Greece’s Telecom Market: A Reality Check (part I)

The Greek telecommunications market was liberated by EETT , the National Regulatory Authority in 2001 . Strong optimism on market’s prospects and the stock market prosperity of the time led many (far more than the local market could sustain) entrepreneurs to try their chances in telecommunications. Two years later, in 2003 the rumor had it that the time was up for the weaker (in a very subjective interpretation of the term) telecom operators to withdraw and clear the field for those with better business models and deeper pockets. And in fact, in 2003 three minor operators shutdown operations and anxiety for the next day inspired local press and marketing plans. Next year, the anticipation for a market clean-up remained high, yet, “expectations” didn’t materialize. And so happen the years after.

Since then, plenty of water ran under the bridge to get us where we are today. Recent market developments are truly significant and radically change the industry landscape. Year 2008 might eventually mark the greatest changes in the market since 2001. At least so far as it has been a full and exciting year of thunderous operations shutdown, bankruptcies, mergers and the advent of a new comer. This post is the first of a series of short reviews to elaborate on market structure changes in Greek telecommunications industry. Opinions and interpretations expressed here are my own alone. I’d welcome any comment or disagreement (or truth re-instament!) from you that would complement this and/or future posts.

Market Exits

Teledome was a strong telephony operator although relations with OTE never seemed to work out smoothly. OTE has blocked in the past the electronic circuits of the company due to overdue payments and only with EETT’s intervention did the re-instatement of the circuits become possible. In July 2007 Int racom Holdings had initially agreed to buy 100% shares of Teledome to merge its operations with Hellas Online and Unibrain. In November of the same year these plans were abandoned. Teledome was then preparing for an IPO. Early in 2008 OTE has once again stopped circuit services to Teledome. This time it was fo good and the company filled some time later for bankruptcy (chapter 99 of law 3588/07 – similar to the US’ Chapter 11). The debt of the company is estimated at around 20M euros the great majority of which is owned to OTE.

Lannet has been one of the most successful competitors to OTE in telephony services. Very soon, it lined up at the top of call minutes volume and revenues (at the great times of selection/preselection services). In recent years it acquired Columbia Telecom , the most successful VNO in Greece and merged with Telepassport, another operator with high telephony rankings. Especially the acquisition of Columbia marked a significant strategic advantage as in the long-term all customers of the acquired company could be taken from competition and transfered to Lannet’s network. However, Lannet has never performed well in broadband neither in unbundling business. Earlier this year OTE shutdown around 90% of the circuits that the company leased and hasn’t put them in operation ever since. October 30th (that is today), Lannet’s board of directors is in session to evaluate future actions but from the meeting’s agenda it is evident that efforts currently concentrate on saving as much financial assets of the company as possible without considering operations issues.

Altec Telecoms was the greatest bust of the year for many reasons. First, it was part of a well connected Group of Companies with almost two decades of presence in IT and Telecommunications industry (and Media earlier this decade). Second, the company was about to implement an ambitious marketing plan, high rank senior executives have been hired from the competition and according to the company’s executives plans to secure additional funding were closing to a successful end. Third, Altec Telecoms served zone 1 of ” SYZEFXIS ” project. “SYZEFXIS” is a project of Greek Ministry of the Interior, Public Administration and Decentralization, which aims at the development and updating of Public Sector’s telecom infrastructure. It’s about a core and access network for the Public Sector’s organizations aiming to satisfy all their needs for electronic communication. Zone 1 was considered le fillet of the project covering all major governmental buildings and services in the greater Athens metropolitan area. Altec Telecoms filled for bankruptcy on the 17th of October . This enabled runner-up (Hellas Online) for zone 1 of SYZEFXIS project to take in charge. (Note: after the circuits freeze by OTE and until the 17th of October fixed telephony and broadband services in ALL ministries and administration authorities was literally a joke! Public servants can now again pick up their handset and get a dial tone!).

UPDATE: Follow up the review in Part II and Part III.