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OTE Group: From State Monopoly to Digital Phoenix – The Story of Greece's Telecom Transformation
I. Introduction & Episode Roadmap
Picture Athens in late 2010. The ancient capital is gripped by unprecedented turmoil. Protesters fill Syntagma Square, banks shutter their doors, and the specter of sovereign default hangs over Greece like a Mediterranean storm cloud. In a modern office building in Maroussi, a suburb north of the city center, a newly appointed CEO named Michael Tsamaz walks into the headquarters of OTE Group, Greece's national telecommunications company. The organization he inherits carries €5.5 billion in debt, operates with bureaucratic processes dating back half a century, and faces a workforce accustomed to the comfortable rhythms of a state monopoly. Refinancing is impossible. Deutsche Telekom, the German parent company, is quietly distancing itself from Athens in case Greece gets expelled from the eurozone.
"The company was carrying €5.5 billion in debt and refinancing wasn't an option," Tsamaz would later recall. "As the Greek saying goes, anything I lifted, I found a problem."
What followed over the next fourteen years represents one of the most remarkable corporate turnarounds in European history. OTE's net debt has been reduced by almost 90 percent since 2010, from €4.3 billion to approximately €0.6 billion. Today, OTE Group stands as a Deutsche Telekom subsidiary in Greece and one of the three largest companies listed on the Athens Stock Exchange by market capitalization.
The Group offers fixed-line and mobile telephony, broadband services, pay television, and integrated ICT solutions, while also being involved in satellite communications, real estate, and professional training. For the full year of 2024, OTE Group achieved 4.5% revenue growth in Greece and a 1.6% increase in adjusted EBITDA, mainly driven by strong contributions from mobile, pay-TV, and ICT services.
The central question that animates OTE's story is profound: How did a bloated state monopoly navigate the worst sovereign debt crisis in modern history, transform into a lean digital champion, and become a cash-generating machine that now returns nearly all of its free cash flow to shareholders?
The answer involves five major inflection points: the gradual privatization that began in 1996, the Deutsche Telekom partnership forged in 2008, the survival of the Greek debt crisis, the operational transformation under Tsamaz's leadership, and the strategic refocusing that positioned OTE as Greece's fiber and 5G leader. Each chapter reveals lessons about the interplay between corporate strategy, national politics, and the inexorable forces of technological change.
II. Origins: Building Greece's Telecom Infrastructure (1926-1990s)
The story begins not in the digital age, but in the turbulent years following World War I. Greece in 1926 was a nation still recovering from the catastrophic population exchange with Turkey, absorbing over a million refugees from Asia Minor while trying to build the institutions of a modern state. Into this chaos came a modest but consequential decision: the establishment of the Hellenic Telephone Company (AETE) to consolidate the patchwork of public and private telecommunications operators that had sprung up across the country.
OTE was founded on October 23, 1949, as a successor to AETE, which had been established in 1926 to consolidate all such public and private telecommunications companies. The timing was significant. World War II had devastated Greek infrastructure, and the country was in the midst of a brutal civil war between communist insurgents and government forces backed by Britain and the United States. Founded as a state-owned entity succeeding earlier fragmented telephone operations, OTE initially functioned as a monopoly responsible for national telephony infrastructure amid post-war reconstruction efforts supported by Marshall Plan funding.
The Marshall Plan connection was crucial. Telecommunications received about 1.8% of Greece's 1948-1952 reconstruction budget through Marshall Plan aid allocated for national rebuilding. American dollars helped lay the copper wires that would connect Greek villages to Athens, Greek businesses to the world. It was infrastructure building in the classic post-war mold: state-directed, monopolistic, and aimed at national development rather than commercial returns.
The early accomplishments were dramatic by the standards of the time. From 1949 to 1959, major progress was made in developing telecommunications: the number of automatic telephones increased from 43,290 to 102,601 in Attica—a 137% increase in telephone installations in Athens and Piraeus. The number of public telephones increased from 154 to 417.
International connectivity expanded even more impressively. In 1948, Greece had telephone connections to just 15 countries. By 1959, it had telephone connections to all of Europe and most countries in America, Asia, Africa, and Australasia, resulting in a 2,044% increase in international calls. Ten years after the founding of OTE, the telephone was no longer seen as a privilege of the few; it was now widely available.
Greece's political landscape during these decades was anything but stable. The country lurched from monarchy to military dictatorship (1967-1974) and finally to democracy. Through it all, OTE remained a creature of the state, its workforce swelling with political appointees, its operations insulated from competitive pressure. Until 1998, OTE operated as a state-owned monopoly.
The accumulated inefficiencies of monopoly operation would later become painfully apparent. State-owned enterprises in Greece developed a culture of guaranteed employment, political patronage, and limited accountability. OTE was no exception. Its workforce was heavily unionized, its processes ossified, its customer service notoriously poor. But for decades, none of this mattered because customers had nowhere else to go.
The transformation began, tentatively, in the 1990s. European Union directives on telecommunications liberalization forced Greece's hand. The EU's Maastricht Treaty created a specific timetable calling for implementation of telecommunications liberalization legislation. The market was opened to competitors and OTE was gradually privatized.
The privatization debate in Greece was intense, pitting traditional left-wing suspicions of foreign ownership against the pragmatic recognition that modernization required capital and expertise that the state could not provide. This tension would recur throughout OTE's journey, shaping every major strategic decision.
