Annual Report 2002

Transcription

Annual Report 2002

Annual Report
2002
44, Kifissias Ave., 151 25 Maroussi, Athens, GR
www.cosmote.gr
GRAND SPONSOR
Dear Shareholders,
We have entered a new era marked by swift technological developments and the full liberalisation of the telecommunications
market both on a national as well as on an international scale. Therefore it is vital for COSMOTE and the OTE Group as a whole to
sustain an ongoing growth track.
Being the key growth and profitability driver of the OTE Group, COSMOTE aims to become one of the best five mobile operators
in Europe. COSMOTE’s market share, quality of customer base, high rates of growth, technological innovation – which often
surpasses that of its European peers – the quality witnessed on all operational fronts and its dedication towards its customers and
employees are some of the factors that define COSMOTE’s leading market position and justify the trust shown by its shareholders.
For 2003, the OTE Group aims to sustain its leading position in the Greek market, continue offering high quality services to its
customers and reinforce its international presence through solid improvement of its existing investments’ financial performance.
To this end COSMOTE’s contribution will be of great importance.
I am positive that during this year, COSMOTE will come even closer to achieving its goal to become one of the best five mobile
operators in Europe. A great challenge lies ahead but surely feasible from the Group’s largest subsidiary. The OTE Group will
support COSMOTE in realising this vision.
Lefteris Antonacopoulos
Chairman of the Board of Directors
Dear shareholders
2002 has been yet another significant year for COSMOTE, during which our company has reinforced its leading position in the
Greek mobile market, achieved a strong financial performance and took up significant activities abroad.
COSMOTE’s accomplishments, as recorded by international and domestic investment institutions, the media and most importantly
as perceived by the general public, are a result of a structured strategy and intensive collective effort.
I consider the following to be the key milestones for COSMOTE during 2002:
± The significant growth rates achieved that were once again well above the respective European averages. The continual
enhancement of profitability, the impressive EBITDA margin and the substantial improvements of all key performance indicators
± The further improvement of the Company’s market share and the enhancement of its lead against competition. In addition, the
quality of our customer base as proven by the Company’s key ratios, the low levels of churn, the fact that COSMOTE sustained
the majority of total prepaid net additions and its leading position in the contract segment
± The assumption of the management of OTE’s mobile assets in Bulgaria and FYROM that proves OTE Group’s confidence in
COSMOTE and its expertise in successfully managing such ventures is the first step towards the creation of synergies among the
Group.
± The acquisition of the LMDS licence that allows the Company to offer integrated services to its corporate customers, the full
exploitation of its GPRS network with the commercial launch of MMS, along with the acquisition of the extra 900 MHz
spectrum, are all very significant corporate decisions taken with the aim to enhance the Company's revenue streams.
± In addition, the new tariff policy that was introduced in conjunction with the changes in the interconnection regime in Greece,
demonstrate COSMOTE’s ability to indentify market needs and effectively respond to the challenges that surface in the
continually evolving environment that it operates in.
± Finally, in 2002, COSMOTE exploited the opportunities that arise from its 2004 Olympic Games sponsorship, further improved
its telecommunications network, strengthened its corporate image and continued its Corporate Social Responsibility Programme,
by pro-actively participating in various social and environmental activities both in Greece and abroad.
Dear Shareholders,
Following the conclusion of a series of important accomplishments during 2002, COSMOTE now enters an era signified by new
challenges on all fronts, an era during which all of us, together as a team will work hard to cater for the needs of our employees,
our customers and our shareholders.
Evangelos Martigopoulos
Managing Director
1
SELECTED COSNOLIDATED FINANCIAL DATA
Euro, Million
Amounts in:
(except share and per share data)
INCOME STATEMENT DATA
Total operating revenues
2002
1,201.3
Total cost of sales and services provided
322.7
488.2
Gross profit
604.2
713.0
Operating income
300.1
380.6
Income before provision for income taxes and minority interests
292.0
361.7
Income before minority interest
179.8
235.3
Net income
174.1
229.3
0.53
0.69
330,000,000
330,047,910
BALANCE SHEET DATA
2001
2002
Current assets
219.3
229.5
3.2
7.9
Net income per share
Weighted average number of shares outstanding
Non-current assets
Fixed assets/license, net
946.1
1,073.8
1,238.4
1,380.9
Current liabilities
665.6
277.7
Long-Term Debt
0.0
333.6
45.3
70.3
Total Assets
Other long-term liabilities
Minority interests
13.3
16.9
Share capital
155.1
155.1
Paid in surplus
156.2
153.6
Retained earnings
Total Liabilities and Shareholders Equity
191.2
360.8
1,238.4
1,380.9
CASH FLOW DATA
2001
2002
Net cash provided by operating activities
356.8
319.7
Net cash used in investing activities
2
2001
926.9
(531.0)
(260.4)
Net cash provided by/ (used in) financing activities
144.5
(57.9)
Net increase/(decrease) in cash
(28.6)
(15.3)
Cash at beginning of year
60.0
31.3
Cash at the end of year
31.4
16.1
The key milestones
in the Company’s evolution
April 1998
COSMOTE commences commercial operations
December 1998
Launch of COSMOKARTA prepaid service. The Company's customer base reaches 300,000
representing an estimated 14.5% market share.
1st quarter 1999
COSMOTE is net income and EBITDA positive, after less than one year from the beginning of
its commercial operations.
November 1999
Network coverage reaches 97% of the Greek population.
December 1999
The Company's customer base reaches 1 million.
1st quarter 2000
COSMOTE has the largest number of contract subscribers among the three mobile operators
in Greece. Since then the Company has maintained leadership in the contract market
segment.
August 2000
The Company expands its operations abroad with the acquisition of 85% of the Albanian
Mobile Communications company (through its 97% owned subsidiary COSMO-HOLDING
ALBANIA).
September 2000
Launch of "MyCosmos" mobile portal, an umbrella of value-added services.
October 2000
Listing of the Company’s shares on the Athens and London Stock Exchanges.
February 2001
The Company through a consortium between COSMOTE-OTE-√∆∂net, is declared as Grand
National Sponsor of the Olympic Games "ATHENS 2004" in the telecommunications sector.
1st quarter 2001
Nation-wide installation of GPRS network and commercial launch of GPRS services.
May 2001
Launch of the new prepaid product ‘WHAT’S UP?’ and offering of CHAT services to all
customers.
June 2001
COSMOTE becomes the market leader in the Greek market and its customer base exceeds
2.52 million, with an estimated market share of approximately 36.5%. Launch of unique
Voice portal services under "MyCosmos" (based on voice recognition technology).
July 2001
COSMOTE was granted a Special License for UMTS.
December 2001
The Company's customer base reaches 2.95 million, with a market share of approximately
37%. AMC’s customer base exceeds 273 thousands.
February 2002
Transfer to COSMOTE of OTE’s Fixed Wireless Access license (LMDS) at 25 GHz.
July 2002
COSMOTE is awarded GSM 900 spectrum (2x5 MHz) and becomes a dual band operator.
COSMOTE lowers interconnection rates for fixed line calls terminating on its network.
September 2002
The Company launched commercially an integrated MMS offering.
October 2002
COSMOTE assumes management of OTE's mobile assets Globul and MTS.
December 2002
The Company's customer base reaches 3.51 million (with a market share of 37.6%, 3
percentage points ahead of the 2nd operator). AMC's customer base exceeds 501 thousands,
with a market share of approximately 59%.
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Contents
Chapter 1.
Information on Drafting of the Annual Report and the Auditors of the Company ................ 6
Chapter 2.
General Information on COSMOTE .......................................................................................... 10
2.1 Overview of the Company ..................................................................................................... 12
2.2 Telecommunication Licenses ................................................................................................. 13
2.3 New EU Telecommunications Regulatory Framework............................................................ 16
2.4 Share Capital .......................................................................................................................... 18
2.5 Share price performance ........................................................................................................ 20
2.6 Shareholders .......................................................................................................................... 23
2.6.1 Shareholders Agreement............................................................................................... 24
2.6.2 OTE Group .................................................................................................................... 24
Chapter 3.
Business of COSMOTE................................................................................................................ 28
3.1 Services and Products............................................................................................................. 30
3.1.1 Contract Services .......................................................................................................... 30
3.1.2 Prepaid Services ............................................................................................................ 32
3.1.3 Value Added Services .................................................................................................... 33
3.1.4 MyCosmos (mobile portal) ........................................................................................... 34
3.1.5 Other Services ............................................................................................................... 35
3.2 International Roaming............................................................................................................ 36
3.3 Customers .............................................................................................................................. 37
3.4 Churn .................................................................................................................................... 38
3.5 Distribution network .............................................................................................................. 38
3.6 Corporate communication..................................................................................................... 40
3.7 Telecommunications network ................................................................................................ 41
3.8 Commercial Agreements........................................................................................................ 42
3.9 Property ................................................................................................................................. 47
3.10 Employees ............................................................................................................................ 49
Chapter 4.
Management ............................................................................................................................. 50
4.1 Organisation chart ................................................................................................................. 52
4.2 Board of Directors .................................................................................................................. 53
4.3 Corporate Governance – Audit Committee............................................................................ 56
4.4 Management Share Option Plan............................................................................................ 57
4
Chapter 5.
Summary Discussion and Analysis of Financial Condition and Results of Operations .......... 60
5.1 Financial Review ..................................................................................................................... 62
5.1.1 Summary Consolidated Financial Results ...................................................................... 62
5.1.2 Summary Stand Alone Albanian Mobile Communications Results................................ 64
5.2 Operating Review................................................................................................................... 66
5.2.1 COSMOTE (Greece) ..................................................................................................... 66
5.2.2 Greek Cellular Market ................................................................................................... 68
5.3 Capital Expenditure Plan ........................................................................................................ 68
Chapter 6.
COSMOTE Group of Companies ............................................................................................... 70
6.1 COSMO – HOLDING ALBANIA .............................................................................................. 72
6.2 ALBANIAN MOBILE COMMUNICATIONS SH.A .................................................................... 73
6.3 CosmoONE HELLAS MARKET SITE ......................................................................................... 75
6.4 COSMO – MEGALA KATASTIMATA S.A. ............................................................................... 77
Chapter 7.
COSMOTE and Social Responsibility ......................................................................................... 80
Chapter 8.
Quality in COSMOTE .................................................................................................................. 88
Chapter 9.
The "ATHENS 2004" Olympic Sponsorship ............................................................................... 92
Chapter 10.
Strategy and Prospects .............................................................................................................. 96
Financial Report
5
CHAPTER 1
Information on Drafting
of the Annual Report
and the Auditors of the Company
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COSMOTE is the leader
in the Greek mobile market.
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10
Information on Drafting of the Annual Report
General Information on COSMOTE
Business of COSMOTE
Management
Summary Discussion and Analysis
of Financial Condition and Results of Operations
COSMOTE Group of Companies
COSMOTE and Social Responsibility
Quality in COSMOTE
The “ATHENS 2004” Olympic Sponsorship
Strategy and Prospects
1. The drafting and the disposal of the present Annual
2. With respect to Judicial and other Legal proceedings:
Report is in accordance with the provisions of decision
5/204/14.11.2000 of the Greek Capital Markets
± There are 2 pending applications before NTPC (National
Commission Board of Directors, governing all Greek listed
Telecommunications and Post Committee) from STET
companies and the respective UK Listing Authorities
Hellas and VODAFONE respectively, for the resolution
provisions governing GDRs
through NTPC’s arbitration of disputes related to
interconnection charges as from 26.01.2003 as far as
STET Hellas is concerned and as from 01.02.2003 as far
as VODAFONE is concerned.
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± The Company is a party to judicial and administrative
3. Finally the Company's financial accounts, are prepared
disputes, the majority of which concern the operation of
in accordance with the US Generally Accepted Accounting
base stations. These disputes arose during the current
Principles (US GAAP), and have been audited by ERNST &
financial year. The Company does not expect that the
YOUNG.
outcome of the above disputes will have a negative
impact on its financial situation and its results.
± The Company has filed an application of annulment
before the Council of State against the resolution of
NTPC number 257/72B/07.02.2003, pursuant to which
the Company was nominated as Organisation with
Significant Market Power (SPM) in the interconnection
market.
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CHAPTER 2
General Information
on COSMOTE
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Innovation, drive and dedication
are the qualities that sustain
COSMOTE in its leading position.
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Business of COSMOTE
Management
Quality in COSMOTE
2.1 Overview of the Company
6. to acquire property or rights of use or exploitation
"COSMOTE" was incorporated under Law 2190/1920 on
through purchase, lease or in any other way whatsoever
October 1996 under the name "Cellular Operating System
and the right to dispose or impose charges on (i)
of Mobile Telecommunications S.A.", by the Hellenic
telecommunication services and (ii) mobile or fixed assets
Telecommunications Organisation S.A. (OTE S.A.) with a
or other rights, regardless of their location,
percentage of 99.99% and the Hellenic Advisory
7. the representation in Greece and abroad of, similar to
Telecommunications and Postal Organisation S.A.
the systems, products and services,
(E.S.T.T.O) with a percentage of 0.01%. Its registered
8. the design, development, production and sale, and in
office is located at the municipality of Athens, (15, Stadiou
any other way disposition of electronic commerce
Street, GR 105 61), and its central administration is in
applications. The provision of electronic commerce
Maroussi, (44, Kifissias Avenue, GR 151 25). The Company
services and any other activity related to electronic
is registered at the Register for Société Anonymes of the
commerce,
prefecture of Athens, in Greece under number
9. to supply, distribute and sell all kinds of products which
36581/06/B/96/102 and has a duration of fifty years.
will advertise and promote the 2004 Olympic Games and
the products and services of the Company.
The Company was renamed "COSMOTE Mobile
10. the management and business administration of legal
Telecommunications S.A.", following the resolution of the
entities of any type, which act in the field of mobile
Annual General Meeting that was held on the 2nd June
communications in Greece or abroad.
1999. The Company uses the brand name "COSMOTE".
11. the provision of consulting and training services,
concerning the planning, installation and operation of
The objects of the Company according to article 4 of its
telecommunication systems as well as consulting and
Articles of Association are as follows:
training services concerning the management and
1. to install, operate, maintain, exploit, manage and
business administration of legal entities of any type, which
develop mobile telephone systems and mobile and
act in the field of mobile communications in Greece or
wireless telecommunication systems of any nature,
abroad.
hereinafter referred to as "systems", at local national and
12. the provision, to legal entities of any type which act in
international level,
the field of mobile communications in Greece or abroad,
2. to supply and distribute equipment used in Greece or
of services with respect to their operations.
abroad in connection with those systems,
13. the production and exploitation of software developed
3. to design, develop, produce, supply, use, sale, rental,
by the Company with respect to the telecommunications.
lease and maintain telecommunication-equipment systems
and undertake any activity related to mobile
The Company’s objects also include undertaking any
telecommunications,
activity related to wireless, mobile and personal
4. to install and operate units for the support of the
communications, including activities in the fields of
"systems" in Greece or abroad,
electronics and data processing in general.
5. to develop, exploit, manage and offer mobile phone
services and related added value services in Greece or
abroad through the "systems",
12
For the attainment of its objects, the Company can:
± Incur contracts of any nature or agreements with
individuals or legal entities, organizations, state – owned
companies, states or international organizations,
± Establish companies of any kind or participate in
companies or syndicates of companies in Greece or
abroad, which have the same or similar objects or
promote in any way the objects of the Company,
± Establish branches, agencies, representative offices,
anywhere in Greece or abroad,
± Represent firms, domestic or foreign, in connection to its
objects,
± Provide technical or consulting operations to individuals
2004 Olympic Games and the products and services of the
Company.
or legal entities in Greece or abroad,
± Professionally train personnel for their employment in
Finally, after the resolution of the Shareholders'
the Company or its subsidiaries and affiliates and provide
Extraordinary General Meeting on 31.10.2002, the
working or scientific or training personnel to third
Company’s objects were also modified with the addition
parties,
of paragraphs 10, 11,12 and 13.
± Sign loans for own use, accept personal or other
guarantees, undertake obligations, issue bills of
The objects of the Company fall within the field of
exchange, bonds or other titles on behalf of the
"Telecommunications" under the code number 624.0,
Company,
pursuant to the classification of the financial activities
± Undertake every similar commercial or any other kind of
activity and perform every material act or legal act
(STACOD 91) of the National Statistical Service of Greece
(ESYE).
directly or indirectly related to the objects of the
Company or aiming directly or indirectly to the
2.2 Telecommunication Licenses
fulfilment of the Company’s objects.
The Company's provision of telecommunications services
within Greece is currently governed by the terms of Law
The Company’s objects were modified after the resolution
2867/2000 (the "Telecommunications Law") which
of the Shareholders General Meeting on 31.7.2000, with
replaced the previous Law 2246/94 and by presidential
the addition of paragraph 8 regarding electronic
decrees, ministerial resolutions and resolutions of the
commerce applications.
National Telecommunications and Postal Commission (the
‘NTPC’) which implement the Telecommunications Law
Furthermore, after the resolution of the Shareholders
and harmonise Greek Law with applicable EU
Extraordinary General Meeting on 21.2.2002, the
Telecommunications Law. The Company operates in
Company’s objects were also modified, with the addition
accordance with the conditions stipulated in its Licenses
of paragraph 9 for the supply, distribution and sale of all
and, in this respect, is supervised by the NTPC, that is
kinds of products which will advertise and promote the
responsible for the regulation and supervision of the
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Business of COSMOTE
Management
Quality in COSMOTE
telecommunications market. The Ministry of Transport and
COSMOTE holds the following Telecommunication
Communications (the "Ministry") is responsible for
Licenses:
establishing the telecommunications policy, promulgating
I. Special License for Second Generation Mobile
regulation and initiating legislation.
Communications (2G)-Additional RadioFrequency
Spectrum EGSM
According to the Telecommunications Law, the General
(SPECIAL LICENSE FOR THE INSTALLATION, OPERATION
Licenses Regulation and the Special Licenses Regulation,
AND EXPLOITATION OF A PUBLIC
telecommunication activities in Greece may be exercised
TELECOMMUNICATION NETWORK OF 2ND
under a regime of General or Special Licenses, depending
GENERATION MOBILE COMMUNICATIONS AND THE
on the activity. General Licenses are obtained after the
PROVISION OF 2ND GENERATION PUBLIC MOBILE
lapse of 15 days from the submission to the NTPC of
COMMUNICATION SERVICES)
Declaration of Registration. Special Licenses are issued by
the NTPC according to a specific procedure, described in
COSMOTE provides mobile telecommunications services
the Telecommunications Law and the Special Licenses
in Greece in the 1800 MHz frequency band, according to
Regulation. Special Licenses concern: a) the installation of
the terms of its 2G License. The 2G License was initially
telecommunications networks with particular rights with
granted to OTE as follows: OTE was authorised by Article
regard to access to public or private land and b)
14 of Presidential Decree 437/1995 to develop and
telecommunication services which require the use of
provide mobile telecommunications services in Greece,
scarce Resources, such as radio frequencies, positions in
including personal communications services through the
synchronous orbit and numbers from the National
technology GSM 1800. The Ministry issued resolution
Numbering Plan.
92093/1995, which granted OTE the right to use the
frequency bands 1760-1785 MHz and 1855-1880 MHz.
The Special Licenses may not be transferred without the
OTE's right to develop and provide personal
prior consent of the NTPC. In addition, any rental or co-
communications services using GSM 1800 technology,
exploitation of a Special License or change in the share
was transferred to COSMOTE pursuant to Law 2465/97 by
capital structure of a holder of a Special License, which
way of a contribution in kind by OTE, valued at GRD
could result in a direct or indirect change of its control, is
16,346,823,305, as approved by the General Meeting of
prohibited without the prior consent of the NTPC. Also,
the shareholders of the Company. The 2G License has a
any transfer of shares, –through one or more transactions,
duration of 25 years starting from November 29, 1995
which in aggregate represents more than 2% of the paid
and can be renewed following a resolution of the NTPC.
in share capital of the holder of Special License, must be
notified to the NTPC within 15 days of its realisation.
In December 2001 the NTPC harmonised all 2nd
Generation Special Licenses. In this respect its resolution
number 240/1/28.12.2001 was issued in connection with
COSMOTE’s 2G License.
14
In August 2002, following a tender of the NTPC for the
GRD), 70% of which was paid at the time of the award of
award of EGSM RadioFrequency Spectrum for the
the License, while the remaining 30% will be paid in three
provision of 2nd Generation Public Mobile
annual equal instalments starting from December 2005.
Communication Services, the Company was granted for a
The 3rd Generation Special License has duration of twenty
period of 15 years 2x5 MHz at the EGSM band (885-890
years starting from the 6th of August 2001 (until the 5th
MHz and 930-935 MHz), (NTPC resolution number
of August 2021) and can be renewed by an NTPC
261/138/28.8.2002).
resolution. According to the 3rd Generation Special
License, the Company has the responsibility to provide:
After, the award of the above additional EGSM Spectrum
a) at least 25% coverage of the population of Greece until
to the Company, the aforementioned resolution of NTPC
December 2003,
under the number 240/1/2001 in connection with the
b) coverage of the Olympic Games facilities and all the
Company's 2G License was amended. The total price of
areas where respective activities will take place within
acquiring the additional EGSM Spectrum amounted to
Attica, as well as the main road arteries that lead to the
38,160,591.00 euro, which was paid at the time of the
above areas that are located within Attica until June 2004
award of the Spectrum.
and
c) at least 50% coverage of the population of Greece until
II. Special License for Third Generation Mobile
December 2006.
Communications (3G or UMTS)
The above requirements need to be achieved for packet
switched services at a transmission rate in natural level of
at least 144kbps for the downlink and 64kbps for the up-
TELECOMMUNICATIONS NETWORK OF 3RD
link.
GENERATION MOBILE COMMUNICATIONS AND THE
PROVISION OF 3RD GENERATION PUBLIC MOBILE
III. Fixed Wireless Access Special License (LMDS)
COMMUNICATION SERVICES)
In August 2001, following a tender of the NTPC for the
TELECOMMUNICATIONS NETWORK OF FIXED WIRELESS
granting of 2nd and 3rd generation licenses, the
ACCESS AND THE PROVISION OF PUBLIC FIXED
Company was granted, pursuant to the NTPC resolution
TELEPHONY SERVICES)
number 226/1/6.8.2001, a 3rd Generation Special
License. In this respect, the Company was assigned for
In May 2002 the NTPC authorised, under its
exclusive use 2 Ã 15 MHz paired spectrum and 2 Ã 5 MHz
248/65/15.3.2002 resolution, the transfer of OTE’s 25GHz
non-paired spectrum. Specifically the following radio
Fixed Wireless Access Special License to COSMOTE. As a
frequency sections were assigned to COSMOTE 1950.3 –
result the Company was assigned a radio frequency
1965.3 MHz, 2140.3 – 2155.3 MHz and 1905.1 – 1910.1
section of 24969 – 25025 MHz and 25977 – 26033 MHz1.
