Hellenic Telecom.Organization S.A. Net Income dropped on 43.2% in 2015 and Revenue showed almost no change
25 Feb 2016 • About Hellenic Telecom.Organization S.A. (
$OTES) • By InTwits
Hellenic Telecom.Organization S.A. reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hellenic Telecom.Organization S.A. has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.6%. At the same time it's in pair with industry average of 12.4%.
- CAPEX is quite volatile: 1,167 in 2015, 715 in 2014, 1,026 in 2013, 642 in 2012, 450 in 2011
- The company has business model with low profitability: ROIC is at 7.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hellenic Telecom.Organization S.A. ($OTES) key annual financial indicators
| mln. € | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,038 | 4,360 | 4,096 | 3,918 | 3,903 | -0.4% |
| SG&A | 511 | 913 | 841 | 841 | 852 | 1.4% |
| EBITDA | 1,663 | 1,393 | 1,178 | 1,386 | 1,221 | -11.9% |
| Net Income | 120 | 472 | 317 | 267 | 152 | -43.2% |
Balance Sheet
|
|---|
| Cash | 683 | 1,162 | 1,444 | 1,510 | 1,323 | -12.4% |
| Short Term Debt | 763 | 1,416 | 400 | 465 | 434 | -6.9% |
| Long Term Debt | 4,139 | 2,635 | 2,557 | 2,173 | 1,756 | -19.2% |
Cash flow
|
|---|
| Capex | 717 | 508 | 605 | 604 | 658 | 9.0% |
Ratios
|
|---|
| Revenue growth | -8.1% | -13.5% | -6.0% | -4.3% | -0.4% | |
| EBITDA growth | -4.9% | -16.2% | -15.4% | 17.6% | -11.9% | |
| EBITDA Margin | 33.0% | 32.0% | 28.8% | 35.4% | 31.3% | -4.1% |
| Net Income Margin | 2.4% | 10.8% | 7.7% | 6.8% | 3.9% | -2.9% |
| SG&A, % of revenue | 10.1% | 20.9% | 20.5% | 21.5% | 21.8% | 0.4% |
| CAPEX, % of revenue | 14.2% | 11.7% | 14.8% | 15.4% | 16.9% | 1.5% |
| ROIC | 4.8% | 8.2% | 5.4% | 10.4% | 7.1% | -3.3% |
| ROE | 9.6% | 31.6% | 18.0% | 13.2% | 6.9% | -6.3% |
| Net Debt/EBITDA | 2.5x | 2.1x | 1.3x | 0.8x | 0.7x | -0.1x |
Revenue and profitability
Hellenic Telecom.Organization S.A.'s Revenue showed almost no change in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.1 pp from 35.4% to 31.3% in 2015.
SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased on 2.9 pp from 6.8% to 3.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 16.9% in 2015. CAPEX/Revenue increased on 5.2 pp from 11.7% in 2012 to 16.9% in 2015. Average CAPEX/Revenue for the last three years was 15.7%.Battling declining revenue the company invested a large share of EBITDA (53.9%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (7.10%) and ROE (6.94%). ROIC decreased on 3.3 pp from 10.4% to 7.1% in 2015. ROE decreased on 6.3 pp from 13.2% to 6.9% in 2015.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 1.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 0.8x to 0.7x in 2015. Debt dropped on 17.0% in 2015 while cash dropped on 12.4% in 2015.
Valuation
Hellenic Telecom.Organization S.A.'s trades at EV/EBITDA 0.7x and P/E 0.3x while industy averages are 10.5x and 26.1x. Hellenic Telecom.Organization S.A.'s EV/(EBITDA-CAPEX) is 1.6x with the industry average at 4.7x.