For investors examining OTE today, the legacy of this period matters because it explains both the company's strengths (ubiquitous infrastructure, brand recognition, regulatory relationships) and its ongoing challenges (workforce restructuring, process modernization). The transformation from state monopoly to competitive enterprise was never complete in a single stroke—it unfolded over three decades and arguably continues today.
III. The Mobile Revolution & Birth of COSMOTE (1990s-2000s)
The cellular phone arrived in Greece like a thunderbolt, upending assumptions about telecommunications that had held since the copper wire era. Where fixed-line telephony had been a natural monopoly—it made no sense to duplicate the wires running into every home—mobile telephony offered something different: competition through the airwaves.
COSMOTE launched commercial operations in Greece in April 1998 and reached 1 million subscribers a year later. In 2000, the company was listed on the Athens Exchange. In 2001, COSMOTE reached a customer base of 2.5 million, becoming the largest mobile network operator in Greece.
The speed of this ascent was remarkable. COSMOTE, a member of the OTE Group, started commercial operations in Greece in April 1998, five years after its competitors, and in only three and a half years of operations achieved the leading position in the Greek mobile market, both in terms of subscribers and growth rates but most importantly in terms of profitability. The company has been called the most successful third entrant in Europe.
How did a late entrant, born from a state monopoly, overtake established competitors? The answer reveals something important about the relationship between parent company resources and subsidiary execution. COSMOTE benefited from OTE's established brand, its retail presence, and its existing customer relationships. But it also operated with a different culture—more entrepreneurial, more customer-focused, less burdened by legacy bureaucracy.
The company in 2003 generated over €1.35 billion in revenues and €253 million in net profit. Both the company's EBITDA margin (above 42%) and net profit margin (above 18%) remained constantly among the top 3 in Europe.
The privatization of OTE proceeded in parallel with COSMOTE's growth. OTE S.A. was listed on the Athens Stock Exchange in 1996. Since that initial listing, the Greek State gradually reduced its stake in OTE. The early privatization waves were politically contentious but economically necessary, providing the capital needed for network investment while introducing market discipline.
The human cost of transformation was significant. The shift from state monopoly to competitive enterprise required fewer workers, different skills, and entirely new ways of operating. The company managed this transition through voluntary programs rather than mass layoffs, but the scale was nonetheless dramatic. Employment fell substantially between the mid-1990s and the late 2000s as OTE shed the bloat accumulated during its monopoly years.
Analysis of the privatization and liberalization of the Greek telecommunications sector from 1998 to 2009 shows that net social benefits ranged from 62.85% to 145% of OTE's total annual revenues in 1998. Privatization facilitated modernization and contributed to Greece's broader telecom liberalization, yielding substantial net social gains even as individual workers bore adjustment costs.
The dual strategy emerged clearly during this period: use COSMOTE to capture the high-growth mobile market while gradually modernizing OTE's legacy fixed-line business. Both would eventually be unified under a single commercial brand, but the organizational separation allowed COSMOTE to develop the aggressive, market-focused culture that a startup requires.
The late 1990s and early 2000s also saw OTE begin to look beyond Greece's borders. A mature domestic market offered limited growth; neighboring Balkan countries, emerging from communism and hungry for telecommunications infrastructure, offered opportunity. This regional expansion would prove consequential—both as a source of growth and, eventually, as a strategic distraction that would need to be unwound.
IV. Balkan Expansion: The Southeast Europe Play (2001-2008)
The logic seemed compelling at the turn of the millennium. Greece, a member of the European Union since 1981 and the eurozone since 2001, stood as the prosperous anchor of an economically underdeveloped region. To the north lay the Balkans—Bulgaria, Romania, Serbia, Albania, North Macedonia—countries transitioning from communism, their telecommunications infrastructure decades behind Western standards, their populations eager for connectivity. Who better to bring them into the digital age than their EU neighbor?
OTE acquired an initial 35% stake in RomTelecom, the incumbent telephony company in Romania. OTE bought a 35% stake in RomTelecom and voting control of another 16% in 1998 for $675 million. The Romanian government had a 65% stake in RomTelecom.
This was the marquee deal of OTE's regional expansion, giving the Greek company a controlling position in Romania's fixed-line market at a time when that market still held promise. In 2003, the Romanian government approved the deal under which OTE would raise its stake in RomTelecom from 35% to 54%, through a $242.6 million share capital injection.
The mobile strategy proceeded through COSMOTE. The company was launched as Cosmorom in 1999 by Romtelecom as its mobile telephony brand and entered service in April 2000. OTE acquired a GSM license in Bulgaria and established Globul to exploit this license. The company was founded under the name "Cosmo Bulgaria Mobile" in 2001 by OTE and operated under the brand name "Globul" until 2014.
The expansion extended beyond these two markets. OTE secured minority stakes in Telekom Srbija (Serbia's state-owned incumbent), operated AMC in Albania, and held positions in North Macedonia. At its peak, the OTE Group had access to populations across southeast Europe numbering in the tens of millions.
The Athens 2004 Olympics coincided with this period of expansion and confidence. Greece hosted the Games amid great national pride—and at considerable fiscal cost. OTE S.A. and COSMOTE S.A. were the Major National Sponsors of the Athens 2004 Olympic Games. The sponsorship burnished the brand but the broader fiscal implications of the Games would soon catch up with Greece.