MHz. The total price for acquiring the 3rd Generation
The price that the Company paid to OTE for the transfer of
Special License amounted to euro 161,408,657 (55 billion
the above Special License amounts to euro 9,535,000 and
1. √∆∂ maintained its 3.5 GHz Fixed Wireless Access License.
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Management
Quality in COSMOTE
includes the goodwill that in the meantime had resulted
spots) Nationwide. The Company aims to provide to the
for OTE since December 2000 (payment date of this
users of this network, access to the Internet, and to their
Special License). This transfer was approved by
corporate networks. Furthermore, the Company aims its
COSMOTE’s Extraordinary General Meeting, which was
customers to be able to use all the already provided
held on 21st of February 2002. This General Meeting also
services for data transfer (GPRS, GSM, and data). Such Hot
approved the transfer to the Company of fixed assets that
Spots are conventions centres, hotels, airports, Public
had already been obtained by OTE for the exploitation of
places (restaurants, cafe e.t.c.),
the Special License, at a total amount of euro 5.6 million.
V. General Licenses
The Fixed Wireless Access Special License lasts until the 10th
The Company also holds General Licenses for the exercise
of December 2015 and, according to existing legislation, it
of the following telecommunication activities:
can be renewed by an NTPC resolution. According to the
± Capacity Leasing and Virtual Private Network (VPN)
Fixed Wireless Access Special License, the Company
services (Class A0201 and ∞0202)
undertakes the responsibility to install, operate, maintain
± Data transmission services (Class ∞03)
and use the necessary equipment so that it can provide
± E – mail (Class ∞0401)
radio coverage at least to the 20% of the population of
± Network operation for Closed User Groups, including
Greece by December 2002, as well as fulfil any request
the provision of general telecommunication services and
made by users for the provision of Fixed Public Telephone
voice transmission (Class ∞0602)
Services and the provision of Broadband Network Services.
± Network access services (Class ∞0604)
± Internet access services (Class ∞0701)
IV. Special License for Wireless Lan Services (W-Lan)
± Voice telephony services, via, in whole or in part, a
πn October 2002, following an application of the
network infrastructure, whose holder has the ownership or
Company to NTPC, according to the Special Licenses
management of the network without assignment of
Regulation, the Company was granted pursuant to the
numbers from the National Numbering Plan (Class ∞1001)
NTPC resolution number 271/18/30.10.2002, a Special
± Audiotex (Class ∞1102)
License for the use of spectrum zone 2.4 GHz and the
Services. According to the above Special License the
2.3 New EU Telecommunications Regulatory
Framework
Company has the right to provide W-Lan Public Mobile
The international framework for telecommunications has
Communications Services to public places (hot spots) with
rapidly evolved during the last few years. In this respect,
data transmission equipment operating in the 2.4 GHz
the European Parliament and Council have issued a set of
band and spread spectrum techniques, fully compliant to
four new directives, and one decision that were published
ETSI EN 300 328 technical standard. This Special License
in the Official Gazette of the European Union on the 24th
has a duration of 15 years and can be renewed pursuant
of April 2002 and must be conveyed to the National
to a resolution of NTPC.
Legislation of State Members until the 24th of July 2003,
provision of W-Lan Public Mobile Communications
replacing existing telecommunication directives. These are:
16
According to the above Special License, the Company may
a) Directive 2002/19/EC «on access to and
develop Local High Speed Wireless Access Networks (hot
interconnection of electronic communications networks
and associated facilities» (Access Directive),
market of products and services isn’t effectively
b) Directive 2002/20/EC «on the authorisation of
competitive within a specific geographic area, it shall
electronic communications network and services»
identify undertakings with significant market power on
(Authorisation Directive),
that market and shall impose on such undertakings
c) Directive 2002/21/EC «on a common regulatory
appropriate specific regulatory obligations provided for in
framework for electronic communications network and
the Access and Universal Services Directives.
services» (Framework Directive),
d) Directive 2002/22/EC «on universal service and users’
During this analysis of the relevant markets, the National
rights relating to electronic communications networks and
Regulatory Authority shall take the at most account of the
services» (Universal Service Directive) and
Guidelines and the Recommendation, in collaboration,
e) Decision 676/2002/EC «on a regulatory framework for
where appropriate, with the national competition
radio spectrum policy in the European Community»
authorities.
(Radio Spectrum Decision),
Some other main aspects of the new EU regulatory
Furthermore, the European Parliament and Council have
framework for Electronic Communications are:
issued the following:
a) the establishment of a right of appeal against the
a) Directive 2002/58/EC for the processing of personal
decision of a National Regulatory Authority,
data and the protection of privacy in the electronic
b) the establishment of a consultation and transparency
commerce sector,
mechanism regarding the taking of measures by the
b) Recommendation C 497/11.02.2003 of the
National Regulatory Authorities,
Commission for the identification of those product and
c) the encouragement of the cooperation of the National
service markets within the electronic communications
Regulatory Authorities with each other and with the
sector, the characteristics of which may be such as to
European Commission,
justify the imposition of regulatory obligations (the
d) the right of the European Commission to request from
Recommendation) and
a National Regulatory Authority to withdraw a measure
c) Guidelines of the Commission for market analysis and
where it concerns a definition of a relevant market
the assessment of the significant market power, according
different from those defined in the Recommendation, or
to article 15 of the Framework Directive (the Guidelines).
the designation or not of undertakings with significant
This new regulatory framework is the result of the
market power, and where such decisions would create a
procedure that the European Committee initiated in 1999
barrier to the common market or would be incompatible
for the review of the European Telecommunications
with Community Law and in particular the policy
Framework (Review 1999).
objectives that National Regulatory Authorities should
follow.
The new EU regulatory framework for electronic
e) the new content that is given to the meaning of
communications introduces a procedure for the taking of
"significant market power". Specifically, this notion seizes
measures by the National Regulatory Authorities,
to associate with a 25% market share, but is equivalent to
according to which, when a National Regulatory Authority
the concept of dominance, as defined in the case law of
(in Greece the NTPC) concludes that a specific relevant
the Court of Justice and the Court of First Instance of the
17
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European Communities regarding competition. More
No.1095/12.3.1997 Societes Anonymes and Limited
specifically «an undertaking shall be deemed to have
Liability Companies Issue). Thus, the Company's share
significant market power if, either individually or jointly
capital amounted to thirty billion (30,000,000,000) Greek
with others, it enjoys a position equivalent to dominance,
Drachmae and consisted of 30,000,000 registered shares,
that is to say a position of economic strength affording it
with nominal value 1,000 Greek Drachmae per share.
the power to behave to an appreciable extent
independently of competitors, customers and ultimately
By resolution of the Extraordinary Universal General
consumers».
Meeting of the shareholders of the Company (dated
f) In the Commission's Recommendation a range of
21.3.1997), which was published to the Official Gazette
relevant markets is defined, such as retail markets and
No.1765/24.04.1997 Societes Anonymes and Limited
wholesale markets. Especially in the mobile sector the
Liability Companies Issue, it was increased by an amount
following wholesale markets are defined:
of 20,000,000,000 (twenty billion) Greek drachmae by
± Access and call origination on public mobile telephone
issue of 20,000,000 (twenty million) registered shares of
networks
nominal value of one thousand (1,000) Greek drachmae
± Voice call termination on individual mobile networks
each. That increase was materialised: a) by contribution in
± The wholesale national market for international roaming
kind of the license for the operation of DCS 1800 mobile
on public mobile networks.
telephony network in Greece that was transferred
(contributed) by the "ORGANISATION OF GREEK
2.4 Share Capital
TELECOMMUNICATIONS S.A." to the Company by virtue
The share capital of the Company was formed as follows:
of article 15 of Law No 2465/1997, the value of which was
At the establishment of the Company, by depositing
determined according to article 15 of the aforementioned
1,200,000,000 (one billion two hundred millions) Greek
Law to the amount of 16,346,823,305 (sixteen billion
Drachmae in cash from the founders of the Company and
three hundred forty six million eight hundred twenty three
by issue of 1,200,000 (one million two hundred thousand)
thousand three hundred and five) Greek drachmae and b)
shares of a nominal value of one thousand (1,000) Greek
by depositing an amount of 3,653,176,695 (three billion
drachmae each, according to article 31 of the initial Statutes
six hundred fifty three million one hundred seventy six
of the Company (Official Gazette No.6719/3.10.1996
hundred ninety five) Greek drachmae.
Societes Anonymes and Limited Liability Companies Issue).
By resolution of the Extraordinary Universal General
18
By resolution of the Extraordinary General Meeting of the
Meeting of the shareholders of the Company (dated
shareholders of the Company (dated 18.12.1996) which
31.07.2000), which was published to the Official Gazette
was published to the Official Gazette No.1095/12.03.1997
No.7496/09.08.2000 and 9167/05.10.2000 Societes
Societes Anonymes and Limited Liability Companies Issue,
Anonymes and Limited Liability Companies Issue, it was
it was increased by an amount of 28,800,000,000 (twenty
decided that the nominal value of the shares be decreased,
eight billion eight hundred million) Greek drachmae by
with a simultaneous increase of their total number, by
issue of 28,800,000 (twenty eight million eight hundred
6.25 times, so as the nominal value of each share be GRD
thousand) nominal shares of nominal value of one
160. Thus there have been 312,500,000 shares of a
thousand (1,000) Greek drachmae each (Official Gazette
nominal value GRD 160 each.
By the same above resolution of the Extraordinary
the Official Gazette No. 2233/27.03.2002 Societes
Universal General Meeting of the shareholders of the
Anonymes and Limited Liability Companies Issue, it was
Company, the share capital of the Company was increased
decided the harmonization of article 5 of the Articles of
by an amount of two billion eight hundred million GRD
Association with the resolution of BoD Meeting No
(GRD 2,800,000,000) by the issue in cash of seventeen
115/21.12.2001 (item 3) under which according to article
million five hundred thousand (17,500,000) registered
13 par. 9 of C.L. 2190/1920 the share capital was
shares of a nominal value of one hundred sixty (160) GRD
increased by twenty six thousand two hundred and fifty
each. These new shares, were offered through a public
eight euro and ninety euro cents (26,278.90) in cash and
offering and a private placement at an offer price
the issue of fifty five thousand eight hundred and seventy
amounting to GRD 3,200 (euro 9.39) each (excluding
(55,870) ordinary shares of a nominal value of forty seven
387,660 shares which were offered to the employees of
euro cents (0.47) each and the expression of the share
the Company, at an offer price of 2,560 GRD per share,
capital in euro only.
i.e. a 20% discount on 3,200 GRD). Thus, the Company's
share capital amounted to 52,800,000,000 Greek
By the resolution No 139/14.01.2003 of the Board of
Drachmae and consisted of 330,000,000 registered shares,
Directors was certified the partial deposit of the Share
with nominal value 160 Greek Drachmae per share.
Capital increase, i.e. the amount of thirty nine thousand
one hundred and twenty seven euro and fifty eurocents
By resolution of the Extraordinary Universal Ordinary
(39,127.50), as it was decided by the Board of Directors
General Meeting of the shareholders of the Company
resolution No 138 at the Meeting of 19.12.2002 (item
(dated 12.06.2001), which was published to the Official
7) and pursuant the provision of article 13a of C.L.
Gazette No. 5242/29.06.2001 Societes Anonymes and
2190/1920. Specifically, the share capital of the
Limited Liability Companies Issue, it was increased by an
Company was increased by an amount of 39,127.50
amount of fifty million three hundred and twenty five
euro by issue of 83,250 nominal shares of nominal value
thousand GRD (GRD 50,325,000) with capitalization of
of 0.47 euro each. One of the items on the agenda of
the reserves from the issuance of shares above par with a
the Annual General Meeting of the Company, which will
simultaneous increase in the nominal value of the share
take place on June 3,2003, will be the harmonization of
from GRD one hundred and sixty (160) to one hundred
article 5 of the Articles of the Association with the above
and sixty GRD and one thousand five hundred and twenty
resolution of BoD.
five parts of the drachma (160.1525) and on the other
hand the expression of the share capital and the nominal
After the above increase the share capital of the
value of the share in euro, as well. Thus, the Company's
Company amounts to one hundred and fifty five million
share capital amounted to 52,850,325,000 Greek
one hundred and sixty five thousand three hundred and
Drachmae or 155,100,00 euro and consisted of
eighty six euro and forty eurocents (155,165,386.40
330,000,000 registered shares, with nominal value
euro) and is divided into three hundred and thirty million
160.1525 Greek Drachmae or 0.47 eurocents per share.
one hundred and thirty nine thousand one hundred and
twenty (330,139,120) shares of a nominal value of 0.47
By resolution of the Extraordinary General Meeting of the
euro each.
Shareholders (dated 21.02.2002) which was published to
19
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The table below sets forth, certain information regarding the evolution of the Company’s share capital.
THE COMPANY’S SHARE CAPITAL
Date
of General
Meeting
Amount
of Share
Capital Increase
Method of Increase
Capitalisation
of reserves and
contribution
Paid in Cash
in kind
Offer Price
(in GRD)
(in GRD)
Total
Share
Capital
Nominal
Value per
Share
(in GRD)
(in GRD)
Number
of Shares
Incorporation
1,200,000,000
1,000
1,200,000,000
0
1,200,000,000
1,000
1,200,000
18 Dec. 1996
28,800,000,000
1,000
28,800,000,000
-
30,000,000,000
1,000
30,000,000
21 March 1997
20,000,000,000
1,000
3,653,176,695
16,346,823,305
50,000,000,000
1,000
50,000,000
50,000,000,000
160
312,500,000
52,800,000,000
160
330,000,000
31 July 2000
31 July 2000
STOCK SPLIT
2,800,000,000
12 June 2001
12 June 2001
21 Feb. 2002
3,200*
Increase in the nominal value of the Company’s shares together with an expression in euro
50,325,000
-
-
50,325,000
Expression of the Company’s share capital in euro
21 Feb. 2002
26,258.90
8.24
26,258.90
14 Jan. 2003
39.127,50
8.24
39.127,50
TOTAL
-
52,850,325,000
160.1525
330,000,000
155,100,000.00
0.47
330,000,000
155,126,258.90
0.47
330,055,870
155,165,386.40
0.47
330,139,120
155,165,386.40
0.47
330,139,120
* Excluding 387,660 shares that were offered through a private placement to the employees of the Company, at an offer price of 2,560 GRD per
share (i.e. 20% discount on 3,200 GRD)
Save in connection with the arrangements described in the section ‘Management Incentive Plan’, no capital of COSMOTE
is currently under option or agreed conditionally or unconditionally to be put under option.
COSMOTE has no convertible debt securities, exchangeable debt securities or debt securities with warrants in issue.
It is noted that during the last and current financial year, no public tender was made by third parties in connection with
COSMOTE’s shares, nor did COSMOTE make a public tender in connection with the shares of another company.
2.5 Share Price Performance
COSMOTE’s shares started trading on the Athens and London Stock Exchanges on October 12, 2000, through a Combined
Offering (consisted of the International Offering and the Greek offering), of existing shares and shares from the Company’s
share capital increase. The Company’s shares are also trading on the London Stock Exchanges in the form of GDSs.
The following table includes the closing price of the share at the last trading day of each month from January 2002 until
April 29, 2003, the total volume of shares traded per month and the respective turnover per month.
20
Turnover per month
ˇ thousand)
(ˇ
Total Volume
traded per month
Closing Price
ˇ)
(ˇ
31 Jan. 2002
29,915
2,550,487
11.60
28 Feb. 2002
35,789
3,387,464
10.10
Date
28 Mar. 2002
37,469
3,631,600
9.70
30 Apr. 2002
33,227
3,349,132
10.58
31 May 2002
20,810
1,955,951
10.22
28 June 2002
17,259
1,688,008
10.16
31 July 2002
15,707
1,589,804
9.94
30 Aug. 2002
12,959
1,295,509
10.08
30 Sep. 2002
12,826
1,458,231
8.40
31 Oct. 2002
12,645
1,519,797
8.44
29 Nov. 2002
45,364
4,725,426
9.90
31 Dec. 2002
41,196
4,259,523
9.38
31 Jan. 2003
53,524
5,575,741
9.46
28 Feb. 2003
20,739
2,197,203
9.46
31 Mar. 2003
21,385
2,297,559
8.92
29 Apr. 2003
28,619
2,992,236
9.32
The following graph demonstrates the share price performance (in euro) and the respective turnover (in thousands euro)
of COSMOTE’s shares from the beginning of year 2002 until April 29, 2003.
Turnover (ˇ 000s)
COSMOTE (ˇ)
16,000
13
14,000
12
12,000
11
10,000
8,000
10
6,000
9
4,000
8
2,000
7
29/0
4/03
28/0
2/03
29/0
3/03
29/0
1/03
29/1
2/02
29/1
1/02
29/1
0/02
29/0
9/02
29/0
8/02
29/0
7/02
29/0
6/02
29/0
5/02
29/0
4/02
28/0
2/02
29/0
3/02
29/0
1/02
29/1
2/01
0
21
During the same period, COSMOTE’s share price performance, compared to the performance of the Athens Stock
Exchange General Index, was as follows:
Athens General
14
2,800
13
2,600
12
2,400
11
2,200
10
2,000
9
1,800
8
1,600
6
1,400
29/1
2/01
29/0
1/02
28/0
2/02
29/0
3/02
29/0
4/02
29/0
5/02
29/0
6/02
29/0
7/02
29/0
8/02
29/0
9/02
29/1
0/02
29/1
1/02
29/1
2/02
29/0
1/03
28/0
2/03
29/0
3/03
29/0
4/03
7
ASE General Index
COSMOTE (ˇ)
Finally, COSMOTE’s share price performance compared to the performance of the European Wireless Index (rebased), is
portrayed at the next graph:
COSMOTE
European Wireless Index
110
100
90
80
70
60
22
29/0
4/03
29/0
3/03
28/0
2/03
29/0
1/03
29/1
2/02
29/1
1/02
29/1
0/02
29/0
9/02
29/0
8/02
29/0
7/02
29/0
6/02
29/0
5/02
29/0
4/02
29/0
3/02
28/0
2/02
50
29/0
1/02
06
07
08
09
10
COSMOTE
02
03
04
05
Business of COSMOTE
Management
Quality in COSMOTE
29/1
2/01
01
As it is evident from the tables above, for the period from 1.1.2002 to 29.4.2003 COSMOTE's stock outperformed the
Athens General and the European Wireless indices by 17.4% and 17.5% respectively. This performance ranks COSMOTE's
stock among the most stable and profitable stocks in the mobile telecommunications sector across Europe.
As of April 29, 2003 COSMOTE is included in the ASE General Index (with a weight of 6.77%), the ASE Telecoms Index
(with a weight of 27.70%) and in the FTSE/ASE 20 large cap ("blue chip") index (with a weight of 2.77% approximately).
In addition the Company is included in nine different sectoral and total market indices (BE500, E300, DJS TMI, DJS TEL
etc.). COSMOTE’s market capitalisation as of 29.4.2003 was 3,077 million euro.
2.6 Shareholders
The Company’s shareholding structure, according to the share registry on March 31, 2003 (and until 29.04.2003) was the
following:
Shareholder
# of shares
OTE S.A.
(%)
194,623,760
58.95%
Telenor B- Invest
59,410,510
18.00%
WR Com Enterprises Ltd
23,204,370
7.03%
Free Float (Domestic & International Institutional
Investors, & retail holders)
52,900,480
16.02%
330,139,120
100.00%
TOTAL
On April 30, 2003 TELENOR B-INVEST AS announced the sale of 29,705,255 million shares, thus halving its participation in
the share capital of COSMOTE to 9%. The Company’s shareholding structure, according to the share registry at May 6,
2003 is the following:
Shareholder
# of shares
(%)
OTE S.A.
194,623,760
58.95%
Telenor B- Invest
29,705,255
9.00%
WR Com Enterprises Ltd
23,204,370
7.03%
Free Float (Domestic & International Institutional
Investors, & retail holders)
TOTAL
82,605,735
25.02%
330,139,120
100.00%
COSMOTE is not aware of any person, who has a direct or indirect interest in 3% or more of COSMOTE’s paid in share
capital.
As of March 31, 2003 the Company’s personnel, including directors and executive officers, held shares representing less
than 0.07% of COSMOTE’s share capital. The relevant interest for directors and executive officers amounted to 0.025%.
23
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Quality in COSMOTE
2.6.1 Shareholders Agreement
± OTE had agreed not to vote at shareholders meetings in
The Shareholders Agreement between Telenor B-Invest AS
favour of resolutions with respect to the following matters
and OTE, dated 28.07.2000 provided that, for as long as
without the approval of Telenor-B Invest AS, which
the shareholding of Telenor B- Invest AS in COSMOTE was
approval could not be unreasonably withheld;
at least 15%, the following provisions shall apply:
(i) increases in the share capital of COSMOTE by way of
issuance of new shares or of a convertible loan which
± Telenor-B Invest AS had the exclusive right to appoint
would result in the dilution of Telenor-B Invest's equity
three (3) directors to the Board of Directors (including the
interest in COSMOTE
Vice-Chairman). In case that none of the three (3)
(ii) decrease in the share capital of COSMOTE;
members that were appointed by Telenor-B Invest AS
(iii) a merger or change of the legal status of COSMOTE;
were not present or were not represented in meetings of
(iv) termination or extension of the term of COSMOTE or
the Board of Directors, the Board would postpone the
its revival;
meeting for a week at the end of which it will meet again
(v) any amendment to COSMOTE's Articles of Association
regardless of the absence of the aforementioned
that materially affected Telenor-B Invest's special rights as
members.
described above.
± Meetings of the Board of Directors of COSMOTE (unless
adjourned) were only quorate if an appointee of Telenor-B
All the aforementioned provisions were only accounted for
Invest AS was present. Any adjourned meeting would be
in the Shareholders Agreement, with the exception of the
quorate not withstanding the absence of the Telenor-B
right of Telenor-B Invest AS to appoint three directors to
Invest AS appointees;
the Board of Directors (including the Vice Chairman),
± the following matters to be decided upon by the Board
which was included in the Articles of Association of the
of Directors required the approval of Telenor-B Invest AS,
Company. Following the recent decrease of Telenor's B-
which approval could not be unreasonably withheld: any
Invest AS's participation in COSMOTE's share capital, the
significant changes to the annual budget and business
Shareholders Agreement has been terminated according
plan of COSMOTE; the placing on the agenda of a
to its terms.
shareholders meeting of all resolutions with respect to any
increase of the share capital of COSMOTE by way of the
2.6.2. √∆∂ Group (Hellenic Telecommunications
issuance of new shares or a convertible loan not included
Organization S.A.)
in the relevant annual budget and/or business plan;
The Hellenic Telecommunications Organization S.A. (OTE),
± COSMOTE's managing director could be appointed only
incorporated in 1949, is a full service telecommunications
with the approval of Telenor-B Invest, which approval
group, operating as a Société Anonyme under Greek law.
could not be unreasonably withheld;
The company’s shares are listed on the Athens Stock
± At the request of Telenor-B Invest AS, COSMOTE would
Exchange, London Stock Exchange and New York Stock
employ an International Investments director who would
Exchange.
report directly to the Managing Director and would be
responsible for the development of the Company's
Under European Union and Greek law, OTE had the
investments abroad.
exclusive right until 31 December 2000 to install, operate
and commercially exploit the Greek public fixed
24
telecommunications network and to provide public
± The International Activities business unit is responsible
switched voice telephony services. To meet the challenges
for the management of OTE’s international wireline assets
of a competitive environment and to ensure that OTE
as well as for the coordination of all the Guarantor’s
remains the leading provider of public switched voice
telecom activities outside Greece.
telephony in Greece following liberalisation of the market
± The Domestic Wireline business unit is responsible for
for these services on 1st January 2001, the company has
serving retail, corporate and wholesale customers with
heavily invested in enhancing the capability of its network
wireline services in Greece.
to offer an expanding range of products.
