Market Comment By Manos Chatzidakis - Beta SEC.

Market Comment 

By Manos Chatzidakis - Beta SEC.

Domestic market ended sharply higher yesterday after the strongest positive session since last June recording new intraday year highs (1.057) along with a significant increase in clean volumes (€168,4m). Investors followed the rally on other major exchanges while domestic optimism was fuelled by positive macro news and the confidence that the forthcoming capital raising from the three systemic banks will be successfully concluded. So far Alpha bank and Bank of Piraeus have announced that they have already secured the funds needed to achieve the 10% coverage of private participation while National Bank of Greece raised the initial target of the offer to avoid the issuance of CoCos. 

Positive momentum is still strong, technical signs are very bullish triggering a jump start in the opening. However we wouldn’t exclude some profit taking in the day due to the  significant double digit gains in the last two sessions.

¢           In the Spotlight

Banks: Bank of Greece data for March, published on Wednesday, are pointing to a steady decline in the level of interest rates for deposit accounts. The average interest rate for new time deposits lasting up to one year went down to 4.36 percent in March from 4.49 percent in February and 4.59 percent in January 2013.

HTO (Results 3M 2012 – Conference Call): OTE released yesterday Q1 results broadly in line with market expectations. Adverse economic conditions prevailing in Greece had a negative effect on operational results plus the full effect of the lower mobile termination costs in Greece, Romania and Bulgaria. However, a more dynamic sales policy (ADSL+31K, VDSL lines +20K, OTETV +70K) helped the group to partial offset the negative impact of lower fixed (-56K in Q1) and mobile revenues(-15%) in operating results in the first quarter of 2013. In specifics:

¡         Group revenues were down more than 11% in the first quarter of this year. Τermination rate cuts were far and away the major factor behind  this steep decline. Excluding the mobile termination cuts impact, OTE Group's  revenues would have declined by less than 7% in the quarter.

¡         Operating expenses, excluding amortization and extra charges, totaled 682 million euros in the first quarter from 761.8 million euros last year (down 10.6 pct), reflecting a 11.9 pct decline in payroll spending (- €30m). EBITDA margin was 35.4 pct, almost unchanged from a 35.5 pct in the same period last year.

¡         Fixed investments totaled 102.8 million euros, from 118.5 million euros last year.

¡         In Romania, fixed telephony revenues fell 9.2 pct in the first quarter, reflecting a 24-pct drop in wholesale revenues as a result of a reduction in end-call fees in the country.

¡         In the Greek mobile telephony market, a decline in Cosmote's revenues (€25m) in the first quarter reflected excessive reductions in end-call fees and intensifying competition in the market.

¡         In Albania, revenues were negatively affected by aggressive pricing policy in the country.

¡         Q1’13 net income was positively affected by a €65.7mn one-off after-tax capital gain from the sale of Hellas Sat, while in Q1’12 OTE had recorded a €211.3mn after-tax capital gain on the sale of Telekom Serbia stake. Furthermore, the re-measurement of the Group’s deferred tax position due to the rise in the nominal tax rate in Greece from 20% to 26% resulted to a €50mn positive impact on the quarter’s profitability.

¡         Regarding dividend the management said that dividend payments will start from 2014.

OTE	Results 3M 2013			Estimates 3M'13
In thous. euro	2012	2013	Δ	3M 13 E	Δ (Est)
Sales	1,180,200	1,045,400	-11.4%	1,050,000	-0.4%
EBITDA	417,500	368,000	-11.9%	371,000	-0.8%
(% Sales)	35.38%	35.20%	-17 bps	35.33%	-13 bps
Net Income	306,600	167,500	-45.4%	156,700	6.9%
(% Sales)	25.98%	16.02%	-996 bps	14.92%	+110 bps

Alpha Bank: Alpha Bank will release its First Quarter 2013 Results on Friday, 10th of May 2013, at 10:00 a.m. Athens Time. A conference call will follow before market open at 10:10

MIG: MIG announced the issuance of a tradable convertible bond with pre emption rights in favour of existing bond holders. There will be two tranches and the issuance will be up to 660m new shares with bonds nominal value of 1 euro.