The Balkan expansion looked shrewd through one lens: secure growth markets at reasonable prices, leverage Greek management expertise, build scale across a regional footprint. But there were problems. The markets proved more competitive and lower-margin than anticipated. Mobile technology advanced rapidly, requiring continuous capital investment. And managing operations across multiple countries with different regulatory environments stretched organizational capacity.
Moreover, the expansion consumed capital and management attention that might have been better deployed at home. The Greek telecommunications market, while mature, was far from optimized. Customer service remained poor, network investment lagged, and competitors were improving. The seeds of competitive challenge were germinating even as OTE's management looked outward.
By 2007, as the global financial system approached crisis, OTE was a sprawling regional telecommunications empire—but one whose complexity masked underlying vulnerabilities. The company needed a partner with deep pockets, operational expertise, and the patience to undertake transformation. Such a partner was about to appear.
V. The Deutsche Telekom Deal: Finding a Strategic Partner (2007-2009)
The path to Deutsche Telekom's entrance was circuitous, passing through the hands of Greek financiers and the corridors of political power in Athens. In 2007, MIG Holdings acquired 20% of the company, while in March 2008, sold it to German Deutsche Telekom, which later increased its stake to 25% plus one, matching that of the state.
Marfin Investment Group (MIG) had assembled its stake quietly, capitalizing on Greece's still-functioning capital markets. But MIG's acquisition immediately raised questions about its intentions and capabilities. Greek law restricted private parties from becoming principal shareholders in certain strategic assets, and the government wanted a telecommunications company—not a financial holding company—as the strategic investor.
Deutsche Telekom consummated the agreement concluded with Marfin Investment Group (MIG) in mid-March 2008 on the acquisition of just under 20 percent of OTE and acquired the shares for EUR 26 per share with a total purchase price of around EUR 2.55 billion. Under the terms of the agreement with the Greek government, Deutsche Telekom would increase this stake to 25 percent plus one vote.
The structure was carefully crafted to balance German operational control with Greek political sensibilities. Based on OTE's current share price at the time, the total purchase price for the stake of 25 percent plus one vote came to around EUR 3.2 billion. This was not a full takeover—Greece retained its own 25% plus one vote, maintaining formal parity—but the shareholder agreement gave Deutsche Telekom effective management control.
Why did Deutsche Telekom want a Southern European platform? The German giant faced its own challenges in its saturated home market and saw consolidation across European telecoms as strategically necessary. OTE offered several attractions: established positions in both fixed and mobile, a regional footprint in the Balkans with potential for improvement, and a strong cash flow profile despite operational inefficiencies.
OTE generated revenue of EUR 6.3 billion in the 2007 financial year, an increase of 7.3 percent over the previous year. Adjusted EBITDA increased 3.4 percent to EUR 2.2 billion. Net profit amounted to EUR 0.66 billion, up 15.3 percent on the prior year.
These were solid numbers for a company still carrying significant operational fat. Deutsche Telekom's expertise in operational excellence—honed through its own painful restructuring of the former German state monopoly—could theoretically unlock substantial value.
The deal included clever financial engineering through put options. From the time of the acquisition of the 3-percent stake in OTE by Deutsche Telekom, the Greek government had a put option for a further 5 percent of the shares in OTE. This option was valid for 12 months and could be exercised in October 2008 at the earliest. A price of EUR 27.50 per share was agreed for this option. The Greek government also held a second put option for a further 10-percent stake in OTE until 2011.
The political opposition in Greece was vocal. The opposition political parties criticized the government, which they held responsible for the manner in which Deutsche Telekom became a stakeholder in OTE. They accused the government of playing the part of "mediator" between Deutsche Telekom and MIG, so that ultimately MIG reaped a huge amount from the transfer of its shares.
The European Commission cleared the deal in October 2008, finding no significant competition concerns. Since July 2009, Deutsche Telekom has been the largest shareholder of the company. By then, the Greek government had exercised its first put option, reducing its stake while raising needed cash. The ownership structure continued to evolve. Following the sale of a further 5% in 2009 and another 10% in 2011 of OTE's share capital by the Greek state to Deutsche Telekom, the state held 10% and Deutsche Telekom 40%.
The timing of this partnership proved either fortunate or catastrophic, depending on perspective. Deutsche Telekom had secured a strategic foothold just as Greece approached an economic abyss. The German company would provide crucial credibility and financial backstop through the years ahead. But it also found itself majority owner of a company in a country experiencing economic collapse without modern precedent in Western Europe.
VI. Into the Abyss: The Greek Debt Crisis & OTE's Survival (2009-2015)
The Greek debt crisis, widely known within the country simply as "The Crisis," began with a revelation that shattered confidence not just in Greece, but in the very foundations of eurozone governance. PASOK leader George Papandreou won national elections and became prime minister in October 2009. Within weeks, Papandreou revealed that Greece's budget deficit would exceed 12 percent of GDP, nearly double the original estimates. The figure was later revised upward to 15.4 percent.
The implications cascaded rapidly. Greece's credit rating was downgraded by Fitch from BBB+ to BBB−. Greece's credit rating was downgraded by Standard & Poor's below investment grade to junk bond status. As borrowing costs rose and financing dried up, Greece was unable to service its mounting debt.
To avoid default, the International Monetary Fund and EU agreed to provide Greece with €110 billion in loans over three years. Germany provided the largest sum, about €22 billion, of the EU's €80 billion portion. In exchange, Prime Minister Papandreou committed to austerity measures, including €30 billion in spending cuts and tax increases.