± The Mobile business unit is responsible for the
management of OTE’s mobile activities in Greece and
As the leading provider of public switched voice telephony
abroad on a case by case basis (based on specific
in Greece, OTE provides local, long distance and
management contracts).
international communication services to Greek and foreign
± The Internet business unit is responsible for the
businesses, consumers and government agencies. In
management of OTE’s Internet activities in Greece and
addition, OTE offers its customers a range of
abroad (based on management contracts where the
technologically advanced services including mobile
relevant assets do not belong to it).
telephony through COSMOTE, internet access through its
subsidiary OTEnet, ISDN connections, high-speed data
OTE has completed the establishment of the Group
communications, etc., as well as traditional services, such as
Corporate Center and the Domestic Wireline business unit.
leased lines, maritime and satellite communications, sales of
Moreover, on October 2002 OTE and OTE International
equipment, telecards and directories. The company also
entered into a management contract with COSMOTE,
undertakes the construction of telecommunication
pursuant to which COSMOTE has assumed direct
infrastructure projects in Greece and abroad.
management responsibility for two of OTE’s mobile assets,
namely CosmoBulgaria Mobile (Globul) and MTS Mobile
With its basic priorities being the offering of improved
Telecommunications Services AD-FYROM. The completion
services to its customer base, the upgrading and
of the establishment of the remaining business units is
expansion of its infrastructure in order to support its full
expected to occur within 2003.
range of products and services and the increase of its
value, in terms of market capitalization, OTE is currently
The Group Corporate Center supports the Managing
under a reorganization process that will allow it to operate
Director and the company’s management team in the
more efficiently as a group.
following areas:
± strategic activities, such as corporate activities, mergers
On 17 July 2002, OTE announced its organization into
and acquisitions, technology and management of
four dedicated business units and the establishment of a
synergies, management of regulatory framework, portfolio
Group Corporate Center designed to transform OTE into a
management and overall competition management;
market-oriented, modern and competitive
± performance management across the company’s
telecommunications group. The four business units are:
operations, i.e., targets setting, monitoring achievement of
International Activities, Domestic Wireline, Mobile and
targets, incentive schemes for OTE’s executives.
Internet.
25
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Management
Quality in COSMOTE
The new organizational structure is designed to enable OTE to:
± effectively face intensifying competition in Greece;
± take full advantage of its capabilities to develop its international assets; and
± minimize duplication and maximize synergies across its operations.
OTE offers a wide range of services and products covering the needs of its customers. These are offered, directly, swiftly
and easily through the company’s outlets and the Internet. OTE’s services and products are continually enriched and
upgraded, following the latest developments in the field of telecommunications worldwide, which results in maximization
of value to end users.
OTE is currently among the leading group of companies in Greece and among the top ten telecommunications companies
in Europe. It has a large number of subsidiaries in Greece and abroad which are mainly active in the wider field of
communications. Apart from Greece, OTE is present in various markets in South Eastern Europe and is currently reevaluating its existing investments in the Middle East. The latter is a solid strategy that aims to expand its customer base
and further reinforce the Group’s strong position in the European telecommunications market.
OTE’s share capital amounts to 1,204,689,535.61 euro and consists of 504,054,199 registered shares with a nominal value
of 2.39 euro each. According to the company’s Shares’ Registry, OTE’s shareholders as of 31 March 2003, were the
following:
Shareholder
Hellenic Republic
33.761%
Hellenic Exchangeable Finance
10.649%
Hellenic Finance No S.C.A.
2.970%
DEKA S.A.
0.017%
Other (Domestic – International)
Total
26
%
52.603%
100.0%
Its Board of Directors carries out OTE's management, which determines the Company’s strategy and development policies
and monitors and supervises its property management. The Board of Directors consists of fifteen members, appointed for a
period of five years. The Board of Directors currently consists of the following members:
Name
Antonacopoulos Eleftherios
Skarpelis Georgios
Position
Chairman, Managing Director
ice Chairman
Aggelou Lazaros
Member
Argyropoulos Georgios
Member
Veniamis Theodoros
Member
Georganas Iakovos
Member
Georgantopoulos Michalis
Member
Mandila Lana
Member
Panas Stavros
Member
Papakonstantinou Georgios
Member
Spanos Christos
Member
Tamvakakis Apostolos
Member
Tamvakakis Phaedon – Theodoros
Member
Sachalos Ioannis
Member
Note: Mr Polyzogopoulos, the fifteenth member of the Board, has resigned and has not been replaced yet.
27
CHAPTER 3
Business
of COSMOTE
28
COSMOTE’s accomplishments
are the result of intensive team effort
and a very successful
customer-oriented strategy.
29
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Management
Quality in COSMOTE
Business of COSMOTE
3.1 Services and Products
roaming charges when customers use the service outside
The Company's principal business is the provision of a
Greece.
complete range of mobile telecommunications services
including contract and pre-paid services, international
COSMOTE's basic tariff structure does not distinguish
dialling and roaming, value added services, including
between peak and off-peak calls, nor does it distinguish
voicemail ("VMS"), short message services ("SMS"), call
between local and long distance calls within Greece.
diversion, caller identification ("CLI"), as well as a variety of
International calls made by COSMOTE customers are
advanced value added services using WAP, SIM
charged at the applicable OTE rate plus the applicable
microbrowser and Voice Recognition technologies. In
COSMOTE per second airtime charge provided for in the
addition, since March 2001 it offers to its contract and
relevant package.
corporate customers, GPRS services, while in September
2002 the Company launched an integrated MMS offering.
In November 2002, COSMOTE enriched its contract tariff
As of December 2002, COSMOTE’s network covered over
plans by launching a wide range of bundled contract
99.6% of the population of Greece, 92.7% of its mainland
packages in order to meet the needs of all its customers.
and islands and 96% of its territorial waters
Consistent with its existing policy "the more you talk, the
less you pay", COSMOTE introduced lower ‘on-net’ calls a
3.1.1 Contract Services
for all COSMOTE originating calls that terminate within
COSMOTE is the leading provider of mobile
the OTE group or to other fixed line operators. The new
telecommunications services to contract subscribers in
concept behind the Company’s tariff plans (‘on-net’ and
Greece with a total of 1,551,441 contract subscribers as of
‘off-net’ call distinction) is to offer even more affordable
December 31, 2002 representing a market share of
services, thus further increasing usage, and profitability
1
47.8% . During the first quarter of year 2003 (at the end
and encouraging customer loyalty.
of March) the Company’s total number of contract
subscribers reached 1,565,290.
Corporate Services
The Company, as part of its strategy of increasing
The Company offers its contract subscribers standard GSM
revenues from, and numbers of, corporate subscribers
services and a selection of value added services (e.g. VMS,
established programs with special reduced tariffs and
CLI) at no additional monthly access fee. The Company
special features applicable exclusively to corporate
(until November 2002) offered its services to contract
subscribers. As corporate customers are regarded the
subscribers on the basis of two programs, the first with a
business and companies that are subscribed to the
minimum contract duration of twelve months and a
Company’s Corporate Programmes and Services. The
monthly access fee of euro 10.27, and the second with no
basic characteristics of these tariffs are:
limitation on contract duration and a monthly access fee
± A minimum of 11 subscriptions per corporate customer
of euro 7.33. Both tariff plans have the same airtime traffic
(5 or more subscriptions according to a new plan
charges for outgoing calls based on seconds of use, plus
activated since March 2002);
1. Based on publicly available figures released in 2002 by VODAFONE (Greece), STET Hellas and Q-Telecom.
30
± A low monthly access fee per subscription;
± Scaled airtime charges, depending on destination of call;
± Handset subsidy depending on number of subscriptions;
± Heavy usage is rewarded with end of year discounts; and
± Handset renewal subsidies are offered, after 12 months,
depending on airtime usage.
On December 2, 2002, all new connections were made to
COSMOTE BUSINESS SOLUTIONS, which were introduced
to replace the Company’s previous Corporate
Programmes. The basic characteristics of these new
programmes are:
Virtual Private Network. The Company launched a VPN
± 5 or more subscriptions per customers;
service in April 2000 for corporate
± A low monthly access fee per subscription;
subscribers. VPNs allow companies to define a private
± Scaled airtime charges, depending on destination of call;
numbering plan (closed user group) for users within an
± Scaled monthly discounts on airtime charges based on
organisation. Short dialling, call barring and favourable
the number of subscriptions;
pricing are provided for users within the VPN group. This
± Handset subsidy depending on number of subscriptions;
service’s capabilities may be partly expanded to the
± Handset renewal subsidies are offered, after 12 months,
corporate customer’s fixed telephones while if it is
depending on airtime usage.
combined with the "Direct Access" service, the corporate
customer’s PBX can be a full member of the Virtual Private
Despite reducing the handset subsidy of acquiring a new
Network and further utilise the service’s capacities.
corporate subscriber by 27% from July 2002, at the end
of December 2002, the Company had approximately
Wireless Office. This service is exclusively provided by
12,000 corporate customers (150% y-o-y growth) with
COSMOTE since April 2000. The wireless office service is
over 233,000 new connections (up 88% from the
basically a mini GSM system within the customer’s
previous year).
premises, installed by the Company. For an additional
monthly fee, wireless office provides enhanced coverage
Value Added Services to Corporate Subscribers
within the subscriber’s office or plant and calls to and from
The Company, as part of its strategy to increase revenues
a handset can be routed through the company’s network
from corporate customers, offers a number of additional
as if the call were being made from or received on a desk
value-added services such as Virtual Private Network, Fleet
telephone, with no extra charge.
Management, tailored to the corporate sector. COSMOTE
believes that there is significant opportunity for growth in
Leased Lines. The service provides connectivity to
the corporate sector of the market and intends to continue
corporate customers for voice, data or fax calls through a
to focus on such customers. The services that are offered
private telecommunication network provided by
to the corporate customers are:
COSMOTE. The "Leased Lines" service is offered for a fixed
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monthly fee independently of the number and the
Fleet Management. This service which is being offered
duration of the calls.
since the beginning of 2003 in co-operation with
SPACENET, is targeted to organisations and companies
LMDS. The Fixed Wireless Access Special License (LMDS)
that own a fleet of vehicles and wish to manage it
that COSMOTE acquired in 2002, allows the Company to
efficiently, both in Greece and abroad.
install, operate and exploit commercially an autonomous
fixed wireless access network. By commercially exploiting
3.1.2 Pre-Paid Services
its LMDS network, COSMOTE will be able to provide an
COSMOKARTA
integrated service portfolio to its corporate customers. The
In December 1998, the
first services offered through LMDS are Direct Access and
Company introduced its
Leased Lines, which not only provide COSMOTE with
pre-paid service under the
additional revenues but also reinforce corporate customer
brand name "COSMOKARTA". As of December 31, 2002,
loyalty. In addtion, the Company aims to further exploit
COSMOTE had 1,954,897 pre-paid customers
the LMDS network by connecting GSM and UMTS base
(representing 55.8% of the total COSMOTE customer
stations, in high density areas. By March 2003, COSMOTE
base compared to 50.3% one year ago) from the total of
had already installed base stations (LMDS hubs) in Athens,
6,066,123 prepaid customer in the Greek mobile market
while in Thessaloniki the installation of base stations is in its
at the end of December 2002. It is noted that, as of
final phase thus achieving geographical coverage of the
December 31, 2002, COSMOTE sustained the second
two largest cities in Greece. In COSMOTE’s immediate
position with respect to the pre-paid telephony segment
plans, is the extension of coverage to other major cities of
in Greece with a market share of 32.2%. During the first
the country.
quarter of year 2003 the Company’s total number of prepaid customers reached 2,076,173. The new tariffing
Office on the Move. The range of services offered
policy of on-net/off-net call distinction introduced in
through Office on the Move has been designed for
November 2002 was also applied to prepaid customers. In
companies that wish to provide their executives with the
addition, in order to reward its COSMOKARTA customers,
flexibility to work efficiently even when being away from
the Company introduced an innovative "Bonus" scheme
their office. The services included are:
involving a scaled credit, i.e. the offering of additional free
airtime, depending on the 'on-net' usage made.
± COSMOTE GPRS Internet provides an easy, fast and
reliable Internet connection via mobile phone, laptop and
"WHAT’S UP?" (LOGO)
PDA.
In May 2001 COSMOTE launched a
± COSMOTE Data & Fax enables dependable data and fax
new breakthrough pre-paid product
transmissions via mobile phone, laptop and PDA.
under the name "What’s up?" This
± MOBILE Fax Mail allows the storage of fax messages on
the mobile phone voice mail.
new innovative product is mainly
addressed to youngsters but also to all other customers
1. GSM Pro was a combination of GSM services and Private Mobile Radio ("walkie-talkie") services particularly suited to construction
companies, to companies with vehicle fleets, etc.
32
that choose to principally communicate through the use
elimination of subsidies and the fact that pre-paid
of SMS (short text messages). The "What’s up?" product
customers do not generate bad debt.
offers exclusive privileges such as step down billing
regarding SMS charging, a CHAT service for easy and swift
During 2002, COSMOTE offered its prepaid customers the
communication, free call identification and immediate
choice of changing package, i.e. from COSMOKARTA to
activation with the first call
WHAT’S UP and vice versa through an automatic
procedure, made activation possible with just one call, and
The "What’s Up?" product also offers all the existing
created a special program for people with hearing
services of COSMOTE’s pre-paid product, COSMO∫∞R∆∞,
problems.
that include: Voice mail, Automatic Roaming for incoming
calls and SMSs, MyCosmos mobile portal services, and
3.1.3 Value Added Services
lower ‘on-net’ charges for calls terminating on OTE or on
COSMOTE services strategy focuses on exploiting cutting
other fixed line operators’ networks. In addition,
edge technology in order to provide user friendly and
COSMOKARTA and "What’s Up?" customers are do not do
competitive services and satisfy customers’ needs.
not sign any contracts, do not pay monthly access fees
COSMOTE’s innovative value added services enhance the
and do not receive monthly bills.
Company’s financial performance and target all segments
of its customer base, both contract and prepaid
The COSMOKARTA or WHAT’S UP packages include a SIM
(COSMOKARTA & WHAT’S UP). During 2002 COSMOTE
card and pre-paid airtime and are offered with or without a
significantly enriched its VAS portfolio by adding new
handset. COSMOTE pre-paid customers can renew their
information, communication and entertainment services.
airtime by purchasing new airtime cards through COSMOTE’s
extensive distribution network (the points of sales for the
MMS: COSMOTE launched commercially its Multimedia
COSMOKARTA product amount to more than 9,000).
Messaging Service in September 2002. The Company
COSMOTE believes that pre-paid services have a positive
offered its MMS services free of charge for a period of 6
impact on its performance due to improved incoming traffic
months, aiming to encourage usage and familiarize
levels and because pre-paid customers consume. COSMOTE's
customers with the new technology and applications.
pre-paid customers pre-pay for COSMOTE's services and,
therefore, do not generate bad debt.
COSMOTE was the only mobile operator in Greece to
offer from day one, in collaboration with important
COSMOTE facilitates its customers even further by
content providers, a wide range of exclusive applications
allowing them to renew their pre-paid airtime through
based on MMS technology. These applications allow the
phone banking and through ALPHA Bank’s nationwide
exchanging of messages which combine text, sound and
ATM network.
image (person to person messaging) and include a variety
of services such as news headlines, sports news, humorous
It is noted that COSMOTE pre-paid services have a positive
comic strips, ringtones, screensavers, wallpapers.
impact on the Company’s financial performance and more
specifically on the EBITDA margin, due to the fewer
In addition COSMOTE offers a unique accompanying
administrative resources that are consumed, the
service "My Personal Album" that enables COSMOTE
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customers that do not have an MMS enabled handset to
Furthermore during 2002 COSMOTE renewed the
receive and manage/process their MMS messages (create,
Automatic WAP Subscription Service and the Automatic
forward, reply, rename and delete MMS messages) through
Retrieval of WAP and MMS settings aiming at an even
an exclusive personalized web page. By the end of 2002,
easier access to MyCosmos services. At the end of 2002,
COSMOTE had approximately 20,000 MMS users.
approximately 1,000,000 COSMOTE subscribers were
using MyCosmos SIM, while more than 650,000
3.1.4 "MyCosmos" (mobile portal)
subscribers were accessing MyCosmos services via SMS.
COSMOTE was the first mobile
operator in Greece to launch
Services offered through the MyCosmos mobile portal:
an integrated mobile portal,
under the brand name MyCosmos (in September 2000).
Information Services
The portal offers to all COSMOTE subscribers an umbrella
COSMOTE offers information services that include political,
of value added mobile Internet services related to
financial and sports news as well as other general information.
entertainment, communication, information, financial
An example of the services offered is the Travel Service, which
transactions, etc that is easily accessible.
provides information regarding the ships departure timetable,
and the exclusive "Athens Airport" service, which provides on-
With the application of cutting edge technology,
line information for the departures and arrivals to the Athens
COSMOTE’s MyCosmos portal can be accessed through
International Airport. In addition, the service informs the
various ways, allowing customers to choose the way they
subscribers via an SMS-alert every time there is new
are more familiar with and depending on the technology
information for the flight that they have requested (follow-
supported by their handset.
me). In order to satisfy the sports fans, COSMOTE also
provides full coverage of all the sports news and game results
The MyCosmos portal can be easily accessed through the
of all the major Greek teams, as well as news from major
following alternative technologies:
athletic events (such as the world football cup during 2002).
± Short Message Service (SMS)
Other services include information regarding music concerts
± WAP
and festivals, ski resorts in Greece etc.
± the menu of the MyCosmos SIM card, in which a SIM
34
Toolkit (STK) Microbrowser is embedded exclusively by
Entertainment Services
COSMOTE. This SIM card provides an easy to use menu
The MyCosmos portal includes services such as quiz
for services as well as transaction security.
games, cards, TV-guide, theatre and location-dependent
± Voice Recognition. COSMOTE was the first operator in
cinema information. Since April 2002, COSMOTE
Greece and one of the first in Europe to use such a
exclusively offers, in cooperation with Motorola, the
technology.
popular game "Who wants to be a millionaire", the mobile
± the advanced IVR technology (Interactive Voice
version of the TV-game which is very successful in the
Response).
Greek TV. Other exclusive services that were launched
± A Multimedia Message Service (MMS), either from a
during 2002 allow customers to listen exclusively to songs
compatible handset, or the "Personal Album" through the
of popular Greek artists before their official release or
Internet).
receive signed autographs via MMS.
In January 2003, COSMOTE created the Beat Box service in
In 2002, COSMOTE exploited even further the potentials
collaboration with the major record companies in Greece.
of its MyCosmos voice portal by using the speech
This is the most comprehensive music mobile service
synthesis technology, also known as Text To Speech (TTS)
through which the Company’s customers can listen to their
for new services.
favorite songs, make dedications to friends, download
songs in the form of a ringtone or even order a CD.
3.1.5 Other Services
In addition, COSMOTE offers the following value added
COSMOTE offers its customers a variety of Ringtones,
services:
Logos & Picture messages they can download and that
have proven to be very popular. The service is offered in
Short Message Service ("SMS"). This is the most popular
cooperation with VIRGIN MEGASTORES. In 2002
service among COSMOTE customers. SMS revenues for
COSMOTE started offering MTV (the popular music
the year 2002 increased 29.2% while the number of SMSs
channel) Ringtones and Logos in collaboration with
per customer per month reached 41, one of the highest in
M.C.N. the company that owns the MTV registered
Europe.
trademark. COSMOTE was the first mobile operator in
Greece to offer SMS as an alternative way of requesting
Directory Services and COSMOSYNDESIS. The Directory
the selected ring-tone and logo, which simplified the
Services offer information regarding COSMOTE ’s contract
usage of the service and contributed to its big success.
subscribers as well as OTE subscribers. Additionally a call
connect service is offered to all mobile and fixed line
Communication Services
numbers in Greece through the same directory service
Through the E-MAIL Service, COSMOTE customers can
number.
use their mobile phone to send and receive e-mails, while
through the CHAT service many users with common
Voicemail. COSMOTE ’s voicemail services are available to
interests can communicate instantly via SMS.
all customers, the majority of whom utilise this service. The
service allows the caller to leave a message when the
Financial Services
customer is not available, not reachable, busy or beyond
These include On Line stock trading information, a service
the coverage area.
that provides real time stock data for stocks trading on the
Athens Stock Exchange and the "Euroconverter" service,
COSMOTE InfoExpress 1650. This service is free of
which allows conversion from Euro to Drachmas and vice
charge and is available to the entire customer base of
versa.
COSMOTE. It provides the subscribers with general
information through a voice response system regarding
Voice Portal MyCosmos
COSMOTE’s network and value-added services.
During 2001 COSMOTE further exploited its exclusive
Voice recognition technology, which was launched in
Internet and Mobile Commerce. The Company offers
2000 and created the voice portal MyCosmos.
internet and mobile commerce services such as the
purchase of CDs and DVDs or the payment of the
subscription fee for the online edition of the most popular
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Classified Adds Newspaper "XRYSH EYKAIRIA", through the
The proliferation of new technologies that will allow
mobile phone.
higher data speeds and the gradual adoption of GPRS are
expected to further boost MyCosmos Services, while at the
Data and Fax Service and Fax Mail Service. These
same time improve their functionality. These technologies
services enable contract subscribers to send and receive
will allow the development of new services related to
data and fax, as well as to access the Internet from their
communication and entertainment, with the addition of
mobile phone through HSCSD (High Speed Circuit
image and video that will make the services more
Switched Data). COSMOTE is the first company in Greece
appealing and exciting to use. The new devices available
to offer a comprehensive range of services aiming to satisy
further contribute to the increased usage of such services
in the most effective way customers’ needs for fast, reliable
due to their advanced characteristics like colored screen,
and continuous data transfer.
powerful processing capabilities, etc.
Internet Access Service. These service enables
It is therefore expected that through GPRS ("always on"
COSMOTE's customers to access the Internet on their
connection feature the usage of the mobile phone as a
personal computers through their mobile phones via
suitable medium for accessing the Internet and corporate
national universal Internet access numbers.