Appendix 1: Peers in Fixed Line Telecommunications
Below you can find Hellenic Telecom.Organization S.A. benchmarking vs. other companies in Fixed Line Telecommunications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Syqic ($SYQ) | 190.6% | 37.6% | 20.5% | 126.5% | |
| Alternative Networks ($AN.) | | -2.1% | -0.4% | 17.5% | 9.2% |
| Telecom Egypt ($TEEG) | -3.4% | 1.6% | 11.0% | 9.2% | |
| Verizon Communications Inc ($VZC) | | 4.5% | 4.1% | 5.4% | 3.6% |
| Rostelekom ($RKMD) | 7.4% | -0.2% | -1.6% | 2.8% | |
| |
|---|
| Median (13 companies) | 7.4% | -0.8% | -1.6% | -0.8% | -0.8% |
|---|
| Hellenic Telecom.Organization S.A. ($OTES) | | -13.5% | -6.0% | -4.3% | -0.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kt Corp ($KTCD) | 81.6% | 75.5% | 76.0% | 77.9% | 77.9% |
| Verizon Communications Inc ($VZC) | 58.6% | 60.1% | 62.8% | 60.7% | 60.1% |
| Telecom Egypt ($TEEG) | 45.0% | 41.4% | 41.9% | 44.2% | |
| Syqic ($SYQ) | 59.6% | 57.3% | 59.9% | 43.6% | |
| Alternative Networks ($AN.) | 38.1% | 39.0% | 39.2% | 41.2% | 41.3% |
| |
|---|
| Median (6 companies) | 51.8% | 49.4% | 50.9% | 43.9% | 50.7% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| O2 Czech Republic As ($O2CZ) | 41.6% | 39.1% | 38.6% | 41.0% | 29.9% |
| Koninklijke Kpn Nv ($0O8F) | 39.5% | 35.9% | 34.1% | 39.1% | 33.2% |
| Ooredoo Qsc ($ORDS) | 45.9% | 46.0% | 42.4% | 37.6% | |
| Orange Polska Sa ($OPLD) | 39.2% | 34.3% | 30.1% | 33.2% | 29.1% |
| Rostelekom ($RKMD) | 40.8% | 39.7% | 39.0% | 33.0% | |
| |
|---|
| Median (13 companies) | 32.2% | 34.0% | 33.1% | 31.7% | 29.5% |
|---|
| Hellenic Telecom.Organization S.A. ($OTES) | 33.0% | 32.0% | 28.8% | 35.4% | 31.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ooredoo Qsc ($ORDS) | 20.7% | 21.9% | 27.5% | 25.3% | |
| Rostelekom ($RKMD) | 28.0% | 31.7% | 23.6% | 19.3% | |
| Telefonica Sa ($TDE) | 14.5% | 15.2% | 17.0% | 19.1% | |
| Orange Polska Sa ($OPLD) | 17.5% | 16.6% | 16.9% | 17.6% | 16.9% |
| Verizon Communications Inc ($VZC) | 14.7% | 14.0% | 13.8% | 13.5% | 13.5% |
| |
|---|
| Median (13 companies) | 13.2% | 13.6% | 13.7% | 12.9% | 13.5% |
|---|
| Hellenic Telecom.Organization S.A. ($OTES) | 14.2% | 11.7% | 14.8% | 15.4% | 16.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| BT Group ($BT.A) | 23.3% | 23.6% | 27.0% | 34.7% | 37.5% |
| Syqic ($SYQ) | 64.3% | 38.9% | 3.2% | 33.9% | |
| Alternative Networks ($AN.) | 36.7% | 35.2% | 33.7% | 28.5% | 20.2% |
| Adept Telecom ($ADT) | 11.9% | 11.6% | 15.5% | 13.2% | 14.3% |
| Verizon Communications Inc ($VZC) | 7.8% | 8.0% | 16.7% | 10.1% | 19.3% |
| |
|---|
| Median (13 companies) | 11.9% | 11.2% | 9.7% | 7.7% | 14.4% |
|---|
| Hellenic Telecom.Organization S.A. ($OTES) | 4.8% | 8.2% | 5.4% | 10.4% | 7.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telefonica Sa ($TDE) | 3.0x | 2.5x | 2.5x | 3.6x | |
| Kt Corp ($KTCD) | 2.0x | 2.1x | 2.1x | 3.1x | 1.3x |
| Koninklijke Kpn Nv ($0O8F) | 2.4x | 3.8x | 3.4x | 3.0x | 3.6x |
| Verizon Communications Inc ($VZC) | 1.4x | 1.7x | 0.8x | 2.8x | 2.1x |
| Ooredoo Qsc ($ORDS) | 1.7x | 1.6x | 1.7x | 2.0x | |
| |
|---|
| Median (13 companies) | 1.4x | 1.6x | 1.1x | 1.6x | 1.2x |
|---|
| Hellenic Telecom.Organization S.A. ($OTES) | 2.5x | 2.1x | 1.3x | 0.8x | 0.7x |