The human cost was staggering. Greece's economy collapsed. Its economic output declined by 25 percent from the 2010 level. Wages and pensions fell. Unemployment reached 27 percent. According to Eurostat, 44% of Greeks lived below the poverty line in 2014. In 2015, the OECD calculated that 20% of the Greek population lacked the funds to meet their daily food requirements.
For OTE, the crisis presented existential challenges. Due to the Greek financial crisis and the inability to raise capital from the market, OTE's inherited debt and solvency were at risk. 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 company could not access capital markets to refinance its debt. Customer spending contracted as Greeks tightened their belts. Regulatory pressure intensified as the government sought to extract maximum revenue from its remaining stake. And Deutsche Telekom, watching from Bonn with growing alarm, had to decide whether to commit further resources to its Greek investment or cut losses.
"Our parent company was distancing themselves from Greece in case the country was kicked out of the EU," Tsamaz would later acknowledge. The threat of "Grexit"—Greece's departure from the eurozone—loomed over every business decision. OTE's bonds traded at distressed levels. Any long-term planning seemed futile when the currency itself might cease to exist.
Yet Deutsche Telekom's backing proved crucial. The German company's presence provided credibility with creditors and suppliers that a standalone Greek company could not have mustered. It offered access to technical expertise, best practices from other European operations, and a signaling effect that suggested OTE would survive even if Greece defaulted.
The Greek government continued selling its OTE stake during the crisis, raising cash for its depleted treasury. This was part of the privatization demands embedded in the IMF/EU bailout programs. The Greek government informed Deutsche Telekom that it would make use of its right to sell another 10 percent of the shares in OTE to Deutsche Telekom. Once the shares were transferred, the Greek state held 10 percent of the voting rights in OTE and Deutsche Telekom 40 percent.
By 2012, Greece had completed the largest sovereign debt restructuring in history, imposing losses of over 50% on private bondholders. The economy continued contracting. Three successive bailout programs would eventually provide around €290 billion in loans, tying Greece to austerity and reform conditions through 2018.
Through it all, OTE survived. The company that entered the crisis carrying over €4 billion in debt would emerge with a fraction of that burden. The workforce that numbered over 20,000 at the crisis onset would be dramatically reduced. The bloated monopoly culture that had characterized OTE for decades would give way to something leaner and more customer-focused. The transformation required a specific kind of leadership—and the shareholders had found it in Michael Tsamaz.
VII. The Turnaround: Michael Tsamaz & the Six Pillars of Transformation (2011-2016)
Michael Tsamaz, CEO of OTE Group's mobile arm COSMOTE, assumed the position of OTE President & CEO in November 2010. He arrived not as an outsider bringing foreign turnaround expertise, but as an insider who understood both the company's potential and its pathologies.
Tsamaz joined OTE Group in 2001 and became Head of COSMOTE in 2007. Since 2001, he held several senior roles within OTE, overseeing the course of its international subsidiaries. Before OTE, he held managerial positions in other multinational companies, including Vodafone and Philip Morris.
"I came into the position in November 2010, just a few months after the Greek government announced that we were going to get a bailout from the International Monetary Fund," Tsamaz recalls. The economic situation meant that he had inadvertently jumped into his new role at the very deepest end. "There were two major issues I had to contend with. One was the debt crisis. The other was the fact that OTE, as a former state-owned monopoly, was underperforming in terms of customer service, competitiveness and financial results."
The transformation strategy rested on six pillars. Tsamaz drew up a strategy for this transition based on six pillars: technological superiority; best customer experience; revenue transformation; lead in core business; digitalisation, simplification and cost optimisation; growth mindset and culture.
A concrete plan was set in 2011 to get them through this period, which aimed to fix the basics, progressively focus on growth, and ultimately lead into the digital era.
The first priority was survival, which meant attacking costs with urgency. "My number one priority was to slash our costs. Only when we'd succeeded in fixing the basics could we start looking at growth," Tsamaz would explain.
The workforce reduction was substantial but managed through voluntary programs rather than mass layoffs. OTE managed to reduce costs in a socially responsible manner, signing a collective labour agreement with 10% lower wages in exchange for fewer working hours, and renewed personnel through voluntary exit schemes costing a total of €1 billion for the decade. The company signed a three-year Collective Labour Agreement with the Federation of OTE Employees OME-OTE, achieving personnel costs reduction and securing employment for OTE regular employees.
The reduction in headcount was accompanied by an infusion of younger talent. The company addressed the youth unemployment problem by hiring 2,500 young people better equipped to handle the new technologies the company was planning to invest in.
Tsamaz recruited talented colleagues from across Europe, forming a management team of ten knowledgeable people: engineers, IT gurus, marketing, and customer service experts. "We travelled from one country to the other identifying problems and rewriting business plans. We turned it around."
Operational transformation extended beyond headcount. "Many of our processes dated back 50 years and, while they were fine up to perhaps 30 or 40 years ago, they were only creating bureaucracy and red tape in our modern world."
To reinvent OTE, they had to establish a new customer-centric philosophy and transform internal and customer-facing processes and systems. They also had to change how people positioned themselves within the company and towards the customer. 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.
Asset sales provided crucial debt reduction. Tsamaz made the decision to shed less profitable assets. "We had assets in Serbia, Bulgaria and North Macedonia that were doing quite well. However, I could see that in order to continue performing well in these countries, we would have to invest anywhere from €200-300 million a year. But this was impossible at the time because of our debt."