Intranets, will be significantly promoted, in a much faster
and cost-effective way.
GPRS. In the context of preparing for the launch of third
generation (UMTS) value added services, COSMOTE has
Virtual Home Environment. Since the end of year 2002,
completed (in January 2001) the nation-wide rollout of a
COSMOTE is offering to roamers of foreign networks the
GPRS network and started offering GPRS services, such as
service Virtual Home Environment (VHE). VHE provides
data transmission, WAP and Internet services, at high
"seamless'' access to short code based services of the
speeds, to two of its corporate customers.
foreign network such as customer care, voice mail or
directory information. The subscriber just dials the short
In March 2001 the Company started the commercial
code of the service as it is valid in the home network
offering of GPRS services to all of its contract customer
instead of a full 13-digit number in international format.
base. GPRS services offered by COSMOTE include Internet
access over GPRS (e.g. Web browsing/FTP), WAP and
Third Party Services
MMS access over GPRS.
πn addition to the aforementioned services, COSMOTE
offers its customers access to third party services, through
Customers using GPRS services will be connected
SMS, in cooperation various content providers.
constantly to the COSMOTE network but will only incur
charges when they utilise GPRS services. The Company’s
3.2 International Roaming
GPRS infrastructure currently supports speeds higher than
International roaming enables a mobile phone user to
100 kbp/s compared to the existing 9.6 kbp/s offered by
make and receive calls using a foreign country's GSM
the traditional 2G GSM networks.
network while paying the home GSM provider for the
calls. As of December 31, 2002, the Company had 272
roaming agreements with mobile telecommunications
36
operators in 129 countries, of which 240 agreements in
expected usage and the service availability to all pre-paid
114 countries were operational. As of March 2003, the
customers.
Company had 277 roaming agreements with mobile
telecommunications operators in 129 countries. The
3.3 Customers
Company regularly reviews opportunities to enter into
Since the introduction of mobile telecommunications
agreements with other mobile operators with the purpose
services in Greece in 1993, the market has sustained a
to expand its international roaming capabilities, in order to
rapid annual rate of growth. Based on management
service its own customers' requirements for international
estimates and publicly available information,
roaming, and to enable it to capture an increased share of
approximately 85.5% of the Greek population1,
the roaming traffic originating from tourists and business
representing approximately 9.31 million people, were
travellers from abroad.
mobile phone users as of December 31, 2002.
COSMOTE’s total number of the customers at the end of
The Company provides this service to all its contract
December 2002, reached 3.51 million with an estimated
customers. Since the first quarter of 2001 the Company’s
market share of 37.6%.
prepaid customers can also receive calls and SMSs while
roaming abroad. As of December 2002, contract
During the first quarter of 2003 COSMOTE added
customers of foreign networks that roam over COSMOTE's
135,125 new net additions, bringing the Company’s total
network have access to the Virtual Home Environment
customer base, at the end of March 2003, to 3,641,463
service (VHE) that enables the roamer to use a number of
with an estimated market share of 37.3%. Total number of
value added services offered by his foreign network (i.e.
customers in the Greek mobile market as of March 31,
customer service, answering machine, etc.) by dialing a
2003 was 9,749,739 (according to publicly available
home short code. Roamers are charged on a per 30
information released by Vodafone of 3,382,765 total
seconds basis at the rate of euro 0.164, plus the applicable
customers, STET Hellas of 2,581,329 total customers and
PSTN charges, if calling a destination abroad, depending
Q-Telecom of 144,182 total customers, for the first quarter
on the country, plus their network’s mark-up. COSMOTE
of 2003).
customers while roaming are charged for incoming calls
according to the international call charges of COSMOTE.
Management believes that providing customers with a
single, direct point of contact with the Company, rather
Greece hosts over 10 million tourists and business travelers
than through independent service providers, allows the
each year. In 2002, such visitors made over 80 million
Company's customer care personnel to develop a stronger
roaming calls, using the COSMOTE network. Roaming
relationship between customers and the Company. The
calls made by visitors in Greece and COSMOTE customers
Company currently has two call centres that operate for 24
roaming outside Greece represented approximately 3% of
hours a day, seven days a week and handle approximately
the Company's total revenues in 2002. COSMOTE expects
50,000 calls daily. The highly skilled multi-lingual customer
its roaming revenues to further increase due to higher
service staff is able to handle all incoming calls in different
1. Based on publicly available information and on a population for Greece of 10.9 million inhabitants, following results of the population
census held on March 18, 2001.
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languages. As part of its ongoing commitment to customer
In the context of minimising the level of involuntary churn,
service, the Company has established specific contact
the Company seeks to persuade its customers to pay by
groups to target corporate accounts, new accounts and
credit or debit card thereby improving collection times
sales. The establishment of a specific contact group for
and reducing the potential for bad debt problems to arise.
corporate customers is one of COSMOTE's strategic
initiatives to target corporate customers.
3.5 Distribution Network
The Company distributes its services and products through
3.4 Churn
an extended distribution network comprised as follows:
Churn refers to total disconnections of customers that take
± A Master Dealer network consisting of seven exclusive
place either involuntarily (e.g. due to lack of payment), or
and one non-exclusive master dealer and five smaller
voluntarily (e.g. due to termination of contract). Also, the
distributors (together, the "Master Dealers");
number of customers that disconnect from a certain
± Ten COSMOTE branded stores, six in Athens, two in
package or program in order to reconnect to a new
Thessaloniki, one in Heraklion, Crete and one in Patra;
COSMOTE package or program is included in the reported
± COSMOTE's corporate accounts sales forces; and
churn rate per period. Based on this, the Company’s rate
± Two distributors of the COSMOKARTA packages and
of churn during 2002 was approximately 21.5%. It is
pre-paid airtime cards: Elgeka S.A. ("Elgeka") and the
noted that of this churn over 70% is due to internal1
Greek Post Office.
contract churn as well as prepaid churn.
Distribution Network
The Company has put in place a number of measures to
The Master Dealers, directly and through their network
limit voluntary churn. These measures include a reduction in
of independent dealers, operate a network of
monthly access charges as a loyalty bonus on the renewal of
approximately 2000 points of sale throughout Greece,
contracts. In addition, the Company has established a churn
the majority of which are located in major cities. The
group specifically for the purpose of limiting churn rates.
Master Dealers act as the commercial agents of
The Company also uses information technology systems to
COSMOTE in the distribution of its contract and pre-paid
understand, monitor and control voluntary churn by
services for the payment of commissions pursuant to
focusing marketing resources on customer retention. To
distribution agreements and as the distributor for
date, the Company believes that it has been successful in
boosting COSMOKARTA and WHAT’S UP.
retaining customers who have expressed a wish to
disconnect voluntarily through applying customer service
The seven exclusive Master Dealers are: OTE, Altcom S.A.
resources to address their complaints and to provide an
("Altcom"), S. Benroubi S.A. ("Benroubi Net"), Klimaphone
improved service. The Company provides incentives to its
S.A. ("Klimaphone"), Plaisio Computers S.A. ("Plaisio"),
distributors to reduce churn by paying them Connection
Sanyocom S.A. ("Sanyocom") and SpacePhone S.A.
Bonuses, which take into account customer disconnections
("SpacePhone").
during the relevant period.
1. Change of number or/and program and reconnection to the Company’s network
38
The Company has also entered into a non-exclusive agency agreement with Germanos Batteries S.A. ("Germanos"),
whereby Germanos agreed to distribute the Company's products and services through its chain of 310 stores operating in
specialized retailing in the telecom and small consumers electronics area (including the points of sale of MULTIRAMA, a
specialised arm of Germanos in digital products).
COSMOTE has also entered into agreements with five smaller distributors: "Valuenet S.A" (a distributor of OTEnet's
services), "OTE SAT-Maritel" (a subsidiary of OTE that provides telecommunications services to the marine industry),
"Eurobank Cards S.A." (a credit card provider and a subsidiary of EFG Eurobank Ergasias, a Greek bank), "ONE WAY –
Commercial & Industrial Company of IT and Telecommunications Limited" (a chain of stores with digital products
specialising in information technology and telecommunications offerings) and "Carrefour" Super Market chain in Greece.
The following table sets out the number of outlets distributing COSMOTE's services as of December 31, 2002.
Distributors
Number of Outlets
OTE
450
Altcom
250
Benroubi Net Phone
Germanos
55
310
Klimaphone
50
Plaisio
15
Sanyocom
300
SpacePhone
350
Others (Maritel, Valuenet, Eurobank Cards, OneWay, Carrefour – Marinopoulos)
250
Total
2,030
The Company pays each Master Dealer a series of bonuses, like an airtime bonus based on monthly airtime revenues
generated by each contract subscriber the Master Dealer acquires for COSMOTE, a connection bonus payable for each
new corporate contract acquired by the relevant Master Dealer, a safe payment bonus payable where the new contract
subscriber agrees to pay his bill by credit or debit card; and annual, semi-annual and quarterly bonuses payable if the
relevant Master Dealer achieves prescribed targets for numbers of new contract subscribers connected to the COSMOTE
network during the relevant periods. These bonuses are designed in part to maintain the loyalty of the Company's Master
Dealer network and to encourage them to contribute to the promotion of COSMOTE’s services.
The Master Dealers, with the exception of Germanos, Carrefour and ONE WAY, are prohibited by the terms of their
distribution agreements from selling any other mobile telecommunications service but may and do engage in other
businesses such as the sale of other electronic goods.
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COSMOTE Branded Stores. The Company operates the
and shops are located in large and small population
following ten COSMOTE branded stores; six in Athens,
centres thereby providing convenient outlets for pre-paid
two in Thessaloniki, one in Heraklion Crete and one in
customers to purchase additional units for use in topping
Patra:
up COSMOKARTA and ‘WHAT’S UP?’ cards. The Greek
Post Office also acts as a distributor of the COSMOKARTA
1) ∫ifissias 44, Maroussi
and ‘WHAT’S UP?’ range of products through
2) µenizelou 15, Thessaloniki
approximately 800 branches.
3) ∂thnikis Antistaseos 7, ∫alamaria Thessalonikis
4) ªarinou Antipa 90, ¡ew Herakleio Attikis
3.6 Corporate Communication
5) Lazaraki 7, Glyfada
COSMOTE places emphasis on corporate communication
6) Panepistimiou 41, Athens
as a means for the promotion of its services and products
7) Gregoriou Lampraki 140, Piraeus
as well as its brand name. Today, COSMOTE's brand name
8) Acharnon 434, Athens
is identified with innovation, quality and reliability of
9) Dikaiosinis 67-69, Heraklion Crete
service and the Greek nature of the Company, and
10) Ermou 4 & Ag. Andreou 48, Patra
represents an important competitive advantage for
COSMOTE in the highly competitive Greek mobile
These branded stores provide both sales and customer
telecommunications market.
support services, such as payment collection, basic
handset repairs and billing claims reception. They also
COSMOTE's human-centric philosophy, that is evident in
provide the Company with a valuable promotional vehicle
all its business activities, is present in all Company's
for increasing brand awareness of the Company's services
communications efforts as well. Television, the press, radio,
and products as well as providing the Company with
outdoor posters and the Internet are the means that the
marketing information intelligence. COSMOTE plans to
Company uses during its advertising campaigns. These
open two more branded stores before the end of May
means are diversified and enriched according to the target
2003.
group, with the aim to promote awareness of COSMOTE's
services and products and ensure that a unified message is
COSMOTE's Corporate Accounts Sales Force. The
sent to the Greek public.
Company's corporate accounts sales force focuses on
marketing the Company's services to corporate customers.
In addition, the Company has strengthened its brand
Approximately 60 people are employed in the corporate
through focused advertising campaigns and other forms of
accounts sales force. The number of account managers is
direct and indirect marketing campaigns (i.e. sponsorships
expected to increase by approximately 10 people by the
in the fields of culture, sports, sciences and technology),
end of 2003.
whose aims are to target potential customers while not
alienating existing subscribers.
Elgeka and the Greek Post Office. Elgeka is a distribution
40
company and acts as a distributor of COSMOKARTA and
During year 2002, marketing activity focused on the
‘WHAT’S UP?’ pre-paid airtime cards through
introduction of new value-added services (under
approximately 9,000 kiosks and small shops. These kiosks
‘MyCosmos’ and through cooperation with third parties),
new products, new lower tariffs, and innovative MMS
MHz paired (FDD) and 5 MHz non-paired (TDD)
services.
spectrum) and the 2 x 5 MHz allocated to it in the 900
MHz spectrum acquired in July 2002.
The commercial advertising campaign that run in 2002
with the message "Let's talk" identified COSMOTE with the
In August 2001, following a tender of the NTPC, the
value of communication and promoted its customer-
Company was granted a 3rd Generation Special License.
centric philosophy.
In this respect, the Company was assigned for exclusive
use 2 Ã 15 MHz paired spectrum and 2 Ã 5 MHz non-
COSMOTE continued in 2002 its comprehensive efforts to
paired spectrum. Additionally, in 2002 COSMOTE
communicate to other unique and important groups such
acquired a 25GHz Fixed Wireless Access Special License
as the media and the investor's community.
from OTE, coupled with fixed assets that helped the
company to roll-out an 11 base stations network in
Specifically, during 2002, COSMOTE held a series of
Athens and fulfill the license's requirements. In 2003,
events with respect to keeping the investor community,
additional fixed assets that had already been obtained by
both in Greece and abroad, up to date with Company
OTE for the exploitation of the Special License will be
developments. These included road shows, presentations
transferred to COSMOTE and be utilized to further
and conference calls on a periodical basis, as well as
develop its network in Athens and roll-out the network in
Company representations in various important
Thessaloniki.
international conferences.
The basic elements of COSMOTE's GSM 900/1800
In addition, the Company intensified its communication in
network are its BTSs which house radio transmission and
order to promote its social contribution and its
reception equipment to perform signal processing
sponsorship activities as well as its contribution to the
activities. As of December 31, 2002, the Company's
organization of 2004 Olympic Games, as a National Grand
network was made up of 2,598 BTSs linked to 52 BSCs.
Sponsor further enhancing COSMOTE's image
At the end of year 2002, COSMOTE leased 1,172 sites
internationally.
for these BTSs from OTE. Cellular traffic is collected from
a number of BTSs and routed to a BSC. The BSCs allocate
3.7 Telecommunications Network
radio channels among BTSs, manage intra-BSC handoffs
Quality and geographic coverage of the network are key
among the BTSs and interface with the mobile switching
factors for the success in the distribution of mobile
centres ("MSCs"). Each BSC is controlled by an MSC,
telecommunications services. COSMOTE has constructed a
which is connected to other MSCs in the network as well
high capacity network covering over 99.6% of the Greek
as to other fixed or mobile telecommunications
population, 92.7% of the Greek mainland and islands and
networks.
96% of Greece's territorial waters as of December 31,
2002. The Company currently has extended 2nd
As of December 31, 2002 there were 16 MSCs in
Generation (2G) as well as 2.5 Generation networks with
COSMOTE's network. MSCs also control the billing of calls
significant capacity on the basis of the 2 x 25 MHz
and allow mobile telephone users to move freely from cell
allocated to it in the 1800 MHz frequency band, (2 x 15
to cell while continuing their calls. Connections between
41
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BTSs, BSCs and MSCs consist of transmission lines,
During the next two years, the Company plans to invest
including fiber optic cables, copper cables and microwave
approximately euro 390 million for upgrading and
links. The Company is gradually, in specific cases regarding
enhancing its current network 2 and 2.5G network,
certain parts of Greece, replacing the use of leased lines by
excluding the cost of developing a 3G network and/or
its own microwave network. The Company's network is
regional and domestic acquisitions, joint ventures or other
interconnected with OTE's PSTN in Athens, Thessaloniki
equity investments. Included in this amount is an
(through which international traffic is also routed) Patras,
investment of approximately euro 50 million for the
Larissa and Heraklion, with the network of VODAFONE
preparation of the Company for the Athens 2004 Olympic
(Hellas) in the same cities and the network of STET Hellas
Games. Also during year 2003 the technical analysis with
in Athens, Thessaloniki, Patra and Larissa. Finally,
respect to the Company’s 3G network is expected to be
COSMOTE's network is interconnected with the mobile
concluded and an investment of around euro 60 million is
and PSTN networks of Q-TELECOM in Athens and
planned for the initial pilot network rollout.
Thessaloniki and with the networks of FORTHNET and
Tellas in Athens. The Company co-locates its equipment
The Company is developing its network coverage by
sites with the other mobile and fixed operators where local
building additional BTSs, BSCs and MSCs and other
conditions make this practical and cost effective.
network elements. In this respect it plans in year 2003, to
install approximately 210 additional BTSs, five (5) new
The operation of BTSs is subject to receipt of required
BSCs and to replace three (3) existing MSCs with new
permits from the Ministry and local planning authorities.
high capacity MSCs. Furthermore during the same year it
Spectrum availability is limited and is allocated by the
plans to expand the capacity of 540 existing BTSs. These
NTPC (EETT). The Company currently optimises its
developments are designed to extend coverage in
existing spectrum allocation by adding more BTSs in
response to existing and projected customer demand for
combination with existing technology such as cell
new advanced value added services and to position the
splitting, software feature optimisation, frequency reuse
Company for third generation UMTS technology. The
and cell sectoring. In order to avoid capacity constraints
Company offers nation-wide GPRS commercial services
the Company has started employing microcells, while a
since the first quarter of year 2001.
number of additional measures, such as frequency
hopping, could be used in the future to achieve clearer
3.8 Commercial Agreements
frequency utilisation and higher capacity.
For the smooth end effective execution of its operations,
COSMOTE has entered into commercial agreements both
COSMOTE has developed a comprehensive process to
with its principal shareholder, OTE, as well as with other
monitor the performance of its network on a continuous
suppliers and associates.
basis. The network performance indicators are monitored
42
and evaluated on a national and regional basis by using
Interconnection Agreements
advanced, real time information systems to collect relevant
The Company, like other mobile telecommunications
data continuously from all the network elements and takes
operators, requires interconnection with fixed line
proactive measures to address any shortcomings in
networks and other mobile telecommunications networks
network performance.
to enable customers to initiate and receive calls to and
from customers of these other networks. The Company
Furthermore, pursuant to the resolution of NTPC number
therefore requires interconnection arrangements with the
257/72B/07.02.2003, the Company, VODAFONE and OTE
other holders of the respective individual licenses.
were nominated as Organisations with Significant Market
Power (SPM) in the interconnection market. The Company
Interconnection Agreements are governed by the recent
has filed before the Council of State an application for the
Telecommunications Law 2867/2000 and the Directive
annulment of the above resolution of NTPC.
97/33/EC of the European Parliament and of the Council
of 30 June 1997 on interconnection in
According to the current Directive 97/33/EC on
telecommunications, which is incorporated into Greek
Interconnection in telecommunications which was
Law with the Presidential Decree 156/99. In the process
incorporated into Greek Law with the presidential Decree
of the review of the regulatory framework of the
165/99, the companies which are nominated as
European Union concerning telecommunications (Review
Organisation with the Significant Market Power (SMP) in
1999), on April 24, 2002 was published in the Official
the interconnection market are obliged among other
Journal of the European Community a new Directive on
things to:
Access and Interconnection (Directive 2002/19/EC on
± To follow the principles of transparency and cost
Access) which replaces the Directive 97/33/EC and shall
orientation in the interconnection charges.
enter into force in Member States on July 25, 2003.
± To prove that charges are derived from actual costs
including a reasonable rate of return on investment. EETT
With respect to this issue, there are also two relevant
may request an organization to provide full justification for
decisions of NTPC. In particular, pursuant to the decision
its interconnection charges, and where appropriate shall
of NTPC dated 15.03.2002 the Company and VODAFONE
require charges to be adjusted.
were nominated as Organisations with Significant Market
± To meet all reasonable requests for access to their
Power (SMP) in the telecommunications market.
network.
According to a relevant interpretative announcement of
± To follow the principle of non-discrimination with regard
NTPC the companies with Significant Market Power in the
to interconnection offered to others.
mobile market have the following indicative obligations:
± To apply similar conditions in similar circumstances to
1. Each operator must have one fee for calls terminating
interconnected organizations providing similar services.
into its network, irrespectively of whether the originating
network is fixed or mobile.
Interconnection Agreement with fixed networks
2. The termination fee on a per minute basis must be
The Company and OTE are parties to an interconnection
lower than the lowest "on-net"1 retail tariff offered by each
agreement dated April 9, 1998, concerning the
provider of mobile telecommunications services.
interconnection of calls originating on the PSTN network
3. Discount policies must be transparent and not
owned and operated by OTE or the GSM 1800 network of
discriminating.
the Company and terminating on COSMOTE’s or OTE’s
network, as the case may be. The term of the
1. Calls that are initiated and terminated to the same network.
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Interconnection Agreement is 10 years (expires at 2008).
COSMOTE pays OTE connection fees as well as monthly
Both parties have the right to terminate the
rents for the use of its lines both of which are set at rates
Interconnection Agreement for substantial breach of its
determined unilaterally by OTE from time to time, plus the
terms, if the said breach remains unremedied for one
relevant VAT. Greek law governs the Leased Lines
month by submitting written notice thirty days after
Agreements and the parties are submitted to the
relevant notice is received by the other party.
jurisdiction of the competent courts of Athens in
connection with disputes between them.
Furthermore, up to 30.4.2003 the Company had entered
into interconnection agreements with Quest Wireless,
Framework Agreement for the Secondment of
FORTHNET and TELLAS, which are granted, an individual
Personnel and Leasing of Property
license for Fixed Wireless Access, whereas COSMOTE was
On September 22, 1997, OTE and COSMOTE entered into
in the process of negotiating similar agreements with
a framework agreement for the secondment of personnel
other holders of individual licenses.
to COSMOTE and the lease of OTE's premises to
COSMOTE for the operation of its business. The
Interconnection Agreements with the other three
Framework Agreement is open-ended and has no fixed or
mobile networks
minimum term.
The Company has entered into Interconnection
Agreements with the three providers of mobile
OTE Site Leases
telecommunications services (VODAFONE, STET-Hellas
At December 31, 2002, OTE and COSMOTE were party to
and Quest Wireless) on December 12, 1997, December
1,146 lease agreements regarding OTE sites for the
13, 1997 and May, 2002 respectively.
installation of COSMOTE’s equipment for terms of nine to
twelve years duration. Both parties pay equal amounts of
Main Agreements with OTE
stamp duty. COSMOTE has the right to terminate a Site
Interconnection Agreement with OTE (see above)
Lease Agreement at any time by giving one month's
notice. The Site Lease Agreements are subject to Greek law
Leased Lines Agreements
and the parties submit to the jurisdiction of the competent
As of December 31, 2002, OTE and COSMOTE had
courts of Athens.
entered into agreements for the leasing of approximately
3,651 OTE lines for the COSMOTE network. The Leased
BTS Maintenance Agreements.
