EBITDA, and a highly resilient group EBITDA margin at around 34 percent. The group’s net debt has been reduced by almost 90 percent since 2010, from €4.3bn to about €0.6bn. These figures are the reward of the hard work we have put in, and they propel us to achieve more in future.
We are far and away the largest investor in telecommunications in Greece, having invested over €2bn over the past six years and committed to another €1.5bn by 2020, notably to establish fibre and mobile networks to enable our customers and country to succeed in the digital era. In 2016 alone, our share of market investments was 65 percent.
In terms of fixed telecommunications, we are Greece’s leading provider of optical fibre services. We already provide high-speed VDSL access to over two million households and businesses. In the mobile segment, our 4G network reaches 95 percent of the Greek population, while 4G+ coverage is at 85 percent. We are one of the first networks worldwide and the first in Greece to have launched commercial speeds of up to 500MB/s. We want every household across Greece to be able to get connected, and we want a flawless broadband experience to be the number one reason customers choose us.
We are the partner of choice for businesses seeking advanced solutions in the fields of healthcare, tourism, information security, energy, data centres, cloud and Internet of Things (IoT) services, based on our know-how in the ICT field and our high level of activity in the field of IT integration. A pertinent example of an ICT project we have already delivered is the €43m installation and operation of Coca-Cola HBC Group’s data centre for 28 countries.
Capitalising on our excellent networks, industry-leading customer experience, and complete range of products and services, we want COSMOTE to become a ‘love brand’, not only in the telecommunications industry but also across the Greek market as a whole.
Time for digitalisation
At OTE, change is primarily a mindset. We are in constant pursuit of change in order to become more efficient and address the evolving needs of the modern era. Our transformation into a modern, competitive company has been successfully concluded. A new challenge lies ahead: our digital transformation.
We live in the new digital age. It changes everything: the way we learn, work and live; the way we perceive the world and ourselves in it. Digital transformation is not a matter of choice; it is primarily a matter of survival, and secondarily a growth issue. No industry or organisation can survive without adapting its structure, processes, people and strategy.
We have come a long way in the past few years, and we have prepared the group well for the upcoming challenge of helping customers and the markets where we operate take full advantage of the new digital world. We now have a new vision: to become a digital transformation paradigm in Greece, as well as in Europe, by 2020. For this, we have compiled a 360 degree digital transformation programme that will lead us on our new journey, help us adopt a digital mindset, and allow us to exploit digital capabilities to the benefit of our customers, employees, partners and suppliers.
OTE Group could be considered a model of how strategy, vision, commitment and change-focused mindset can steer an organisation through a crisis.
We are leading change. We act proactively, challenge all assumptions and continuously innovate. We operate in a responsible, ethical manner, ensuring sustainability. We are the enabler of growth for Greece. Through technology and innovation, we build a better world for all.
Michael Tsamaz has been head of OTE Group since November 2010. Prior to this, he held managerial positions within the group and in other multinational companies, including Vodafone and Philip Morris. He holds a bachelor’s degree in business administration from the University of New Brunswick in Canada.