OTE says underlying performance improving

Greek group OTE, the biggest telecoms company in southeast Europe, said its underlying performance was improving, after reporting a big one-off gain from a disposal in Serbia had lifted quarterly profit above forecast.

"Our competitive drive, notably in mobile, led to the underlying improvement of OTE's performance in the quarter," chief executive Michael Tsamaz, appointed by 40% owner Deutsche Telekom to cut costs, said on Thursday.

The former Greek monopoly has been bleeding clients as austerity-hurt customers in Greece and Romania, its two biggest markets, switch to cheaper rivals.

But a policy of cutting wages without layoffs has started improving the picture. More recently, Greece's telecoms regulator on Wednesday allowed a 25% price cut in some OTE offers, which will make the company more competitive.

OTE said first-quarter net income was 307 mln euros ($396 mln), up from 30 mln in the 2011 period and compared with a forecast for 287 mln in a Reuters poll.

Adjusting for the sale of a 20% stake in Serbia's Telekom Srbija earlier this year and other items, profit rose 52% to 95.3 mln euros, it said.

Sales dropped 3.6% to 1.18 bln euros, compared with a forecast for 1.17 bln, for the slowest pace of decline in two years.

OTE shares were up 3.0%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 6.2% to 417.5 mln euros, above a 406 mln forecast.