Line Agreements are for an indefinite period with a
After the expiry of the previous BTS Maintenance
minimum term of 6 months. COSMOTE can terminate a
Agreement with OTE, and pursuant to the approval of the
Leased Line Agreement at any time after the expiration of
Extraordinary General Assembly of the Shareholders of
the minimum term by giving seven days' written notice.
COSMOTE which was held in Athens in 21.02.2002,
The lease of these lines can be discontinued by OTE in
COSMOTE and OTE have entered into a new BTS
case of emergency. OTE is responsible for the maintenance
Maintenance Agreement. This Agreement is valid until
of the leased lines.
31.12.2003 and may be renewed each time for another
year after written agreement of the parties upon the same
terms and following revision of the prices. COSMOTE may
44
terminate this Agreement at any time by giving three
Management Agreement with OTE and OTE
months written notice to OTE.
INTERNATIONAL
In October 2002, COSMOTE, OTE and OTE
Under these BTS Maintenance Agreement, COSMOTE pays
INTERNATIONAL entered into an agreement pursuant to
OTE fixed sums for acting as maintenance contractor and
which COSMOTE assumed management responsibility for
for carrying out preventive maintenance and for repairs
two of OTE's mobile assets, namely COSMO BULGARIA
performed, depending on the location of the BTS and the
MOBILE (GloBul) and MTS Mobile Telecommunications
nature and severity of the problem. The BTS Maintenance
Services AD-Skopje (in the Former Yugoslav Republic of
Agreement is subject to Greek law and the parties are
Macedonia).COSMOTE undertook the following
submitted to the jurisdiction of the competent courts of
responsibilities pursuant to this agreement:
Athens in connection with any disputes between them.
± The financial, technical, commercial and operational
management as well as the legal and regulatory support of
Agreement for the transfer of Special License for Fixed
Globul and MTS. The management of issues relating to
Wireless Access (LMDS)
ownership, financing and relationships with the
On March 12, 2002 COSMOTE and OTE entered into an
governmental bodies for these companies will be
agreement for the transfer to COSMOTE of OTE's Fixed
managed by OTE INTERNATIONAL
Wireless Access License in 25 GHz for the amount of
± Where specifically requested and after a special
9.535.000 euro. The above Special License had been awarded
agreement, management support on an ad hoc basis for
to OTE pursuant to the resolution of NTPC number
all other international mobile subsidiaries of OTE.
229/26/9.10.2001. According to the article 3 parg. 14 c of
the Telecommunication Law 2867/2000, NTPC approved the
The management agreement's term expires on 31
aforementioned transfer with the resolution
December 2004 and shall be renewed automatically for
248/63/15.03.2002 . On 22 November 2002 COSMOTE and
one year, unless a party to the agreement objects to the
OTE entered into an agreement in order for COSMOTE to
renewal at least two months' prior to its expiration. A
purchase for 4,562,099 euro, part of OTE's equipment that
party, for a cause upon giving three months' notice can
had been acquired to cover the operational needs of the
terminate the management agreement.
aforementioned license. This purchase was approved by the
NTPC pursuant to its resolution number 270/6/13.12.2002.
COSMOTE's fees pursuant to this agreement comprise two
elements:
In view of the intention of COSMOTE to purchase from
1. the first element consists of the reimbursement of the
OTE additional equipment which also aims to cover the
operational costs of COSMOTE for the management of
needs of the aforementioned license, the Committee
these mobile companies, excluding amortisation expenses
provided for in article 9 of C.L. 2190/1920 concerning the
and financial losses, plus a 10 per cent premium as profit
Anonymous Companies, was formed following the
2. the second element compensates COSMOTE for the
relevant application of COSMOTE. The Committee's task is
added value provided to these companies and it will
to estimate the value of the aforementioned equipment
amount to a 5 per cent of the annual revenues of each
and to give its permission for its transfer in accordance
company, provided that specific EBITDA targets are met,
with article 10 of C.L. 2190/1920.
as defined in the business plan for each company.
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COSMOTE's fees for ad hoc projects conducted for other
computers). COSMOTE estimates that all the terms of the
mobile telephony subsidiaries of OTE will be agreed on a
aforementioned agreements with OTE are just and fair.
case-by-case basis.
All transactions between OTE are cleared on a bimonthly
OTE Master Dealer Agreement
basis.
COSMOTE and OTE are parties to a master dealer
agreement dated May 25, 1998 and expiring on May 25,
All the aforementioned agreements have been approved
2001, pursuant to which OTE is obliged to promote and
by COSMOTE’s General Meetings, according to article 23a
distribute COSMOTE's services. The OTE Master Dealer
of law 2190/1920, except from the interconnection and
Agreement may be renewed on an annual basis thereafter.
leased lines agreements that represent standard
Under the terms and conditions of the agreement OTE is
commercial agreements, based on OTE’s published tariffs
allowed to delegate the performance of its obligations to
used for all similar agreements with all its leased lines and
promote and distribute COSMOTE's services to sub-dealers
interconnection customers, and thus they do not fall out
of its own choosing. The respective sub-dealership
of the scope of day to day transaction of COSMOTE.
agreements have to be approved by COSMOTE. The
above Agreement gives COSMOTE the right to act as a
Agreements with other Suppliers
contracting party to similar agreements with other
The Company's network utilises standard equipment that
commercial distributors as well. Furthermore, COSMOTE
is available from a limited number of suppliers. The
promotes and distributes its products and services through
Company's major GSM 1800 infrastructure contractor is
its dealers: ALTCOM, GERMANOS, KLIMAPHONE,
Nokia and its affiliates which supplies the Company with
SANYOCOM, SPACEPHONE, S. BENROUBI, PLAISIO
MSCs, BSCs and BTSs, operations support systems and
COMPUTERS, ONE WAY, CARRERFOUR-MARINOPOULOS,
cross connect systems equipment. In July 1997,
VALUENET, MARITEL, EUROBANK CARDS.
COSMOTE entered into an agreement, which was
COSMOTE has assigned the distribution of prepaid
amended in January 2000 and April 2001 and 2002 with
services to the company ELGEKA and to the Greek Post
Nokia for the supply of GSM 1800 transmission and other
Office.
equipment and services. At the beginning of 2003
COSMOTE entered into negotiations in order to achieve a
Other agreements with OTE
new agreement. In August 1999, the Company entered
In addition, COSMOTE has signed with OTE (and other
into a purchase agreement with Ericsson for the supply of
associates) agreements for the bill printing, enveloping and
network infrastructure equipment and related services for
collection of the bills of COSMOTE's contract subscribers.
the Company’s network in the northern part of Greece.
Furthermore COSMOTE and OTE Leasing S.A., a former
This agreement expires in 2003. COSMOTE also purchases
subsidiary of OTE1, are parties to a framework leasing
additional network elements such as a pre-paid platform,
agreement dated January 31, 1997 which currently governs
voicemail servers and SMS centres and a billing and
eighteen individual sub-leasing agreements, mainly including
customer care system from other network suppliers.
the leasing of office equipment (furniture and personal
1. OTE has transferred OTE Leasing to "Piraeus Leasing"
46
Furthermore, COSMOTE has entered into third-parties
Thessaloniki, 2 in Patras, 1 in Heraklion and in Larisa
agreements in order to provide to its subscribers access to
respectively.
the third parties services. In these cases COSMOTE provides
The Company’s fixed assets are free of mortgages,
a percentage of the revenues to the third company.
prenotices and other liens.
3.9 Property
Encumbrances
Intellectual Property
There are no contractual encumbrances on the network or
COSMOTE owns twenty-seven trademarks registered in its
other equipment of the Company.
name with the Greek Ministry of Commerce which are used
in connection with the marketing and sale of its services and
Guarantees
products. The Company has applied to register a further
COSMOTE has guaranteed, without giving a Bank Letter
seven trademarks with the Greek Ministry of Commerce and
of Guarantee, in favour of its related company Albanian
it has applied to the Office for Harmonisation in the Internal
Mobile Communications (AMC) in respect of two
Market for seven Community Trademarks. The Office’s
agreements, signed between AMC and NOKIA, regarding
headquarters are in Alicante in Spain.
the provision of equipment and services, of an amount of
30 million euro and 10 million euro respectively.
Buildings and Sites
COSMOTE leases its headquarters (including a COSMOTE
COSMOTE has provided ALPHA BANK S.A. with a Letter of
branded store) which occupies 5,351 m2 over five floors at
Comfort in favour of its related company Albanian Mobile
44 Kifissias Avenue, Athens pursuant to a nine year lease
Communications for the fulfilment of its obligations under
entered into in November 1997, which may be renewed
a Loan Agreement of an amount of 31.000.000 euro.
unilaterally by COSMOTE for a further six years. COSMOTE
leases the premises for its COSMOTE branded stores in
Moreover, a joint Letter of Comfort has been provided by
Athens and Thessaloniki. It also leases substantially all the
OTE and COSMOTE to AGROTIKI BANK in favour of
sites where its mobile telecommunications network
"cosmoONE HELLAS MARKET SITE AE", in the capital of
equipment is installed. During year 2001 the Company had
which OTE and COSMOTE participate with a percentage
1,088 of its sites leased from OTE and 1,136 of its sites
of 26% each (totally 52%), in respect of a Loan
leased by third parties.
Agreement of an amount of 1.000.000 euro between
cosmoONE and AGROTIKI BANK, assuring the Bank that
Telecommunications Equipment
OTE and COSMOTE shall not proceed to the decrease of
As of December 31, 2002 the Company operated the
their total participation in the share capital of cosmoONE.
following telecommunications equipment:
± 2,598 BTSs (all over Greece)
Regarding the Bank Letters of Guarantee provided by
± 52 BSCs, of which 14 are based in Athens, 4 in
COSMOTE in favour of the National Telecommunications
Thessaloniki, 3 in Patras, 2 in Kavala, 2 in Livadia and 2 in
Committee, for the fulfilment of its obligations under the
Siros, while 1 BSC is based in each of the remaining
Special Telecommunications Licenses granted to
twenty (25) largest cities in Greece.
COSMOTE, it is noted that the following Bank Letters of
± 16 MSCs, of which 9 are located in Athens, 3 in
Guarantee are in effect:
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1. Bank Letter of Guarantee for the amount of 5.135.821
assist the sales and marketing functions:
euro for the fulfilment by COSMOTE of its obligations
± Commission Handling System ("CHS"): CHS is a system
under the Special Licence for Third Generation Mobile
for calculating and processing dealer commissions
Communications.
developed by Intrasoft for COSMOTE.
2. Bank Letter of Guarantee for the amount of 146.735
± Application Request and Activation System: COSMOTE
developed the ON LINE system with the National
under the Fixed Wireless Access Special Licence.
Technical University of Athens to automate elements of
the customer acquisition process (like subscription and
activation).
under the Special License for Second Generation Mobile
± Customer Service Systems: The Company has
Telecommunications regarding the spectrum DCS 1800.
implemented an electronic subscriber document
management system for the collection and filing of all
customer application documentation, supporting
arising from the granting to COSMOTE of radio spectrum
documents at activation time, bill images and faxes sent
in the EGSM900 frequency band.
by customers.
± Fraud Management System: In order to protect its
Information Technology
customers from unauthorised use, the Company has
COSMOTE relies on IT systems for the accelerated
implemented the CFMS, Fraud Management System,
deployment and efficient operation of its network
developed by COMPAQ.
infrastructure, the provision of effective customer services and
the smooth and efficient operation of its internal business. The
ENTERPRISE RESOURCE PLANNING SYSTEMS
Company's main IT systems are briefly described below:
IFS Telecom ("IFS"): IFS is an enterprise resource planning
BILLING AND CUSTOMER ADMINISTRATION SYSTEMS
system, especially customised for COSMOTE. It covers all
The necessary functions for supporting billing and
necessary functions to support multiple currency and
customer administration activities are provided by the
multiple dimension accounting, suppliers, customer
Business Support and Control System ("BSCS"). BSCS is a
orders, invoicing and consolidation of branches. The
client-server billing and customer administration system
business areas of COSMOTE, supported by IFS are the
developed by LHS, presently named SchlumbergerSEMA,
Financial, Customers-Suppliers, Distribution and the Retail
for the telecommunications industry. BSCS’s current
System area.
version (v5.21) provides the Company with capabilities for
the development of a tariffing policy customised to the
INTRANET
needs of GPRS billing. During billing, BSCS summarises
The Company has developed internally an Employees’
account and service data, calculates charges, discounts
Corporate Portal ("Intranet") where all the corporate
and taxes and generates the necessary bill data that are
announcements, phone directory, organisation chart and
provided to the customers.
procedures may be found.
SALES AND MARKETING SYSTEMS
The Company has a number of IT systems designed to
48
NETWORK STATIONS MANAGEMENT
COSMOTE has developed a site manager system that manages network element installation and network status reporting.
COSMOTE's site manager system supports all processes related to network maintenance and is integrated with IFS’s
module for project management, budgeting and cost control.
3.10 Employees
The number of COSMOTE’s employees (including outside contractors and personnel on secondment from OTE) for the
last two years was:
Number of Employees
COSMOTE
OTE
Other
TOTAL
2001
2002
469
1,641
68
68
996
17
1,533
1,726
The above employees were occupied in the following sectors:
SECTOR
2001
2002
Administration (including Legal, HR, Quality etc)
135
146
Financial
180
313
Commercial
821
800
Technical
397
467
1,533
1,726
TOTAL
Total payroll expenses in year 2002 amounted to euro 52.9 million compared to euro 44.7 million in the previous year.
Bonus Scheme
At the extraordinary general meeting held on July 31, 2000, the shareholders approved the adoption by COSMOTE of a
bonus scheme for the payment of annual bonuses to the Company's employees. Pursuant to the terms of this scheme, the
Managing Director shall be authorised to award bonuses to COSMOTE's employees provided COSMOTE has achieved its
budgetary targets and provided the employee has met performance conditions in accordance with COSMOTE's system for
the appraisal of employees. Bonuses shall not exceed three times monthly salaries for senior personnel and two times monthly
salaries for the other personnel. The Managing Director was authorised to make such bonus awards from year 2000 onwards.
49
CHAPTER 4
Management
50
The management
of the Company
remains dedicated in achieving
the ambitious goals it sets.
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Management
4.1 Organization Chart
Internal Audit Committee
BOARD OF DIRECTORS
(Consists of 3 members of BoD)
Internal Audit
Department
MANAGING DIRECTOR
Executive Committee
Legal Counsel, Competition,
Legal & Regulatory Affairs Department
(Managing Director, General Managers,
Legal Councel)
Financial Division
Operation & Maintenance
Department
Accounting Department
Network Sales
Department
Marketing Department
Switching & Network
Management Department
Treasury Department
Corporates Sales
Department
Olympic Games
Sponsorship ATHENS 2004
Department
Constructions Department
Financial Planning
Department
Customer Service
Department
Radionetworks Department
Investor Relations
Department
Corporate
Announcements
Shareholders Services
IT Department
Contracts, Purchasing
& Project Management
Department
International Operations
Purchasing Department
52
Commercial Division
Products Services
& Marketing Division
Technical Division
Human Resources
Organisation
& Quility Department
Puyblic & Media
Department
4.2 Board of Directors
Konstantinos Apostolides, Director, Vice Chairman of
The Company’s Board of Directors comprises of nine (9)
Chipita International
members who serve three-year terms. Six members
(including the Chairman) are elected by the Shareholders
Yiannis Sarantitis1, Director, lawyer.
in the General Meeting, while the remaining three,
including the Vice-Chairman, are nominated by Telenor-B
Arve Johansen, Director, Senior Executive Vice President of
Invest AS, as long as Telenor-B Invest holds at least 15% of
Telenor since 1999 and Chief Executive Officer of Telenor
the Company’s shares. As a result of the decline in
Mobile Communications since 2000.
COSMOTE's share capital in 30.04.2003 to 9%, Telenor-B
Invest abolished its right to appoint members of the Board
Mr. Sliper, Mr. Johansen and Mr. Sarantitis are appointees
of Directors As a consequence, the next AGM has to elect
of Telenor-B Invest in accordance with the terms of the
all nine members of the Board of Directors.
Shareholders Agreement and the Articles of Association.
The remaining members of the Board of Directors are
The Board comprises of the following members:
elected by the General Meeting of the Company’s
Eleftherios Antonakopoulos, Chairman, Chairman and
Shareholders.
Managing Director of OTE since March 2002.
The Board of Directors term ends on 8.6.2003.
Ivar Sliper, Vice Chairman, Telenor Group Executive
Of the above members, only the Managing Director, Mr.
Evangelos Martigopoulos is a performing member, while
Evangelos Martigopoulos, Managing Director, Managing
the other eight (8) are non-performing members,
Director of COSMOTE since June 2000.
according to Corporate Governance Principles.
Yorgos Ioannidis, Director, Managing Director of OTENet
Mr. Leonidas Asimakis and Mr. Konstantinos Apostolides
since June 2000.
are independent members, meaning that they do not
have any other relation with the Company and its
Leonidas Asimakis, Director, Chairman of Asimakis
Shareholders except for his participation in the Board of
Educational Group, and owns 80% of the shares of
Directors.
Asimakis Schools S.A.
The Managing Director, represents the Company before
Christos Economou, Director, Secretary of International
the Courts, as well as any other judicial and public
Relations of OME-OTE (the OTE trade union) and a
authority, binds the Company and stipulates on behalf of
Member of the Steering Committee for Social Affairs of the
the Company for contracts of any kind up to euro
European Commission.
2,100,000.
1. Mr. Ioannis Sarantitis is son of Mr. Vassilios Sarantitis, that holds an indirect shareholding interest in COSMOTE (through WR Com
Enterprises Ltd)
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The total aggregate of the remuneration paid to the Board
Government from Essex University, England and has a
of Directors for their duties amounted to euro 52.7
Post-graduate Diploma in Economics from the University
thousands. The only Board member that receives a
of Surrey, England.
monthly salary is the Managing Director, Mr. Evangelos
Martigopoulos, whose payments and other benefits for the
Nikolaos Tsolas, Chief Technology Officer.
year ended December 31, 2002 amounted to euro 332.2
Mr. Tsolas was appointed Chief Executive Officer of the
thousands including his performance bonus. The
Bulgarian mobile operation, GloBul in December 2002. At
Shareholders General Meeting has approved the
the same time he is the Chief Technology Officer of
aforementioned remuneration package of the Managing
COSMOTE group. His main responsibilities cover the co-
Director.
ordination of technical issues in the foreign markets that
COSMOTE is activated. In June 2000 he became General
Details of the officials that form the Company’s Executive
Manager of Network and Services at COSMOTE. Prior to
Committee are set out below:
joining COSMOTE, he was Executive Director of Network
Development and Operations at STET Hellas. Mr. Tsolas
Evangelos Martigopoulos, Managing Director.
has also served as Director of Communications at
Mr. Martigopoulos has been the Managing Director of
Commercial Capital, Director of Services and Product
COSMOTE since June 2000. Between March 1998 and
Development at STET Hellas, Systems Engineer at Siemens
February 2000, Mr. Martigopoulos was Sales and
AG, Munich, Germany and Member of Technical Staff in
Marketing Director of COSMOTE. In February 2000, he
the New Services Division at AT&T Bell Laboratories, New
assumed the functions of General Commercial Manager of
Jersey, USA. Mr. Tsolas holds a B.Sc. in Mathematics from
COSMOTE. Prior to that, he was Sales Manager at
the University of Ioannina, Greece, an M.Sc. in
Databank, syNET and NCR Hellas, as well as Sales Account
Mathematics from the State University of New York,
Manager at Digital. He has also worked as a Systems and
Oswego, NY, USA, and an M.Sc. and a Ph.D. in Electrical
Communications Analyst at Bull. Mr. Martigopoulos holds
Engineering and Computer Science from the University of
a M.Sc. in Power Electronics from Brunel University,
California at Berkeley, USA.
England and a B.Sc. in Electronics from the University of
London, England.
Ioannis Kyriakakis, General Technical Director
Mr. Kyriakakis is the General Technical Director of
54
Elias Fotiadis, Chief Financial Officer.
COSMOTE since January 2003. He started his career in
Mr. Fotiadis is the Chief Financial Officer of COSMOTE
OTE in 1973 and in 1996 he joined COSMOTE, where in
since it commenced commercial operations. Prior to his
2000 was appointed Switching and Network
current position he was Chief Financial Officer and
Management Director. In November 2001 he became
Member of the Board of KINO S.A., and, prior to that,
General Technical Director of ROMTELECOM and retained
Chief Financial Officer at J.N.Leoussis S.A., a conglomerate
this position till December 2002. Mr. Kyriakakis holds a
of advertising and marketing companies, a Financial
B.Sc. in Physics from University of Thessaloniki, Greece and
Consultant and an Auditor/Consultant with Price
a M.Sc. in Electronic Physics from the Postgraduate
Waterhouse. Mr. Fotiadis has a B.A. in Economics and
Department of the University of Thessaloniki.
Megaklis Stoukidis, Chief Commercial Officer
Industry) and continued as a Product Manager in the
Mr. Stoukidis has been Chief Commercial Officer of
Marketing Division of the same company. Since 1994, he
COSMOTE group since May 2003. His main
has participated in many seminars in the field of
responsibilities cover the co-ordination of commercial
telecommunications and mobile telephony, as a speaker.
issues in the foreign markets that COSMOTE is activated.
He holds a B.Sc. in Electrical Electronic Engineering from
In August 2000 he became General Commercial Manager
the Technical University of Liverpool and a M.Sc. in Digital
of COSMOTE. Prior to joining COSMOTE, Mr. Stoukidis
Electronics and Microprocessors from the University of
was the Director for Communications Devices Division for
UMIST in Great Britain.
Greece and the Balkans at Siemens AG. He has also served
as Marketing Accounts Manager at VODAFONE (Greece),
Irini Nikolaidi, Legal Counsel, Competition and Legal
Marketing Manager for the General Business Unit at IBM
Affairs Director.
Hellas and Staff Engineer at Foster-Miller Inc. Mr. Stoukidis
Ms. Nikolaidi, joined COSMOTE as its Legal Counsel at the
holds a B.Sc. in Electrical-Mechanical Engineering from the
time of its incorporation in October 1996. Before that she
National Technical University of Athens, Greece and a
had served at OTE and private law firms as an expert in
M.Sc. in Engineering Management from Northeastern
telecommunications and company law, with a focus on
University of Boston, United States.
mobile telephony projects. Ms. Nikolaidi obtained a law
degree from the University of Athens, Greece as well as a
Konstantinos Liamidis, General Commercial Director
Master Degree (LL.M.) in International Business Law from
Mr. Liamidis joined COSMOTE as Deputy Commercial
the University of London (UCL), England, where she
Director at the time of its incorporation in October 1996.
specialised, among other subjects, in International Finance
In the beginning of 2000 he was appointed Retail Network
and International Trade Law.