The results were dramatic. This success in the midst of the economic crisis was made a case study by Harvard Business School and is taught internationally at leading universities. Under his leadership, OTE Group consistently delivers 60% of the industry's investments, making it the largest investor in Greece in next-generation networks and technology infrastructure.
Michael Tsamaz became OTE's longest-serving Chairman and CEO. Placing customer experience as a top priority, he led the successful transformation of OTE into a modern, high performing technology company, with strong financial foundations. During his tenure, OTE not only became the largest investor in new generation networks and technological infrastructure in Greece but also a leader in all core telco segments: Fixed, Mobile, Pay TV, and ICT.
The turnaround stands as a textbook case of corporate transformation under extreme duress. For investors, the key lesson is that strategic clarity, execution discipline, and workforce management can overcome even the most adverse macroeconomic conditions—provided that leadership remains focused and that financial backing (in this case from Deutsche Telekom) provides the runway for transformation.
VIII. Portfolio Rationalization: Focus on Greece & Romania (2013-2018)
The asset sale program that began under the pressure of the debt crisis evolved into a deliberate strategic refocusing. "We decided to sell the assets that we could not invest in anymore and use the proceeds from the sales to slice out debt and invest in areas that would give us the best returns on profit," Tsamaz explained.
OTE announced the signing of an agreement to sell its 100% stake in Cosmo Bulgaria Mobile EAD (Globul) and Germanos Telecom Bulgaria to Telenor, the Norwegian telecom operator. The agreement consideration reached €717 million.
The Bulgarian sale came at a meaningful valuation. The sale price amounted to €717 million, which is Globul's enterprise value and reflects a 6x 2013 estimated EBITDA multiple. At the end of 2012, Globul reported 4.5 million subscribers and a 36 percent subscriber market share. In 2012, Globul and Germanos Bulgaria generated revenues of EUR 378 million and EBITDA of EUR 135 million.
The rationale was straightforward: Bulgaria required continuous capital investment that OTE could not afford, the market remained highly competitive, and the proceeds could be deployed more productively in Greece. OTE's CFO Babis Mazarakis commented: "The successful completion of Globul's sale at an optimum price is a significant step in pursuing OTE's refinancing strategy, adding to the Group's value. With the completion of this transaction OTE reduces its net debt to less than EUR 2 billion or by more than 50% since the beginning of 2011."
The Serbian stake was next. OTE signed an agreement for the sale of its minority stake in Telekom Srbija, of which it owned 20%, for about €400 million. Then came the satellite business: OTE sold its stake in Hellas Sat to Saudi Arabian-based Arabsat for approximately €200 million.
Each sale reduced complexity, freed capital, and sharpened focus on the core Greek market. Following completion of the Globul sale, OTE had raised €1.3 billion from asset sales since January 2012, including the divestment of satellite operator Hellas Sat and a 20% stake in Telekom Srbija, helping to slash its debt pile by half.
The logic was sound: focus on markets with scale, exit subscale positions, generate cash for debt reduction and dividends. Albania followed a similar path; the operation was eventually sold. Previous operations included GLOBUL in Bulgaria (now Yettel) and Telekom in Albania (now One Albania).
Romania remained in the portfolio but proved troublesome. The market was highly competitive, margins were under pressure, and the synergies with Deutsche Telekom's other Central European operations never fully materialized. OTE announced an agreement to sell its 54% stake in Telekom Romania Communications to Orange Romania for €295 million. The fixed-line business was divested, leaving only the mobile operations under OTE's ownership.
Through this period, Deutsche Telekom continued to increase its stake in OTE. HRADF announced in February 2018 the opening of a tender procedure for the acquisition of 5% by the Greek state. The competition ended with no interested parties. Deutsche Telekom exercised its right of first refusal and the acquisition was completed in May 2018. Deutsche Telekom currently holds 55% of the company's shares and the Government of Greece owns 1.2%.
The portfolio rationalization transformed OTE from a sprawling regional operator into a focused Greek champion with one international position (Romania) that the company continues to evaluate. This concentration has allowed deeper investment in Greek infrastructure—precisely the fiber and 5G networks that define OTE's competitive position today.
IX. The Fiber & 5G Era: Building for the Future (2018-Present)
With the balance sheet repaired and the organizational transformation largely complete, OTE pivoted to infrastructure investment. The opportunity was clear: Greece lagged European peers in fiber penetration, and the coming 5G revolution required massive network upgrades. OTE, as the incumbent with the largest customer base, was best positioned to capture the return on these investments.
In 2024, OTE solidified its position as the leader in the Greek market for Fiber-To-The-Home (FTTH) infrastructure. As of December 2024, OTE's FTTH network had reached 1.7 million homes and businesses, accounting for a substantial share of the total installed FTTH lines in Greece. The company plans to extend coverage to 2.1 million homes by the end of 2025 and approximately 3 million by 2027.
The scale of fiber leadership is remarkable. OTE remains far and away the largest fiber network provider in Greece, having installed over 80% of the country's total active FTTH lines. This dominance creates powerful competitive advantages: OTE captures not only retail customers migrating to fiber but also wholesale revenues from competitors who must use OTE's infrastructure.
OTE continues to achieve strong growth in its FTTH subscriber base, delivering another record quarter with 39k customer additions. The total number of its FTTH subscribers reached 394k, representing 16.8% of its total broadband connections. While this represents an increase of 6 percentage points compared to the previous year, there remains significant potential for future growth.
