Price war takes toll on telco firms
The price war that is raging between the country’s alternative telecom providers is costing the sector heavily, with growing competitiveness taking its toll on company balance sheets. Data show that in 2007, telecom companies are estimated to have incurred losses of more than 200 million euros while liabilities reached 900 million euros. The companies have been spending big to promote their services as they plow more money into infrastructure. «Every time an offer takes place, it is like we are shooting ourselves in the foot,» said a senior industry source. Recent promotions that have taken place include offers made by On Telecoms – a company that reported earnings of 10 million euros in its first year of operations as well as a loss of 23 million euros. On Telecoms recently offered new customers who sign up for any package by the end of September three months free of charge. Other offers have come from Hellas Online (HOL) which is tempting customers by offering unlimited local and long-distance calls along with free calls to 26 countries for 19.90 euros per month. Sources say sector participants can only stay afloat by attracting a growing customer base. Poor financial results, however, have started to have an impact on company valuations and share performance. Shares in Lannet are no longer traded on the Athens bourse, while companies such as HOL have lost almost 50 percent of their market valuation in less than three months. Meanwhile, the valuation of Forthnet, the first company to provide Internet services in Greece, has fallen below the value of its recent Nova acquisition. «Small businesses have become addicted to communications and want credible solutions so they do not hesitate to pay a premium charged by OTE in order to have peace of mind,» the sources added. Former state monopoly OTE continues to dominate the telecoms landscape with revenues from fast Internet and mobile phone operations supporting its growth rates.