Sales Director. As of May 2003 Mr. Liamidis became
General Commercial Director. Prior to joining COSMOTE,
According to the provisions of decision 5/204/14.11.2000
he started his career in OTE and later on became an
of the Greek Capital Markets Commission Board of
executive in the Commercial Department of the
Directors, the Company has hired Mr. Spyridon
Organisation. He holds a B.Sc. in Physics and Mathematics
Mavrogalos to be the Internal Audit Director and Mrs
from the University of Ioannina, Greece.
Myrella Ioannidou as the Investor Relations Director:
Damian Charalambidis, General Products, Services &
Spyridon Mavrogalos, Internal Audit Director.
Marketing Manager
Mr. Mavrogalos, joined COSMOTE as Director of Internal
Mr. Charalambidis joined COSMOTE as Product and
Audit in April 2002. He is a Certified Chartered Accountant.
Services Director in February 1998. In the middle of year
Prior to joining COSMOTE, he worked for six years at EFG
2002 he became Products, Services & Marketing Director.
Eurobank Ergasias in a number of positions, including head
In May 2003 he was appointed General Products, Services
of Integration Office, Head of Market & Operational Risk
& Marketing Director. His carrier started in 1991 as a
Management and Audit Manager. He has also worked as
Development Engineer in the Research and Development
an Auditor at ABN AMRO Bank and KPMG. Mr. Mavrogalos
Division of INTRACOM (Telecommunication & Informatics
holds an MBA in Financial Studies from Nottingham
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University of England and a B.Sc. in Business Administration
functional assignment of powers between shareholders,
in Computer Information Systems from Deree College.
management and members of the management. The
monitoring and control mechanisms of the activities of the
Myrella Ioannidou, Investor Relations Director.
Company assure the transparency towards the investors
Mrs. Ioannidou, has been Investor Relations Officer of
and the protection of its shareholders’ legal interests.
COSMOTE since August 2000. Prior to joining COSMOTE,
Mrs. Ioannidou worked in a similar position at VODAFONE
In this respect, on April 2002, by decision of the Company’s
(Greece). She has also worked as a Business Analyst at OTE
Board of Directors, an Audit Committee has been formed
responsible for the company’s international offerings,
with the intention to assist the Board of Directors in the
Alpha Bank and Ernst & Young. Mrs. Ioannidou holds a
practice of their duties regarding matters of internal audit
B.A. in Business Administration, Systems Analysis and
and to ensure transparency in corporate activities.
Operational Research from the University of Athens,
Greece and a M.Sc. in Information Systems and
The Audit Committee consists of three non-executive
Telecommunications from the London School of
members of the Board of Directors, that possess the
Economics, England.
necessary knowledge and experience and are appointed
by the Board of Directors, while the Managing Director,
The total aggregate of the remuneration paid and benefits
the Internal Audit Director and the Legal Counsel attend
in kind granted to the aforementioned officials for the year
the meetings without voting rights. Other executive
ended December 31, 2002 was approximately euro 967.3
officers may attend per committee’s request.
thousands. The above figures include provisions for annual
performance bonuses of up to 3 monthly salaries,
The Audit Committee’s main responsibilities are:
according to a relevant approval from the Shareholders
± The assessment of the adequacy and effectiveness of the
General Meeting.
internal control system of the Company and the monitoring
of the Internal Audit Division’s work. Emphasis shall be given
No director of COSMOTE has been involved in significant
in matters of independence, in the quality and scope of
transactions outside of COSMOTE, while a number of the
audits and generally in the effectiveness of its work.
Company’s directors participate in the management of
± The provision of an opinion about the selection of the
Companies of OTE Group.
external auditors.
± The assurance to the Board that the Company is in
56
4.3 Corporate Governance– Audit Committee
compliance with the regulatory framework.
The Company places great emphasis to proper Corporate
± The independent review of the annual financial
Governance and has established a set of internal
statements and other important information to be
regulations, principles and control mechanisms in order to
disclosed or submitted to authorities or organisations
bring the management of the Company into line with the
outside the Company
interests of the Stakeholders, that is all those who have
± The facilitation of the communication between the
legitimate interest in the activities of the Company.
Board, the Management, the Internal Audit Division and
Through the application of the corporate governance
the external auditors of the company regarding the
principles, the Company aims at the trustworthy and
exchange of opinions and information.
Moreover, on April 2002, by decision of the Board of
± The detailed information of the Audit Committee and of
Directors of the Company, the Internal Audit Department
the Board of Directors in fixed periods and at least once
was restructured into Internal Audit Division and a new
every three months for the conclusions of the internal
Internal Auditor was appointed.
audit, the progress of the internal audit work, the agreed
activities and the level of materialisation of the proposals
The Internal Audit Division’s object is the assessment of the
aiming at the improvement of the controlled sectors of the
adequacy and the effectiveness of the internal control
Company as well as of for cases of conflict of the private
system of the Company, as well as the monitoring of the
interests of the members of the Board of Directors or the
observation of the internal procedures and obligations
directors of the Company with the interests of the
arising from the existing legal and regulatory framework.
Company, ascertained during the performance of its
duties
The Internal Audit Division’s main responsibilities are:
± Cooperation with the Internal Audit Division of the OTE
± The monitoring of the application and of the continual
Group.
observance of the Internal Regulation Manual and of the
± All other responsibilities provided by the Law.
Articles of Association of the Company, as well as of the
legislation on Company Law and of the Stock Exchange
Finally, in compliance with the decisions of the Hellenic
Market legislation.
Capital Marker Commission and the recent law on
± The control of the observance of the obligations
corporate governance, the Company has proceeded on
provided by the Decision no 5/204/14.11.2000 of the
October 2002 to the establishment of the Internal
BoD of the Hellenic Capital Market Commission and by
Regulation Manual of the Company.
Law 3016/2002.
aiming at the administration and prevention of dangers
4.4 Management Share Option Plan (The
Management Incentive Plan)
related to the activities of the Company.
The Company has established a Management Share
± Assessment of the adequacy of the internal control
Option Plan intended for the management (Chairman,
system of the Company.
Managing Director, Legal Counsel, General Managers,
± The drawing in writing of audit statements submitted to
Directors, Deputy Directors and Heads of Departments) for
the Management regarding:
the purchase of Company’s shares. The Plan has been
- the level of observance of the various procedures
approved by resolution of the General Meeting held at
applicable to the various sectors of the Company
6.9.2000 and amended by resolutions of the General
- the adequacy of the existing internal controls points
Meetings held at 12.6.2001 and 21.2.2002. Eligible
- the compliance of the Company to the provisions of the
persons are entitled to options in respect of ordinary
Legislation governing its function
shares with an aggregate value of between two and five
- the level of realisation of the guidelines of the
times their respective annual gross salaries, depending on
Management
their position (Basic Options). Further grants of options
± The assessment of the internal control system of the
may be made by the Board of Directors to participants at
affiliate companies and the monitoring of the relevant
the end of each year in respect of ordinary shares with an
internal control services.
aggregate value equal to their respective annual gross
± The conduct of ordinary and extraordinary controls
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salary (Additional Options). In the framework of the law
their grant and 30% with the completion of the third year
and the Company's Articles of Association, the Company
after their grant1.
reserves the right of choosing the procedure to be
followed for the grant of shares to the eligible persons (i.e.
As far as the Chairman is concerned, his Basic Options are
increase of the Company's share capital according to
turned into Definitive after one year.
article 13 par. 9 of C.L. 2190/20, undertaking by the
Company of its own shares etc) The Exercise Price for
Additional Options are turned to Definitive after three
acquiring shares is defined as follows:
years.
a) The exercise price payable for each ordinary share under
options granted at the time of the establishment of the
The Basic Options can be exercised in whole or in part
Management Incentive Plan was 10% below the bottom
until the fourth year from their grant. The Additional
end of the range for the Offer Price during the Company’s
Options can be exercised in whole or in part during their
IPO (i.e. euro 8.24 per share).
maturity year or the year after.
b) The exercise price for the purchase of ordinary shares
under options granted on subsequent occasions by the
Share options expire if the beneficiary leaves the Company
Board of Directors will be the average closing price of the
or is fired before they are turned into Definitive,
shares for the month preceding the grant of options,
independently of their exercise date.
determined by reference to the Daily Bulletin of the ASE.
The same exercise price will be valid for the Additional
Following a resolution of the Board of Directors, in the
Options as well.
year 2000, Basic Options have been granted to 40
managers (including the Chairman of the Board) for the
The number of ordinary shares which may be issued in any
purchase of 1,187,010 shares of the Company, in total, at
five year period after the establishment of the
the price of GRD 2,808 or euro 8.24 per share.
Management Incentive Plan pursuant to its terms or to the
terms of any other share option scheme or under all other
Also, in 2001 the Board of Directors approved the grant
employee share schemes adopted by COSMOTE may not
of: a) Basic Options to 114 Officers for the purchase of
exceed 5 per cent of COSMOTE's share capital and in any
950,390 shares of the Company in total, at the price of
event, may not exceed 10 per cent of the existing shares
euro 9.78 per share (these grants mainly concern
of the Company.
Department Directors, which were included in the Plan
after its expansion by resolution of the General Meeting
The Basic Options are gradually converted to Definitive,
held at 12 June 2001) and b) Additional Options to 38
thus 40% with the completion of one year from their
Officers for the purchase of 296,920 shares of the
grant, 30% with the completion of the second year from
Company, at the price of euro 9.78 per share.
1. As modified by resolution of the General Meeting held at 21.2.2002, which is also valid for grants that had already been materialized
until then.
58
During 2001, 55,870 Share Options matured and
accordingly, 55,870 new shares were issued and granted
representing 0.0169% of the paid in share capital.
Finally, during 2002, 1,133,720 Share Options have
matured of which 83,250 were exercised. Accordingly,
83,250 new shares were issued and granted, representing
0.0252% of the paid in share capital.
In addition, during 2002, the Board of Directors approved
the grant of: a) Basic Options to 27 Officers (including the
new Chairman of the Board) for the purchase of 350,370
shares of the Company in total, at the price of euro 8.96
per share and b) Additional Options to 145 Officers for the
purchase of 833,765 shares of the Company, at the price
of euro 8,96 per share.
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CHAPTER 5
Summary Discussion
and Analysis of Financial Condition
and Results of Operations
60
We continue our impressive
financial performance
and aim at expanding our footprint.
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Summary Discussion and Analysis of Financial Condition
and Results of Operations
5.1 Financail Review
The following summary discussion and analysis of COSMOTE's financial condition and results of operations is based upon
and should be read in conjunction with the Company's U.S. GAAP financial statements for each of the two years ended
December 31, 2001 and 2002, which have been audited by Ernst & Young S.A., independent public accountants (please
see Appendix).
5.1.1 Summary Consolidated Financial Results
COSMOTE [ASE: COSr.AT], reports consolidated financial results (for the twelve months ended December 31, on a yearly
basis). Consolidated financial results included the financial results of AMC1 (Albanian Mobile Communications sh.a).
CONSOLIDATED RESULTS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 2001 AND 2002 (US GAAP)
Amounts in euro (‘000),
% change
Except per share data
2001
2002
Revenues
926,877
1,201,327
29.6%
Of which telecom revenues
895,007
1,173,805
31.2%
EBITDA
408,378
520,419
27.4%
EBITDA Margin
44.1%
43.3%
EBT
292,026
361,675
23.9%
Net Income (after taxes)
179,801
235,322
30.9%
Net Income (after minority interests)
174,112
229,316
31.7%
18.8%
19.1%
0.528
0.695
330,000,000
330,047,910
Net Income Margin
Earnings per Share (euro)
Weighted average number of Shares outstanding
31.7%
The Company reported continuing and sustainable strong growth in its financial results for the period ended December
31, 2002. COSMOTE’s consolidated operating revenues for the period under review amounted to euro 1,201.3 million,
29.6% higher compared to revenues in year 2001. Increase in COSMOTE’s top line reflects the Company’s continuous
strong organic growth (in customers) as well as positive contribution by AMC (that constitutes approximately 8.4% of
consolidated revenues).
Within a highly competitive Greek market and despite the introduction of Mobile-to-Mobile termination charges ,
COSMOTE achieved a significant profitability (i.e. EBITDA) increase y-o-y of 27.4% and posted an EBITDA margin of
43.3%, demonstrating the company’s strong ability to sustain high profitability rates, mainly attributed to efficient cost
structures and economies of scale. Excluding the impact from the Mobile-to-Mobile termination rates, EBITDA margin
would have been 47.1%.
1. More on AMC in section 6.2 of this Annual Report.
62
Overall robust growth in COSMOTE's full year 2002 financial results reflects the continuous strong performance of its
domestic operations coupled with the positive contribution from Albanian Mobile Communications consolidation.
More analytically, total operating revenues for the twelve months ended December 31, 2002 increased by 29.6% to reach
euro 1,201.3 million. This increase reflects a 42.3% increase in interconnection revenues and a 36.1% increase in airtime
revenues (that include outgoing calls, incoming calls and prepaid airtime revenues). Revenues from telecommunications
services increased by 31% during the period under review, representing approximately 98% of total sales compared to
96.5% a year ago.
The full year 2002 financial results underpin the Company's ongoing extraordinary growth and enhanced profitability,
mainly attributed to increasing usage, demonstrating the sustained quality of COSMOTE's customer base as well as
efficient cost structures and economies of scale.
In addition data revenues (which include mainly SMS, WAP and other "soft data" revenues from Value Added Services)
represented approximately 12% of total telecommunication revenues. The blended average monthly number of SMS1 per
customer reached 41, compared to 39 SMS during the previous year.
Roaming revenues have grown by 16.5% and account for 2.6% of total revenues, almost stable compared to the twelve
months of year 2001. Up to the end of December 2002 the Company has signed 272 roaming agreements in 129
countries.
ARPU & AMOU data (Domestic operations: GREECE)
FY-01
Q1-02
89.5
86
AMOU, contract (min)
137
146
ARPU, blended (euro)
29.5
28
ARPU, contract (euro)
41.4
41.2
39
41
AMOU, blended (min)
# SMS, blended (sub/mon)
H1-02
9m-02
FY-02
95
98
155
164
169
28.4
29.8
30
42.8
46.2
46.7
42
42
41
91
Blended AMOU2 during the period under review was 98 min, compared to 89.5 min during the same period last year. This
is attributed to the continuous strong growth in contract AMOU that has resulted in a 32 minutes increase on a yearly
basis (23% higher). This steadily upward trend confirms that voice usage represents the key growth driver in the Greek
mobile market.
1. SMS: Short Message Service
2. AMOU: Average monthly minutes of use per customer
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As a result blended ARPU1 at the end of December 2002
mobile to mobile termination rates, the EBITDA margin is
showed significant stability as it stands at euro 30, slightly
calculated at 47.1%. Furthermore COSMOTE’s (domestic
higher than one year ago, despite the dilution impact
operations: GREECE) EBITDA reached euro 453.5 million,
from the higher proportion of prepaid customers in the
(y-o-y growth: approx. 30.4%) posting an EBITDA margin
total customer base (approx. 56% compared to 50% at
of 41% (ex-M2M at 44.9%).
the end of 2001). This ARPU stability trend on a yearly
basis is supported by the consistent improvement of
Profitable growth is also evidenced by the growth of Net
blended ARPU on a quarterly basis, throughout year 2002.
Income by 31.7% to reach approximately euro 229.3
million, representing 19.1% of total operating revenues
The key driver behind this trend is the strong increase in
(compared to 18.8% during year 2001). Earnings per
contract ARPU, that at year-end 2002, has grown by
share grew by 31.7% compared to the twelve months of
approximately 13% y-o-y to reach euro 46.7 (at the end of
2001 (as a result of the growth in earnings by
2002), also maintaining a steadily increasing trend on a
approximately 32% slightly diluted by the increased
quarterly basis. This is mainly attributed to the
average number of shares outstanding for the period3).
aforementioned continuous growth in usage that has
EPS for the year ended December 31, 2002 stands at
offset last year’s tariff rebalancing and the lower fixed to
approximately euro 0.695 up from euro 0.528 a year ago.
mobile interconnection charges.
5.1.2 Summary Stand Alone Albanian Mobile
As mentioned above interconnection costs have grown
Communications Results
significantly during full year 2002 (by 103.4% on a y-o-y
COSMOTE started consolidating its subsidiary in Albania
basis) and represent approximately 15.7% of total
during the fiscal year 20014 and has managed in a very
operating revenues compared to 10% in year 2001. On
short time to achieve significant returns on this
the other hand, distribution expenses (including SACs &
investment. During the twelve months ended December
2
SRCs ) during full year 2002 have increased by only 6.5%
31, 2002 AMC continued its strong financial performance
on a yearly basis and account for 15.1% of total operating
and contributed by 8.4% to the Company’s consolidated
revenues compared to 18.3% in full year 2001.
revenues and by approximately 13.0% to the Company’s
group EBITDA.
Consequently, EBITDA has expanded by almost 27.4%
and amounts to euro 520.4 million at the end of year
2002. More significantly EBITDA margin for the year,
stood at 43.3%. Excluding the impact from the new
1. ARPU: Average monthly revenue per customer
2. It is noted that another euro 18.6 million of retention costs (in the form of handset replacements) are included in ‘cost of goods’ (total
SACs & SRC's as a percentage of sales is 16.6% compared to 20% in year 2001).
3. Capital increase effected in February 2002 (due to the partial exercise of the stock option plan) brought total number of shares to
330,055,870 compared to previously 330,000,000. Thus weighted average number of shares outstanding for year 2002 was
330,047,910 compared to 330,000,000 in 2001.
4. Cosmo-Holding Albania, which is a 97% owned COSMOTE subsidiary, acquired in August 2000 85% of AMC.
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SUMMARY FINANCIAL RESULTS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 2002 AND 2001 (US GAAP)
AMC STAND ALONE
2001
2002 1
% change
89,454
101,309
13.2%
Operating expenses
28,147
33,594
19.3%
EBITDA
61,307
67,715
10.5%
EBITDA margin
68.5%
66.8%
9,643
15,382
Amounts in euro (‘000)
Depreciation
59.5%
EBIT (Operating Income)
51,664
52,333
1.3%
Net Income (after taxes)
41,495
29,084
-29.9%
Net Income margin
44.4%
28.7%
(Financial Statements for the years 2001 and 2002 according to the, US GAAP, auditors report in Appendix 2)
AMC’s revenues during year 2002 were approximately 13.2% higher compared to the previous period (full year 2001)
and exceeded euro 101.3 million. It is noted that the company's real growth in operating revenues (as expressed in the
local currency) was approximately 19% y-o-y. This is attributed to fast growth in AMC’s customer base that at the end of
December 2002 reached 501,147 customers (representing an impressive 83.5% increase on an annual basis). Of these
customers the vast majority (97.1%) are prepaid customers that have no bad debt and high profitability margins.
Evolution of AMC customer base
2001
Customers
2002
% of total
Customers
% of total
Contract
23,164
8.5%
14,465
2.9%
Prepaid
249,924
91.5%
486,682
97.1%
Total
273,088
100.0%
501,147
100.0%
Based on the above and publicly available information, it is estimated that, AMC’s market share at the end of year 2002,
stood at approximately 59%. It is also noted that mobile telephony penetration in Albania, at the end of year 2002, is
estimated around 27% compared to 7% fixed telephony penetration and less than 13% mobile penetration in year 2001.
Furthermore, most of the company’s network plans have been completed, resulting in the continuous enhancement and
upgrading of AMC’s network that at the end of year 2002 covered approximately 85% of the country.
At the same time marketing and other costs have remained at comparably low levels, consequently EBITDA was sustained
at high levels and exceeded euro 67.7 million. More importantly EBITDA margin reached 66.8%, one of the highest in
1. Average exchange rate for 2002: 1 leke = 0.007558
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Europe despite the introduction of a second player in the Albanian mobile market during August 2001. It is noted that net
income for the year 2002 was affected by a foreign exchange loss of approximately euro 9.1 million, due to the local
currency (leke) devaluation. Consequently Net Income margin in 2002 reached approximately 29%.
5.2 Operating Review
5.2.1 COSMOTE (Greece)
The following selected non-financial operating data has been prepared by the Company based on Company data and
publicly available information. The following table illustrates the evolution of COSMOTE’s customer base and relevant
market penetration of mobile telecommunications in Greece for the period 2001-2002.
COSMOTE total number of customers, beginning of period
COSMOTE total new additions for the period
31.12.2001
31.12.2002
2,061,011
2,943,532
882,521
562,806
2,943,532
3,506,338
Number of Contract customers
1,461,767
1,551,441
Number of pre-paid customers
1,481,765
1,954,897
43%
19%
19.8%
21.5%
COSMOTE total number of customers, end of period
% change (total number of customers)
Churn rate
Total number of customers in the Greek mobile market
7,963,742
9,314,260
COSMOTE market share
37%
37.6%
COSMOTE penetration in the Greek mobile market
27%
32.2%
Penetration
73%
85.5%
SUBSCRIBERS: As of December 31, 2002 COSMOTE’s customer base stood at 3,506,338. The company continued to
dominate the contract customers segment with approximately 48% market share. Penetration in the Greek market at the
end of year 2002 stood at around 85.5%.
During the twelve months of 2002 COSMOTE’s total net new additions were 562,806 customers. Of these, 16% or
89,674 were contract net additions and 84% or 473,132 were pre-paid net additions. Overall, during these twelve months
of year 2002, it is estimated that COSMOTE attracted the majority of total net new additions in the pre-paid market
segment and approximately 1/3 of total net new additions in the contract market segment.
As a result active contract customers at the end of December 2002 reached 1,551,441 increasing by 6.1% compared to
one year ago, while active prepaid customers during the same period amounted to 1,954,897, 31.9% more than
December 2001. The overall split between COSMOTE’s contract and prepaid customers at the end of year 2002 was
44.2% - 55.8% respectively.
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COSMOTE’s churn rate during 2002 stood at 21.5%
that have currently exceeded 80,000 and send on average
(compared to 19.8% for the full year 2001), which is
around 10,000 MMS per day.
below the average European rate. It is noted that of this
churn approximately 70% is due to internal contract
In addition, during 2002, the Company enriched
churn as well as prepaid churn to the new ‘what’s up?’
significantly the services offered through its comprehensive
product. It is noted that active ‘what’s up’ customers at
mobile portal "MyCosmos" with the introduction of new
the end of the year 2002 have exceeded 451,000.
innovative services such as the "Athens Airport," the
"Health Line," and the "Ringtones & Logos" services, that
It is also reminded that subscriber acquisition costs for
had a great success among the company's customers.
contract customers have remained unchanged for the
whole of year 2002 (since November 2000), when they
were last reduced to euro 1101. Prepaid SACs have been
eliminated entirely since the beginning of year 2001.
NEW SERVICES: Consistent with its customer-oriented
strategy of providing simple, comprehensive and
competitive services, accessible by all its customers,
COSMOTE launched commercially in September 2002,
its Multimedia Messaging Service. MMS is the
multimedia evolution of the very popular SMS that is
expected to break new grounds in wireless
communication by making it more personal, functional
and expressive than ever, as it combines text,
voice/sound, colour graphics, photographs etc.