The 5G rollout has been equally aggressive. In mobile, OTE maintained its competitive edge with 99% coverage of its 5G network, positioning it as one of only three mobile networks globally certified as "Best in Test" for the 10th consecutive year.
Branding strategy has evolved to align more closely with Deutsche Telekom. In September 2015, OTE Group announced plans to adopt the COSMOTE brand as their uniform commercial brand covering fixed, broadband and mobile telephony. In April 2025, OTE Group adopted "Cosmote Telekom" branding, aligning with Deutsche Telekom's integrated service strategy.
The television business has grown into a meaningful revenue contributor. OTE's TV subscriber base reached 688k in the first quarter of 2024, a year-on-year increase of 6.0%. In 2024, OTE renewed for another three years its rights to broadcast UEFA football competitions. The award of premium UEFA League content for seasons 2024-2027 strengthens Cosmote TV's competitive positioning.
Investment levels reflect the strategic priority on infrastructure. Deutsche Telekom and OTE announced their intention to invest more than €3 billion in Greece from 2022 to 2027. These investments bring optical fiber connections to millions of homes, upgrade mobile network speeds, and support Greece's digital transformation ambitions.
The tower infrastructure represents another strategic option. OTE's shareholders approved a plan to spin off OTE's passive mobile infrastructure business into a new public limited company, which will be wholly owned by OTE. The demerger will be executed according to Greek corporate law, with an accounting statement dated December 31, 2024. Greek OTE, which owns MNO Cosmote, announced it's exploring carving out its passive infrastructure into a 100% subsidiary. The move follows OTE's spin-off of its Customer Service, Shops and Field Technical Services units.
Tower separation creates optionality. OTE could maintain the towers as a wholly-owned subsidiary, sell a minority stake to bring in capital, or eventually divest entirely at valuations typically higher than integrated telecom assets command. Deutsche Telekom has pursued similar strategies elsewhere in Europe.
For investors evaluating OTE's positioning, the infrastructure investment phase represents a transformation from turnaround to growth. The company has moved beyond survival and stabilization to proactive market leadership. The question now is whether the investments generate adequate returns as FTTH and 5G monetization matures.
X. Shareholder Returns & Capital Allocation Philosophy
The transformation of OTE's balance sheet enables a capital return strategy that would have been unthinkable a decade ago. OTE intends to distribute approximately 98% of its expected 2025 Free Cash Flow of approximately €460 million. Total shareholder remuneration is targeted at approximately €451 million, corresponding to a proposed €298 million cash dividend and approximately €153 million in share buyback.
The balance sheet metrics underscore the transformation. The Group's Net Debt stood at €457.0 million as of June 30, 2024, and the ratio of net debt to 12-month Adjusted EBITDA stood at 0.3x. The Group does not face any significant bond maturity until September 2026.
The group's net debt has been reduced by almost 90 percent since 2010, from €4.3 billion to about €0.6 billion. This deleveraging—achieved through operational improvement, asset sales, and disciplined capital allocation—represents one of the most dramatic balance sheet turnarounds in European telecom.
The commitment to returning capital reflects several factors. First, Deutsche Telekom as majority shareholder values predictable dividend income from its subsidiaries. Second, Greek tax treatment of dividends has historically been favorable compared to capital gains. Third, management recognizes that in a mature market like Greece, excess capital retention would likely generate suboptimal returns.
The share buyback program complements dividend payments by reducing shares outstanding and concentrating ownership. OTE share buy-backs, in the course of which Deutsche Telekom did not sell any shares, resulted in increases to Deutsche Telekom's stake in voting rights.
Free cash flow generation drives shareholder returns. OTE Group anticipates generating approximately €460 million Free Cash Flow in 2025, incorporating estimated cash flow requirements in Telekom Romania Mobile for the full year. The Group projects CAPEX of €610-620 million in 2025, focusing on the expansion of its Fiber to the Home infrastructure.
Why does OTE trade at a discount to European telecom peers? Several factors contribute. Greece carries country risk premium despite its post-crisis recovery. The stock's liquidity is limited compared to major European telecoms. Deutsche Telekom's majority ownership may deter some institutional investors seeking more liquid positions. And the legacy of the debt crisis still colors some investors' perceptions of Greek assets.
Yet the valuation discount creates opportunity for patient investors comfortable with Greek exposure. The company generates substantial free cash flow, maintains minimal leverage, and operates in a concentrated market where competitive intensity has decreased following consolidation. The payout ratio approaching 100% of free cash flow provides immediate return rather than relying solely on capital appreciation.
XI. The Competitive Landscape: Greece's Telecom Battleground
The Greek telecommunications market, despite its modest size, hosts vigorous competition. The Greek telecom market size is estimated at approximately €4.5 billion in 2024, including revenue generated from mobile, fixed-line, broadband, and pay-TV services. Cosmote holds the largest market share, followed by Vodafone and WIND Hellas.
Competition is fierce, with major players like WIND Hellas, Cosmote, Nova, and Vodafone Panafon vying for market share through aggressive pricing strategies, network upgrades, and bundled service offerings.
The market structure has consolidated significantly. United Group, the Southeast European telecommunications and media conglomerate, merged its Nova pay-TV business with Wind Hellas, creating a converged competitor with significant scale. "Wind, with its strong mobile business, has an amazing fit with the media and the fixed-line expertise of Nova and United Group," noted United Group's chief executive.
Nova ranks second in the pay TV space behind telecoms incumbent OTE, which has captured around half of the market. Wind, meanwhile, has a 5%-10% market share, mainly thanks to the TV service it bundles with its telecoms offers.
Vodafone Greece remains a formidable mobile competitor but lacks the fixed-line infrastructure that enables converged offers. Vodafone and Nova have an active sharing agreement in place, beyond sharing passive infrastructure through Vantage Towers. This cooperation allows both to compete more effectively against OTE's integrated offering.
Network quality testing consistently shows Cosmote's leadership. In summary, Cosmote emerged as the market leader for the period Q1 2024 to Q4 2024, excelling in download and upload bitrates as well as 5G focus. Vodafone remains a strong competitor with its leadership in latency. Nova distinguishes itself in video streaming.
Porter's Five Forces Analysis
Threat of New Entrants: Low. Telecommunications requires massive capital investment in network infrastructure, licenses, and spectrum. The Greek market is mature and consolidated, offering limited growth potential that would attract new entrants. Regulatory barriers, while not insurmountable, add complexity.
Bargaining Power of Suppliers: Moderate. Network equipment suppliers (Ericsson, Nokia, Huawei) have some leverage, but the presence of multiple vendors and long-term relationships provides balance. Content providers for TV services hold increasing power as sports rights and streaming become competitive differentiators.
Bargaining Power of Buyers: Moderate to High. Greek consumers are price-sensitive after years of economic hardship. Switching costs are low in mobile and falling in fixed as number portability is well-established. However, convergence (bundling fixed, mobile, TV) increases switching costs for engaged customers.
Threat of Substitutes: Growing. Over-the-top (OTT) services like WhatsApp and Viber erode traditional voice and messaging revenue. Streaming services compete with pay-TV. However, these substitutes require the connectivity that OTE provides, limiting the direct competitive threat.
Competitive Rivalry: High. Three major players in a market of 10 million people creates intense competition. The recent Nova-Wind merger increases competitive pressure on OTE's dominant position.
Hamilton Helmer's 7 Powers Analysis
Scale Economies: OTE's infrastructure advantage is significant. Building FTTH to 3 million households represents billions in investment that competitors cannot easily replicate. The incumbent enjoys lower per-unit costs across network operations, customer service, and administration.
Network Effects: Limited direct network effects, but the wholesale business creates positive dynamics—as more competitors use OTE's infrastructure, OTE earns revenue regardless of which retail provider wins customers.
Counter-Positioning: OTE's full convergence strategy (fixed + mobile + TV + ICT) creates a positioning that smaller, focused competitors cannot match without similar investment.
Switching Costs: Increasing through convergence. A customer with bundled fixed, mobile, and TV services faces significant hassle to switch all services to a competitor.
Branding: COSMOTE enjoys strong brand recognition in Greece, built over decades. The association with Deutsche Telekom adds credibility for enterprise customers.
Cornered Resource: Control of over 80% of Greece's FTTH infrastructure represents a cornered resource that competitors can access only on OTE's commercial terms.
Process Power: The transformation under Tsamaz created operational capabilities that competitors have not matched. However, process advantages tend to erode over time.
XII. Leadership Transition & Future Outlook
Michael Tsamaz decided to leave the company at the end of June 2024, upon the expiration of his existing contract. The Board of Directors unanimously decided to recommend Kostas Nebis to be appointed as new Chairman and Chief Executive Officer, effective July 1, 2024.
Kostas Nebis had been the Chief Executive Officer and President of the Management Board of Hrvatski Telekom, Deutsche Telekom majority owned company in Croatia, since April 2019. From that position, he managed the turnaround of the company, focusing on employee and customer satisfaction while delivering strong business results.
Nebis brings relevant experience but faces different challenges than his predecessor. The new CEO presented a strategy based on five pillars: fiber to the home and business networks, 5G in mobile, television content, ICT projects, and transformation of the company's productive and operational model through digitization. The ultimate goal is for OTE to become one of the most efficient telecommunications companies in Europe.
"In 2024, we delivered on our targets, demonstrating a solid operational and financial performance in Greece. We achieved a 4.5% revenue growth and a 1.6% increase in adjusted EBITDA, mainly driven by strong contributions from mobile, pay-TV and ICT."
"We have shaped a new vision for OTE, with the aim of becoming one of Europe's leading digital telecommunications operators and positioning Greece at the forefront of digitalization in Europe. We have established ambitious targets that will guide our path and enable us to create more value for our shareholders," said Nebis.
The Romania situation represents unfinished business. OTE has entered negotiations for the sale of Telekom Romania Mobile to Digi Romania and Vodafone Romania. A Memorandum of Understanding has been signed, and the proposed transaction is under review by Romanian regulatory authorities. An exit from Romania would leave OTE focused exclusively on Greece, simplifying the business but reducing geographic diversification.
XIII. Investment Thesis: Bull & Bear Cases
The Bull Case
OTE represents an asymmetric opportunity combining defensive characteristics with growth optionality. The company dominates Greek telecommunications infrastructure, generating stable cash flows from millions of subscribers who require connectivity regardless of economic conditions. The balance sheet transformation from €4.3 billion net debt to under €700 million provides financial flexibility unprecedented in OTE's history.