In accordance with its main strategic goal, that calls for
providing quality value added services, COSMOTE has
collaborated with significant content providers to create
exclusive applications based on MMS technology (MMS
News, MMS Sports, MMS "Fun", "Arcas" comic strip etc).
In addition COSMOTE offers a unique accompanying
service "My Personal Album" that enables COSMOTE
customers to manage/process their MMS messages
through an exclusive personalised web page. Until the end
of 2002 COSMOTE had approximately 20,000 MMS users
1. Of which euro 81 is handset subsidy and euro 29 is connection commission to dealers.
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5.2.2 Greek Cellular Market
Based on publicly available information released by the three mobile operators, COSMOTE, VODAFONE (Greece), STET
Hellas, and Q-Telecom the evolution of the Greek cellular market during year 2002 is portrayed in the following table:
NET ADDITIONS DURING THE PERIOD 1.1.2002 – 31.12.2002
Operator
Contract customers
Net additions
(and respective %)
Prepaid net
additions
(and respective %)
COSMOTE
Total net
additions
(and respective %)
89,674
28.6%
473,132
45.6%
562,806
41.7%
VODAFONE (Greece)
100,241
32.0%
233,604
22.5%
333,845
24.7%
STET Hellas
105,153
33.6%
273,151
26.3%
378,304
28.0%
Q-Telecom
Total net additions
18,341
5.9%
57,222
5.5%
75,563
5.6%
313,409
100.0%
1,037,109
100.0%
1,350,518
100.0%
CUMULATIVE CUSTOMERS AS AT DECEMBER 31, 2002
Operator
COSMOTE
Total Contract
customers
(and respective %)
Total Prepaid
customers
(and respective %)
Total
Customers
(and total market share)
1,551,441
47.8%
1,954,897
32.2%
3,506,338
37.6%
VODAFONE (Greece)
910,439
28.0%
2,308,278
38.1%
3,218,717
34.6%
STET Hellas
767,916
23.6%
1,745,726
28.8%
2,513,642
27.0%
Q-Telecom
18,341
0.6%
57,222
0.9%
75,563
0.8%
3,248,137
100.0%
6,066,123
100.0%
9,314,260
100.0%
Total Number of Customers
5.3 Capital Expenditure Plan
Capital Expenditures 2001-2002
The mobile communications industry is highly capital intensive, requiring significant capital to construct mobile
telecommunications networks. The capital requirements of COSMOTE's network are determined by the nature and the
area of coverage desired, the number of customers served in an area, the expected call traffic and the desired quality of
service. Network construction costs are mainly related to the number of cells in the service area, the number of radio
channels in the cells and the switching equipment required.
Since the beginning of its operations and until the end of year 2002, the Company (on a consolidated basis) has invested
close to euro 1.25 billion resulting in a superior network with nationwide coverage and superior quality, providing a wide
range of mobile telephony services.
In year 2001 consolidated capital expenditures amounted to euro 370 million. In year 2002 consolidated capital
expenditures amounted to euro 228 million. Out of this amount, an investment of euro 167 million was related to the
installation of new telecommunication equipment (BTSs, MSCs etc). In addition, during year 2002 COSMOTE invested
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approximately euro 15.1 million for the transfer of OTE’s
factors including the rate at which it builds out its network
Fixed Wireless Access license (LMDS) at the 25 GHz band
(both voice and data network infrastructure), expenditure
and respective equipment (euro 9.5 million cost of license
on pilot projects, research and development and the
and up to euro 5.6 million cost of installed equipment).
expansion of its marketing and distribution capabilities.
Finally, in July 2002 COSMOTE paid approximately euro
38.2 million for the acquisition of a 2x5 MHz spectrum in
The majority of planned investments will relate, in both
the 900 MHz frequencies (EGSM). The Company’s
years, to telecommunications equipment costs in both
investments during year 2002 were financed mainly by
Greece and Albania. It is expected that the
cash generated by the Company’s operating activities.
aforementioned capital expenditures will be financed by
the Company’s own generated funds (mainly through
Capital Expenditure Plan for 2003-2004
cash from operating activities).
During the next two years, the Company plans to invest
approximately euro 390 million (on a consolidated basis)
COSMOTE's strategy involves the expansion of its activities
for upgrading and enhancing its current network,
through selective investments. COSMOTE intends to
excluding the cost of developing a 3G network and/or
pursue these investments on an opportunistic basis,
regional and domestic acquisitions, joint ventures or other
although it does not currently have any such investment
equity investments.More specifically COSMOTE's planned
commitments or understandings except as described
consolidated investments will include the installation of
under chapter 6 of this document.
new BTSs, BSCs and MSCs with the purpose of increasing
coverage and capacity and improving the service quality
of its existing 2 and 2.5G networks. Included in the
aforementioned amount is an investment of euro 50
million (euro 25 million in each year) for the preparation
of the Company for the Athens 2004 Olympic Games. The
majority of this investment will be reused in other locations
after the end of the Olympic Games. It is noted that
COSMOTE's subsidiary in Albania, AMC, plans to invest
approximately euro 25 million and euro 20 million in years
2003 and 2004 respectively. Also during year 2003 the
technical analysis with respect to the Company’s 3G
network is expected to be concluded and an investment of
around euro 60 million is planned for the initial pilot
network rollout. At the same time the Company plans to
develop a range of new value-added services with the aim
to continue providing an attractive offering aiming at
contributing to COSMOTE’s profitable growth. Over the
next two years, COSMOTE's working capital and capital
expenditure requirements will depend on a number of
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CHAPTER 6
COSMOTE
Group of Companies
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We exploit new ventures,
both in Greece and abroad,
aiming to create new sources
of revenue.
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COSMOTE
COSMO-HOLDING
ALBANIA: 97%
CosmoONE HELLAS
MARKET SITE: 26%
COSMO-MEGALA
KATASTIMATA: 40%
ALBANIAN MOBILE
COMMUNICATIONS: 85%
6.1 Cosmo-Holding Albania
Cosmo-Holding Albania ("CHA") was incorporated as a holding company on July 14, 2000 and its registered seat is at 44,
Kifissias Avenue, Maroussi, Attiki, Greece. The duration of the company is 50 years.
Its initial capital, which was fully paid, was GRD 16 billion with a nominal value of GRD 10,000 per share, represented by
1,600,000 shares. Following a capital increase of GRD 16.2 billion on February 2001, the company’s fully paid share
capital amounts to GRD 32.2 billion represented by 3,220,000 shares with a nominal value of GRD 10,000 each. Following
a share capital increase of GRD 3,260,000 with a simultaneous increase of the nominal value of the share from GRD
10,000 to GRD 10,001.013 in June of 2002 due to the expression of the share capital and the nominal value of the share
in euro, the company’s fully paid share capital amounts to GRD 32,203,260,250. The share capital expressed in euro
amounts to 94,507,000 euro represented by 3,220,000 shares with a nominal value of 29.35 euro each.
Its shareholders are COSMOTE, which holds 3,123,400 shares (97%) and Telenor Mobile Communications A.S. that holds
96,600 shares (3%).
The company’s Board of Directors, which serves a three year term, consists of the following:
Elias Fotiadis
Chairman and Managing Director
Vice Chairman
Megaklis Stoukidis
Director
Nikolaos Tsolas
Director
Irini Nikolaidi
Director
In August 2000, COSMOTE acquired from the Albanian Ministry of Public Economy and Privatisation, through CHA, 85%
of the share capital of AMC, for a purchase price of U.S.$85.6 million. AMC holds a license to operate a GSM 900 network
in Albania. The purchase price was payable in two instalments: the first instalment of U.S.$ 42.8 million was paid on
August 22, 2000, and the second instalment was paid on February 20, 2001, through the capital increase of CHA.
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COSMOTE funded its initial contribution to the share capital of CHA through subordinated loans, which were repaid using
part of the net proceeds of the Combined Offering. COSMOTE also funded its participation in the share capital increase of
CHA (February 2001) through the net proceeds of the Combined Offering.
The second audited financial statements of COSMO-HOLDING ALBANIA refer to the period ended December 31, 2002.
The table below presents the key financial data of CHA for years 2002 and 2001:
COSMO-HOLDING ALBANIA
2001
(euro, thousands)
Current assets
2002
1,110
869
Non-current assets
16,868
16,868
Fixed assets, net
69,673
69,673
Total assets
87,651
87,410
589
750
Current liabilities
Debt
0
0
Other long term liabilities
0
9.864
94,497
94.507
0
0
Retained earnings / (accumulated deficit)
-7,436
-17.711
Total liabilities and shareholders Equity
87,651
87.410
0
0
Operating expenses
-338
-26
EBITDA
-338
-26
-5,285
-3,487
Share capital
Paid in surplus
Net loss (after taxes)
6.2 Albanian Mobile Communications sh.a
AMC's registered office is located at Rruga Gjergj Legisi, Laprake, Tirana, Albania.
Its share capital is Leke 813,822,000 represented by 813,822 shares with a nominal value of Leke 1,000 per share. Prior to
the acquisition of the 85% of the share capital by COSMOHOLDING ALBANIA, AMC was 100% owned by the Albanian
Ministry of Public Economy and Privatisation. The present shareholder structure of AMC is as follows:
Shareholder
Number of Shares
%
85.0%
COSMO-HOLDING ALBANIA
691,749
Albanian Ministry of Public Economy and Privatisation*
122,073
15.0%
TOTAL
813,822
100.0%
(*)The Albanian Ministry of Public Economy and Privatisation has decided, according to the privatization law for AMC, for the transfer of
2.4% of the shares outstanding to the employees of the company in exchange of the shadow shares that the employees hold.
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On 31.12.2002 the company had 293 employees.
In December 2001 a Management contract for the provision of consulting services (technical, commercial, legal financial
etc.) was signed between COSMOTE and AMC. The contract is for an indefinite duration as of 1.1.2002 and can be
terminated with a one (1) month’s notice by either party. The Greek law governs the contract and the courts of Athens will
settle any dispute for this contract.
A Supervisory Council and the Board of Directors are managing AMC. The Supervisory Council consists of three members:
Eleftherios Antonacopoulos, President, Megaklis Stoukidis, Vice President and Mr. Iliac Duka representative of AMC’s
employees. The Supervisory Council elects the company’s Board of Directors, which currently consists of the following:
Elias Fotiadis
Stefanos Oktapodas
President
Vice President
Managing Director
Nikolaos Tsolas
Director
Irini Nikolaidi
Director
AMC operates since 1996 and was the sole provider of mobile telecommunications in that country until February 2001,
when the international tender for a second license in Albania was completed. The Vodafone consortium was declared the
winner and commenced operation of its network in August 2001. Today AMC’s network operates in the GSM 900 as well
as the GSM 1800 frequencies. In June, following the request of the Telecommunications Regulatory Entity ("TRE") the
Network Destination Code ("NDC") was changed from 038 to 068. During 2002 AMC started the "Data Transmission
Network Planning" project which today gives the capability to its customers to transfer data through its network.
Furthermore, following a recent resolution (130/30.1.2003) by the TRE, AMC was granted a license to operate an LMDS
network.
On 31.12.2002, the customer base of AMC had doubled compared to last year and had 501,147 customers (as opposed
to 273,088 at the end of 2001), with an estimated market share of 59%. From those customers, 486,682 (97.1% of the
customer base) were prepaid and the rest 14,465 contract customers. In the end of March 2003 that total number of
customers amounted to 537,783.
The Albanian Government has requested from AMC, the distribution to it of dividends regarding the period from
01.01.2000 until 22.08.2000 (date of the acquisition of the 85% of AMC by COSMOHOLDING ALBANIA). This amount is
euro (3,600,0000). The General Meeting of the Shareholders of AMC of 31.5.2001 had decided not to distribute
dividends. According to the legal opinion of the Legal Counsels of AMC, the decision of the General Meeting of AMC
regarding the non-distribution of dividends is valid. The Albanian Government through the "Directorate of the Biggest
TaxPayers" taxed AMC on the above non-distributed dividends the amount of 88 million Leke (approximately 630,000
euro). AMC has taken before the competent Albanian courts the above-mentioned tax levied.
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During 2002, AMC continued its extraordinary financial
Its purpose is the establishment and the provision of B2B
course, participating in the consolidated turnover of the
services. CosmoONE uses the software of COMMERCE
Company by 8.4% and in the consolidated EBITDA
ONE, one of the most renowned American companies in
margin by 12.5%. The turnover of AMC increased by
B2B applications. CosmoONE has already established and
13,2% compared to 2001 and exceeded 101.3 million
operates a horizontal market place offering electronic
euro. Furthermore, the appropriation cost remained
sales, purchasing and e-auction services.
relative low for 2002, resulting to the EBITDA remaining
high exceeding 67.7 million euro. Moreover, the EBITDA
The main object of cosmoONE is e-procurement, which it
margin was 66,8%, despite the intense competition that
realises through the e-market place that it has created,
AMC faced during the whole year from the second
through two basic purchase scenarios, the purchases
company active in the Albanian market. It has to be
through electronic price list and through e-auctions. By
mentioned that 9.1 million euro due to the devaluation of
using the electronic price lists the user can easily find the
the Leke influenced the net profit for year 2002. Finally,
product (or the service) needed. In regards with e-
the dynamic growth of AMC is portrayed in the net profit
auctions, every organization or company that either wants
margin, which during 2002 exceeded 28.7%.
to purchase products at the lowest possible price, or sell
out its reserves etc, can contact CosmoONE, which "hosts"
AMC distributes its products through four major distributors;
the e-auction and executes it according to the wishes and
a network of shops and dealers that cover Albania and in
the scenarios of the buyer or the seller respectively.
2002 started the operation of its own first shop.
CosmoONE’s target is to simplify, through its services, the
The penetration of the Mobile Telephony in Albania
commercial exchange process between companies, to
during 2002 increased significantly and is estimated at
minimise the costs relating to procurements and orders, to
approximately 27% compared to the stagnant 7%
add value to the participants, and finally, to make e-
penetration of fixed telephony in the country. The
commerce available to every company, irrespective of the
planning for the development of the telecommunications
sector and its size.
network of AMC has been completed to a great extent, so
that by the end of 2002 coverage reached approximately
The initial share capital of CosmoONE was 300,000,000
85% of Albania and approximately 90% of the population.
GRD, with 80% owned by the Company and 20% by
The further development of the network will mostly cover
DIENEKIS PLIROFORIKI. Following two share capital
capacity needs provided that the geographical coverage
increases, one in October 2000 to 2 billion GRD, and
has been achieved in Albania.
another in March of 2001, CosmoONE has today a share
capital of GRD 2.5 billion consisting of 2,500,000 shares
6.3 COSMO-ONE Hellas Market Site S.A.
with a nominal value of GRD 1,000 per share. In June 2002
COSMO-ONE Hellas Market Site S.A. ("cosmoONE")
the General Meeting of the Shareholders decided the
founded by COSMOTE and DIENEKIS PLIROFORIKI and
decrease of the share capital and the nominal value of the
was incorporated on June 6, 2000. Its registered office is
share due to their expression in euro. The company’s fully
located at Agia Paraskevi, Attiki, Greece. The duration of
paid share capital amounts to 7,325,000 euro represented
the company is 50 years.
in 2,500,000 shares of a nominal value of 2,93 euro each.
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OTE participated in the share capital of CosmoONE on September 2000. On March 2001 Alpha Bank and National Bank
of Greece participated in cosmoONE’s share capital. The participation of the two Banks in the Share Capital of CosmoONE
will help its development though the services that will be offered and provided to and from CosmoONE. Today,
COSMOTE’s participation in the share capital of CosmoONE is 26% of its share capital.
As of today, the shareholders of CosmoONE are as follows:
Name of Shareholder
Shares
Number
%
COSMOTE
650,000
26
OTE
650,000
26
DIHNEKES PLIROFORIKI
450,000
18
Alpha Bank
375,000
15
National Bank of Greece
Total
375,000
15
2,500,000
100
The Shareholder’s Agreement signed on March 2001 between the company’s shareholders, has the following main
provisions:
± Alpha Bank, National Bank of Greece and DIHNEKES PLIROFORIKI S.A. cannot transfer their shares to a third party
(affiliated companies excluded) until June 6, 2003 without the approval of COSMOTE and OTE.
± COSMOTE and OTE after June 6, 2003 have a right of first refusal regarding the sale of shares of CosmoONE owned by
Alpha Bank, National Bank of Greece and DIHNEKES Plirophoriki S.A.
± Each one of Alpha Bank, National Bank of Greece and DIHNEKES PLIROFORIKI S.A., has the right to appoint one
member to the Board of Directors, for as long as it owns 10% of the company’s share capital.
± In case vertical companies from various sectors wish to participate in CosmoONE, the percentage holding of COSMOTE
will be reduced pro rata.
The company’s Board of Directors serves a three year term and consists of the following nine Directors (30.04.2002):
George Ioannidis
Evangelos Rizos
Director 1
Elias Fotiadis
Director
Efthimios Papapostolou
Director
George Georgitsis
Director
Epaminondas Gardelis
Director
Sotiris Lyssandrou
Director 2
Yiannis Parlitsis
Director 3
1. Mr. Rizos is the BoD Member appointed by DIENEKIS
2. Mr. Lyssandrou is the BoD Member appointed by the NATIONAL BANK OF GREECE
3. Mr. Parlitsis is the BoD Member appointed by ALPHA BANK
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Chairman
Vice Chairman
The General Manager of CosmoONE is Mr. Athanassios Petmezas.
In December of 2002 the company employed 31 people.
CosmoONE started commercial operations in December 2000. In its clientele there are significant companies – buyers and
companies – suppliers. CosmoONE has already signed contracts with large companies from the field of services, industry,
information technology and commerce.
Until December 2002 the total value of transactions through the Electronic Market amounted to euro 233 million, an
increase of 438% compared to 2001, while 96 auctions were conducted with a value in auctioned goods and services
amounting to euro 27.5 million, which contributed an average decrease in the cost of the auctioned goods of 29%. The
rate of increase of the auctions compared to 2001 was 267%, which portrays the increasing interest of businesses in this
kind of business negotiations.
Until the end of 2002, more than 300 companies had made use of the capabilities of e-commerce through the product
and services of CosmoONE.
The company is planning for the near future the provision of value added services such as the capability of electronic
monitoring of the price lists, means of shipment and insurance, connectivity with the global commercial network of
COMMERCE ONE, sourcing services, etc.
The company’s second financial year ended as at 31.12.2002 with revenues reaching approximately euro 1.4 million.
6.4 COSMO-MEGALA KATASTIMATA S.A.
COSMO-MEGALA KATASTIMATA was incorporated on September 8, 2000, and its registered address is located at
Halandri, Attiki, Greece. The duration of the company is 50 years.
Its share capital is GRD 200 million represented by 20,000 shares with a nominal value of GRD 10,000 per share, for the
transfer of which approval by the General Meeting of the Shareholders of the Company is required. The table below
portrays the shareholders of the company. In June 2002 due to the expression of the share capital and the nominal value
of the share in euro, GRD 20,250 increased the share capital of the company with a simultaneous increase of the nominal
value of the share from GRD 10,000 to GRD 10,001.013. The share capital expressed in euro amounts to 587,000 euro
represented by 20,000 shares with a nominal value of 29.35 euro each, for the transfer of which the consent of the
General Meeting of the Shareholders is requested.
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Management
Quality in COSMOTE
Shareholder
Number of Shares
Vivere Entertainement*
COSMOTE
TOTAL
%
12,000
60%
8,000
40%
20,000
100%
*This company has taken over the founder "MEGALA KATASTIMATA SA".
COSMO-MEGALA KATASTIMATA S.A. is a joint venture between COSMOTE and "VIVERE SA" which, following the take
over of "MEGALA KATASTIMATA", is the Greek licensee of Virgin trademarks.
The company’s Articles of Association provide that, for so long as the shareholding of COSMOTE in COSMO-MEGALA
KATASTIMATA is at least 8%, COSMOTE has the right to appoint two members to the Board of Directors (including the
Vice-Chairman).
The company’s Board of Directors, which serves a three year term, consists of the following:
Konstantinos Piladakis
Elias Fotiadis*
Chairman
Vice Chairman
Panagiotis Kalkalos
Director
Stavros Piladakis
Director
Konstantinos Papanastasiou
Director
Sotirios Mitsidis
Director
Irini Nikolaidi*
Director
(*) Mr. Fotiadis and Ms. Nikolaidi are the two members of the Board appointed by COSMOTE.
Moreover, the following matters, in order to be decided upon, require the approval of COSMOTE:
i. The appointment of the General manager,
ii. The approval of contracts falling under article 23a of C.L. 2190/1920.
iii. The assumption of any commitment above twenty (20) million GRD, or the purchase of merchandise of above forty
(40) million GRD, the withdrawal or deposit, collection and issue of bank orders, issuance and endorsement of cheques
and promissory notes of over forty (40) million GRD.
iv. The increase of the share capital with the issuance of new shares or a convertible loan,
On 31.12.2002 the General Manager of the company was Mr. George Hatzelis, who resigned in March 2003 and was
replaced by Mrs. Efthimia Psilia. At the end of 2002 the company employed two people.
The company commenced commercial activities in November of 2000, in the field of e-commerce and has already
constructed an electronic store for the sale of music. This shop (www.virginmega.gr), which is a place for music news and
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purchase of CD and DVD, opened commercially on
December 12, 2000 and is considered as a point of
reference in the means of purchasing and distribution of
the above products in the Greek market.
The second audited financial statements of COSMOMEGALA KATASTIMATA S.A. refer to the period ended
December 31, 2002.
The table below presents the key financial data of
COSMO-MEGALA KATASTIMATA S.A. for year 2002 (the
first period was over twelve months). The company’s
second financial year ended as at 31.12.2002 with
revenues reaching approximately euro 1.8 million and
operating income of euro 1.5 million.
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CHAPTER 7
COMSOTE
and Social Responsibility
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With an increased
social responsibility awareness,
we consider contributing to society
as a major priority
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COMSOTE and Social Responsibility
Even from the beginning of its operations in 1998,
network, with more than 2,500 base stations, combined
COSMOTE has proved through its actions that it
with the immediate response of its workforce,
considers its contribution to society as a primary duty.
contributed to the location and rescue of many fellow
The Company continues to support this fundamental
citizens in danger.
principle even now when holding the leading position in
the Greek market and being among the best performing
Commercial Network
companies in terms of financial performance in Europe.
COSMOTE applied the same philosophy for the
COSMOTE recognises that the responsibility that a large
development of its sales network throughout Greece thus
corporation carries, underpins its obligation to actively
making - through over 2,000 points of sale - its products
contribute to society.
and services available to everyone even in non-urban and
remote areas.
The importance COSMOTE places on society is reflected
in all aspects of the Company's business activities.