The FTTH rollout creates durable competitive advantage. With over 80% of Greece's installed fiber lines, OTE captures both retail and wholesale revenue as the country transitions to fiber-based broadband. FTTH subscribers exhibit lower churn, higher satisfaction, and reduced operating costs compared to legacy DSL customers. The government's Gigabit Voucher program provides demand-side support for fiber adoption.
The shareholder return policy, distributing approximately 98% of free cash flow, offers immediate yield rather than distant promises. At current share prices, the implied dividend yield substantially exceeds European telecom averages. Share buybacks progressively reduce float, mechanically increasing earnings per share.
Deutsche Telekom's majority ownership provides strategic stability, operational expertise, and financial backstop. The German parent has invested substantially in OTE during good times and bad, demonstrating long-term commitment rather than opportunistic extraction.
The valuation discount to European peers reflects legacy perceptions that no longer match reality. Greece has emerged from crisis, returning to investment grade rating territory. OTE's operational metrics compare favorably with larger European incumbents. As investors recognize the transformed company, multiple expansion provides upside beyond cash flow growth.
The Bear Case
Greece remains a small, mature market with limited growth potential. The population is aging and declining. Economic volatility, while reduced from crisis levels, remains elevated compared to core Europe. Any renewed financial stress would immediately pressure OTE's customer base and cash flows.
The competitive environment has intensified following the Nova-Wind merger. United Group, backed by BC Partners, has resources to compete aggressively on price and content. Market share battles could compress margins even if OTE maintains revenue.
The FTTH investment thesis requires monetization that may prove elusive. Fiber rollout costs are largely fixed, but retail pricing power is constrained by competition. If wholesale pricing comes under regulatory pressure, the infrastructure returns could disappoint.
Deutsche Telekom's majority ownership, while providing stability, also limits governance and creates potential conflicts. Key decisions require Deutsche Telekom approval. The parent company's strategic priorities may not always align with minority shareholder interests.
The Romanian mobile business remains a drain on attention and potentially capital. If the sale process stalls or generates inadequate proceeds, OTE remains burdened with an underperforming asset in a competitive market.
Currency risk is minimal given Greece's euro membership, but that membership is itself the result of dramatic intervention during the debt crisis. Any resurgence of eurozone stability concerns would disproportionately affect Greek assets.
XIV. Key Metrics for Ongoing Monitoring
FTTH Penetration Rate: This metric captures the transition from copper to fiber infrastructure that defines OTE's investment thesis. Track both homes passed (infrastructure rollout) and homes connected (monetization). Currently at 16.8% of total broadband connections with significant runway remaining. Target: watch for consistent quarterly increases toward the 40%+ penetration rates seen on mature fiber networks.
Adjusted EBITDA Margin (After Leases): This metric reflects operational efficiency and competitive positioning. OTE maintains margins above 37% at the group level and above 42% for Greek operations. Sustained margin pressure would signal competitive intensity or regulatory challenges eroding pricing power.
Free Cash Flow Conversion: Given the high payout policy, free cash flow quality matters enormously. Track working capital movements, exceptional items, and the gap between adjusted EBITDA and actual cash generation. Any deterioration threatens the dividend and share buyback commitments.
XV. Conclusion: Lessons from the Phoenix
The OTE Group story offers lessons extending beyond telecommunications. A company that appeared destined for crisis-driven irrelevance transformed into a cash-generating leader through strategic clarity, operational discipline, and patient execution. The five inflection points—privatization, the Deutsche Telekom partnership, crisis survival, operational transformation, and infrastructure investment—each required difficult decisions with uncertain outcomes.
Michael Tsamaz, departing after fourteen years at the helm, left behind something far different from what he inherited. He led the transformation of the former state-owned telecommunications company into a modern, customer-oriented technology powerhouse that enabled Greece's digital transformation. It's not an exaggeration to state that OTE Group's turnaround was a key contributor to the country's economic growth during a period of crisis.
The transformation occurred against the backdrop of Greece's own resurrection from near-catastrophe. A nation that saw GDP decline by 25%, unemployment reach 27%, and nearly half its population fall into poverty somehow recovered sufficiently to regain investment grade status and attract international capital. OTE both benefited from and contributed to that recovery.
For investors, OTE presents a proposition uncommon in modern markets: a dominant incumbent with transparent ownership, sustainable dividends, and runway for infrastructure-driven value creation. The Greek country risk premium that once defined investor perception has diminished but not disappeared, creating a valuation opportunity for those comfortable with the residual exposure.
OTE continued to solidify its market leadership in best-in-class networks. In fixed, FTTH footprint was further expanded to 1.7 million households and businesses. In mobile, they maintained competitive edge with 99% coverage of the 5G network, positioning as one of only three mobile networks globally certified as "Best in Test" for the 10th consecutive year. These achievements underscore commitment to delivering superior network performance and customer experience.
The phoenix metaphor is apt not because resurrection is mystical, but because it requires complete destruction of what came before. The bloated state monopoly OTE was—overstaffed, bureaucratic, technologically lagging—had to be dismantled for the modern OTE to emerge. That process caused real pain to real people. Thousands of workers accepted voluntary exit packages; many more saw their wages reduced. The social contract that had defined Greek public sector employment was fundamentally renegotiated.
What emerged serves customers better, generates returns for shareholders, and positions Greece for the digital economy. Whether that represents progress depends on one's perspective. What it indisputably represents is survival—and in the maelstrom Greece experienced from 2010 to 2018, survival itself was an accomplishment.
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