Products and Services
In addition to its commercially successful products and
Telecommunications Network
services, COSMOTE designs and offers mobile services
Consistent with its customer-centric philosophy,
that cater for individual needs outside the scope of
COSMOTE developed its telecommunications network
financial rewards. One example of such a service
with the sole purpose of making mobile
launched in 2002 was the provision of news reports in
telecommunications services accessible to every citizen,
Albanian and Russian for the immigrants who live and
in every corner of Greece. Throughout 2002, COSMOTE
work in Greece.
did not hesitate to place base stations even in areas with
very few residents, such as in Dimario, a Pomak
Human Resources
populated village near the Bulgarian borders, without
COSMOTE is a strong supporter of equal rights and
expecting any significant financial returns. Even outside
opportunities and thus with respect to recruiting new
of Greece, in Albania where the Company successfully
personnel. The Company, aiming to reward its work
operates in, COSMOTE has managed to develop its
force that actively contributes to its successful track
network despite the adverse conditions it was faced with
record, COSMOTE has created a high quality working
due to the country’s poor infrastructure. In certain cases,
environment according to the most recent quality and
COSMOTE combined its network roll-out in Albania with
safety specifications that takes into consideration any
significant projects that involved developing and building
possible special needs.
roads in remote areas, providing electricity to whole
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regions; all of them actions that contributed considerably
Sponsorship Programme
to the improvement of the quality of life in Albania. Last
During 2002, COSMOTE allocated a considerable part of
year, there were also many recorded instances where
its revenues to the support of initiatives taken by
COSMOTE’s comprehensive and state-of-the-art
organised institutions that contribute to the
improvement of the quality of life in Greece. Most
importantly COSMOTE not only supports considerable
efforts, but continually seeks ways for precautionary
action and undertakes its own initiative to that effect.
In its entirety, COSMOTE’s social involvement is
extended to cover all aspects of life with Social Care,
Education, Culture and the Environment being the main
focal points.
Social Care
Since the beginning of its operations COSMOTE, focused
its efforts on children in need and their care. Along these
lines, in 2002, the Company offered a considerable part
of the revenues from the text messages exchanged by its
customers on New Year’s Eve, to charitable institutions,
which aim to provide for children’s care. Last year's
recipients were four institutions recognised for their
significant work for children, namely "Flame", "The
Child’s Smile", "Hope" and "Open Arms". Through this
For the third consecutive year, COSMOTE has been the
ample contribution, several initiatives were made
main sponsor of the "Open Arms" association which
possible; the building of a hostel for the families of
operates in the field of preventive medicine and is also
children with grave illnesses, the purchase of a vehicle for
assisting in equipping children’s medical intensive care
the transport of children and the purchase of expensive
units in hospitals around Greece. Furthermore, under
and essential medical equipment for public hospitals.
the auspices of the Ministry of Health, Cosmote jointly
2002 has been the fourth consecutive year in which
designed and executed with "Open Arms" four
COSMOTE offered its revenues from New Year’s Eve text
campaigns in remote regions of Greece ranging from the
messaging, setting an example for social care in Greece.
Pomak villages in the north to the island of Kassos in the
south. The campaigns included preventive health checks
In addition, for the second consecutive year COSMOTE
for all residents, the provision of information on health
donated a substantial amount to MDA Hellas, a
related issues as well as seminars on children’s behaviour
charitable institution that was founded for the fight
and learning difficulties. In addition, several fun events
against muscular dystrophy and other neuromuscular
were organised for children who, unlike their peers in
diseases.
urban centres, do not have many recreational options.
The lack of health care infrastructure in the remote
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were found to have serious health problems that were
successfully treated by the doctors. Through the data
collected from the project, it has been assessed that the
level of awareness and perception on health-related and
preventive health care issues has significantly improved
among the majority of the participants.
Last year, COSMOTE provided lower text messaging
tariffs for deaf people and free access to the helpline
1056 which was created by "The Child’s Smile"
association in an effort to offer psychological support to
children in need.
Apart from the sponsorships and donations to organised
charitable institutions, COSMOTE frequently contributed
to dozens of smaller ones. On many occasions and in
addition to financial support, COSMOTE undertook TV
ad campaigns, organised events and press office support
to smaller institutions which lack the necessary
communications expertise and are unable to promote
their work on their own.
Cosmote in certain cases, goes beyond what its strategic
planning calls for, when assessing that everal
opportunities related to social contribution require such a
decision. A prime example of such action is when during an executive visit to the remote Pomak villagesregions of Greece – on many occasions those areas are
the Company donated information technology
serviced by a single agricultural health care practice – is
equipment to the schools of the local Muslim minority.
more troubling during the winter months since islands
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and mountain villages of our country are usually
Consistent with its philosophy, during 2002, COSMOTE
inaccessible due to weather conditions and lack of
equipped schools around Greece with 50 computers and
relevant means of transport. It should be noted that
other technological equipment and contributed
during the 2002 campaigns, thousands of people in
financially to a number of school-organised activities. In
remote regions were medically examined and several
the framework of its school visit programme the
Company extended its hospitality to students from the
remote region of Thrace who visited Athens for the first
time and arranged their stay and visits to museums. The
Company also initiated a public awareness programme
creating relevant information material about the effects
of mobile telephony on health.
COSMOTE has proved its concern regarding public
health through the support of conferences with the
objective to exchange opinions and research on
important scientific issues. Thus, in 2002, COSMOTE
sponsored, among others, the 28th Annual Pan-Hellenic
Medical Conference organised by the Athens Medical
Society in order to support the continual training of all
doctors throughout Greece. The Company also
supported the 2nd International Conference "Biological
Effects of Electromagnetic Fields" in Rhodes that was
organised by the National Centre for Science Research
"Demokritos". The scope of the conference was the
research of the main sources of electromagnetic
emissions, the currently accepted levels of exposure and
the potential effects on different parts of the human
body.
Education
Based on its belief that Education is the foundation of
every civilisation and a means for the broadening of the
human mind, during 2002 COSMOTE established a
pioneering institution, "COSMOTE Scholarships".
Furthermore the Scholarships prove the company's
standing commitment to provide support to rural and
less privileged areas of Greece with low economic
development and birth rates that suffer from domestic
migration. The 10 Scholarships (seven thousand euro
each) are for first year undergraduate students of Greek
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universities. In 2002, the scholarships were distributed
Extending its environmental policy, COSMOTE, in 2002,
each to a different prefecture, namely Evros, Rodopi,
recycled hundreds of tons of paper and large quantities
Xanthe, Florina, Grevana, Ioannina, Evrytania,
of ink as part of its extended internal recycling
Dodekanissos, Aitoloakarnania and Arkadia. Moreover
programme which aims to contribute to the highest
and due to the number of candidates and the quality of
possible level in the protection of the environment’s
applications, COSMOTE awarded ten Honorary
natural resources.
Distinctions each accompanied by the amount of 1,000
euro.
Furthermore, the company during the development of its
network and bearing in mind the current relevant
Environment
legislation regarding the situation of new base stations,
COSMOTE actively provides its support to noteworthy
conducted relevant research to assess any potential
initiatives that contribute to the protection of the
effects on the environment, the subsoil and even the
environment in an effort to create public awareness and
environmental aesthetics, always taking into
invite everyone to participate in the process. During
consideration regional architecture and history. In the
2002 and for the third consecutive year, COSMOTE
process of meeting the increasing network coverage
sponsored pioneering Pan-Hellenic programmes
needs, COSMOTE on several occasions has taken
including "Rivers and Lakes of our Country" and the
advantage of alternative environmental friendly energy
"Clean Seas and Shores" programmes organised by the
sources creating a network that also includes base
Ministry of Environment. The main objective of both
stations operating solely on solar energy.
programmes, that were awarded the first prize in a
nation-wide competition by the Greek Water Company,
was to protect water resources as well as to create and
increase awareness among Greeks on the issue. In
addition, COSMOTE created a dedicated public phone
line providing information about the cleanliness of shores
and waters in general in any part of the country.
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Culture
With respect to Culture, during 2002 COSMOTE was the
main sponsor of the Greek National Art Gallery. With the
financial support of COSMOTE, the Greek National Art
Gallery organised the "Picasso’s Century – 20th Century
Spanish Art" exhibition which lasted for three full months
and was one of the main events that marked the cultural
life of Greece in 2002. During the course of the
exhibition, hundreds of thousands of visitors had the
unique opportunity to enjoy more than a 100 works of
art, including work by the most notable Spanish painters
like Picasso, Grie, Dali and Miro, some of which were
publicly exhibited for the first time. Serving the same
purpose of promoting artistic values beyond the Greek
borders, COSMOTE created a series of activities relevant
to the exhibition for its own work force as well as for
students from remote regions of the country.
Furthermore, making good use of its large customer base
and wanting to reward the dedication of its customers,
the company offered to all its subscribers a significant
discount on the entry ticket, that led to more than
300,000 of them visiting the National Art Gallery.
Throughout 2002, COSMOTE remained committed to its
philosophy based on which, offering to society remains a
fundamental responsibility. In addition it developed
noteworthy activity proving its social conscience and
commitment, something which it aims to continue in the
future.
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CHAPTER 8
Quality
in COSMOTE
88
The quality of its products,
services and its customer care
are the cornerstones of COSMOTE’s
success in sustaining its competitive
advantage.
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Quality in COSMOTE
COSMOTE plans, develops, implements and improves its
Currently, and based on the principals of "Continuous
Quality Management System consistent with its goal to
Improvement", the company is unifying Quality Systems
satisfy its customer’s needs and it’s vision in becoming one
(existent and those under development) according to ISO
of the best five mobile operators in Europe.
9001: 2000, including all of its activities. Special emphasis
will be given to commercial and marketing activities, as
From the commencement of its operations, COSMOTE
well as the level of service rendered in the exclusive
started off having one goal: to provide quality mobile
COSMOTE shop's network, and the new technologies
services to all Greeks. This along with superior customer
applied.
and shareholder value, was realised after only 3 years of
operations based on the company's customer-centric
COSMOTE's primary objectives include the development
philosophy, its competitive pricing policy and its
and implementation of Management Systems regarding:
advanced, user-friendly and comprehensible services
offering.
± Environmental issues according to ISO 14001, which will
certify COSMOTE's sensitiveness on environmental issues
Implementing the requirements set by the standard series
as stated in all sectors of its activities,
ISO 9000:1994, COSMOTE was certified by the Hellenic
Standardisation Organisation (ELOT), being an
± Health & Safety issues according to OHSAS 18001,
International Network for Assessment and Certification's
which will substantiate the company's faith in its human
(IQNet) member, for the following business units:
resources as stated through the preservation of a healthy
± Customer's Call Centre Service including
and safe working environment for all its employees,
± the rendering of information on services, billing and
general inquiries,
± Social Accountability issues according to SA 8000, as the
± the proceeding of subscriptions as well as servicing of
company not only complies with the current National
pre-paid and subscribed (flat) customers,
Law, with the Principals of International Conventions on
± the maintenance of customer's loyalty (churn inhibition),
Labour and the Human Rights' Declaration but also shows
as well as program management on device renewal, SIM
respect to its personnel as well as to society in general,
Card management, complaint management and
through the implementation of systematic programs on
± fraud inhibition.
social accountability,
± Procurement & Contract Management.
± Network's Planning, Realisation.
± Network's Maintenance & Operation / Service System's
Maintenance.
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COSMOTE has adopted a Continuous Quality Monitoring
on services rendered to its customers. The company is
implementing monitoring systems to review the quality of
network, voice, spectrum and coverage issues, through
the use of KPI's (Key Performance Indicators) in order to
have an accurate picture of the quality of the services
provided.
COSMOTE' s steps towards further quality improvement
are being expanded to the company's international
activities, contributing actively to the development and
implementation of Quality Management Systems.
Thereby, COSMOTE ensures their excellent
implementation as well as co-operation, amongst the
foreign affiliate companies themselves and with
COSMOTE, resulting in the rendering of high level
services.
The Quality Management Systems support COSMOTE in
its effort to sustain its competitive advantage and to
continue meeting its targets.
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CHAPTER 9
The "ATHENS 2004"
Olympic Sponsorship
92
The Olympic Games sponsorship
enhances our corporate image
and offers new business opportunities.
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The "ATHENS 2004"Olympic Sponsorship
Since 2001, COSMOTE has been actively participating in
sophistication of the whole project in combination with
the organisation of the Olympic Games in our country, in
the wide spectrum of activities that implicate the whole of
its capacity as the Grand National Sponsor in mobile
the Company directly or indirectly, has dictated the
telephony and within the framework of the
adoption of the project management approach and the
Telecommunications Consortium OTE- COSMOTE-
setting up of internal inter-departmental working groups.
OTEnet. The title of Grand Sponsor is the highest level of
the National Sponsorship Programme.
2. Technical Matters
The sponsorship by COSMOTE consists of the provision of
Within 2002, the study for the architecture of the
mobile telecommunication services –voice and data- at the
telecommunications network was completed, which will
preparation stage and during the Games.
cater for the increased needs created by the large groups
of people to gather in Athens before and during the
The compensatory benefits for COSMOTE, that emanate
Games, such as the Olympic Family, Mass Media, visitors,
from the sponsorship, include among others, the right to
etc.
use the ATHOC intangible assets such as the symbols and
the composite logo, access to the Hospitality programme,
The capacity of the network is going to expand
the right to accreditation during the Games, etc.
significantly with focus on the Olympic Cities, while
especially in Attica the capacity will be increased by about
COSMOTE has designed an integrated operational plan
53%. During the first test event, at the Sailing contest in
for the period 2001-2004 which is also aiming to secure
Agios Kosmas in the summer of 2001, the network of
the complete telecommunications coverage of the Games,
COSMOTE responded perfectly to the added needs
seeing this as a significant operational challenge. The first
recorded, while it is worth noting that, apart from the
phase of this plan was completed in 2002 and includes a
voice services, data, high speed and GPRS were also used.
series of actions in the organisational, technical,
In cooperation with OTE, COSMOTE also completed the
commercial and communication sections, the most
design of the area for installing telecom equipment (TER)
important of which are as follows:
in athletic venues, while the initial study on Risk
Assessment was also completed.
1. Organisational
The necessary infrastructure has been developed within
3. Commercial
the Company, through the establishment of a separate
COSMOTE has implemented a series of actions of a
Department, in line with international experience of past
commercial nature, the most significant of which has been
Olympics. This Department has a co-ordinating role and is
the putting on sale of authentic Olympic products through
responsible for implementation of all Olympic projects in
the network of its exclusive COSMOTE shops in 2002
time - both technical and commercial – within COSMOTE,
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while it co-operates with the other members of the
In its effort to develop mutually beneficial synergies, the
"Telecommunications Consortium OTE –COSMOTE-
Company has also co-operated with the International
OTEnet", as well as with the ATHOC ATHENS 2004 for the
Sponsor Samsung in the implementation of its promotion
attainment of the targets mentioned above. The
of the prepaid product in combination with the
International Sponsor’s product, the results of which have
been very positive.
4. Communication
COSMOTE implemented some extraordinary marketing
initiatives in 2002, with the view to disseminating its
sponsorship to its customer base and the wider public:
± It launched the Olympic Contest "Eu Diagonizesthai"
which is addressed both to its customers and employees,
and which will be repeated the next 2 years until the
Games are held, in order to attract the interest of a large
section of the public.
± In co-operation with OTE, it designed and launched the
tour of the country by the spectacular and technologically
advanced road-show "Athlopolis", achieving to familiarise
the public with the Olympic values and the Company’s
sponsorship, aiming to have visited most of the Greek
towns by 2004.
In co-operation with OTE, the Company has also
continued to actively support four Olympics Champions
and five promising athletes in their efforts to achieve
distinction in the Olympic Games.
COSMOTE has implemented a plethora of activities,
especially for its own employees, aiming to keep them
fully informed about the events surrounding the Olympics,
motivate them and maintain their loyalty to the value of
the Olympic Sponsorship for the Company.
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CHAPTER 10
Strategy
and Prospects
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We are dedicated
in delivering our vision:
become one of the best five
mobile operators in Europe.
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The Greek mobile telecommunications market in which
growth, both for the Company and the Greek mobile
COSMOTE operates, has grown significantly during the
market in general. COSMOTE plans to continue its
last years. Market penetration at the end of 2002 stood at
balanced growth strategy, with the aim to continuously
1
around 85.5% compared to approximately 73% at the
increase its revenues and profitability. The Company’s
end of 2001. Following the trend established since mid
EBITDA margin for year 2002, stood at approximately
1999, the Company continued in year 2002, to attract the
43%, thus classifying COSMOTE among the first positions
vast majority of the total net additions2. It is noted that
relative to its European peers.
COSMOTE has achieved market leadership in the Greek
mobile sector since mid 2001, a position that has been
During 2002, COSMOTE maintained a strong – above the
maintained ever since.
average of the European sector – performance and created
new sources of revenue. The Company’s strategic target in
In addition the Company during 2002 enhanced its
the next years, is to exploit potential profitable
position in the prepaid segment (attaining a 32.2%
opportunities in the developing mobile market in Greece
market share) while it has sustained its leading – since
and other countries in South Eastern Europe, so as to
March 1999 – position in the contract segment, with a
become one of Europe’s best five mobile operators.
47.8% market share (end 2002). The latter is considered
as an important advantage, as the contract customers are
To this end, the Company will sustain its successful
the ones having increased usage and consequently,
customer-oriented strategy, with an emphasis on the
contribute higher average revenue to the Company.
following:
Indicatively, it is noted that the average monthly minutes
± Leverage on leading market position
of use per contract customer increased by approximately
± Increase usage from traditional voice services
23% during 2002 (approximately 170 minutes), which
± Sustain its successful customer-oriented strategy and
resulted in an average monthly revenue per contract
competitive offering
customer of approximately 47 euros. The aforementioned
± Boost contribution of data and VAS revenues
had an important contribution in the steady improvement
± Offer integrated telecommunications services portfolio
of the average gross revenue per customer, although the
± Exploit opportunities arising from "ATHENS 2004"
percentage of prepaid customers in the Company’s
Olympic Games sponsorship
customer mix increased.
± Expand operations in the SE European region and
achieve immediate returns
According to reports published by distinguished
± Continue delivering strong financial performance
international investment firms, the average usage of
mobile telecommunications in Europe is still exceeding the
In order to meet its customers’ needs and achieve its
respective Greek average, a fact which confirms
targets the Company intends to offer the following value
COSMOTE’s anticipations that there is room for further
added services, and to increase the usage of existing
1. According to the latest population census, that resulted in 10.9 million inhabitants
2. Number of new customers per period (aggregate of contract customers and prepaid customers)
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services. A significant factor that is expected to contribute
positively to this end during year 2003 is the launch of
new handsets with enhanced characteristics (such as
powerful processing capabilities, embedded cameras,
colour screen etc) combined with a wider range of GPRS
handsets.
BASIC SERVICES: The Company, during year 2003 plans
to offer a Call Notification service, i.e. offer its subscribers
the ability to be notified through an SMS of all nonanswered calls that they have received, while their mobile
phone was out of coverage, deactivated or busy but with
COSMOTE will further establish its position in the field of
the call waiting service deactivated.
music services through the mobile phone, by enforcing its
innovative service "Beat Box". The latter was launched in
"MyCosmos" SERVICES: The Company plans to upgrade
the beginning of 2003, in cooperation with the most
the services it provides through its mobile portal,
renowned music companies in Greece, and allows its users
emphasising in the development and usage of innovative
"to do everything with a song" (audition, dedications,
entertainment and communication services and the
ringtones, orders).
personalization of the offered services and the mobile
terminals, in order to cover the individual needs of its
Finally, the Company has concluded agreements both
subscribers. This will be achieved by providing special
with providers of branded content and providers of new
content in each category of interest (entertainment,
content from the area of multimedia services (sound,
information, music, athletics). Also, the promotion of the
image, animation, video), in cooperation mainly with
services will be targeted to the youth market.
Media Companies, and new portals, by exploiting its
integrated technological infrastructure GPRS/MMS.
Voice Recognition and Text to Speech installed
technologies will be used for further development of the
SPECIAL SERVICES FOR ROAMERS: The Company plans
services provided by the voice portal of "MyCosmos". In
to provide within 2003, more services especially designed
addition, depending on its customers’ needs and
for the needs of visiting Roamers, such as tourist
technology trends, COSMOTE will develop services that
information services, GPRS Roaming etc. Furthermore,
are based on the geographical location of the subscriber at
COSMOTE will offer its prepaid customers the capability to
the time of the request. The Company also considers the
use roaming services in their outgoing calls and prepaid
development of new technologies, such as Java and as
visiting Roamers the capability to use their mobile phones
well as new capabilities for using new content types
in COSMOTE’s network without any restrictions or
(content downloading), that will allow the evolution of
complex procedures.
new advanced services.
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THIRD PARTY SERVICES: COSMOTE will continue to
In this framework, the Company plans to extend the
provide its customers with access to third party content
commercial exploitation of the LMDS, to promote and
through SMS and will further collaborate with third parties
further enrich the access services to the Intranet and the
with the purpose of covering their needs.
Internet through GPRS. Always focusing on the needs of its
corporate customers and by constantly using cutting edge
In parallel, COSMOTE will start offering access to third
technology COSMOTE aims to consolidate and further
party content through Voice (I.V.R.) for entertainment /
extend its already significant position in the corporate
information services. The content of the aforementioned
market sector.
services is provided by third parties, who are responsible
for their design and promotion, while COSMOTE provides
UMTS – 3rd GENERATION MOBILE TELEPHONY:
access to its customers through its network.
COSMOTE plans to develop a UMTS network, in order to
be in a position to offer respective 3G services according
In all cases, the Company undertakes the billing of these
to the terms and conditions of the 3rd generation license
services with respect to its customers and attributes a
it acquired in August 2001.
certain percentage of the relevant revenues to the content
providers. COSMOTE, with the aim of providing its
UMTS technology provides the capability of faster data
customers with quick and easy access from their mobile
transmission as well as image and sound transmission
phone to content provided by third parties, is constantly
through the mobile phone. The first services to be
monitoring market needs and proceeding, when
provided are video telephony, conferencing, messaging,
necessary, to improvements and expansions of its
video streaming, and fast access to the Internet or
infrastructure.
Intranet, while current services, such as MMS, will be
offered with better quality (speed/data volume/image
SERVICES RELATED TO THE "ATHENS 2004" OLYMPIC
analysis). In the future, games between multiple remote
GAMES: Within 2003, COSMOTE will conclude the design
users, purchasing of tickets and on-line banking
of services with relation to the Athens 2004 Olympic
transactions, will be made possible through the use of 3G
Games, with a view to the better exploitation of the
mobile services.
Company’s capacity as a grand sponsor of the Games.
Also, the Company will start to offer the first relevant
COSMOTE’s current network presents certain advantages
services pertaining to the sectors of entertainment and
for a fast and cost effective deployment of a UMTS
information.
network, basically deriving from its state-of-the-art
technology and network architecture.
CORPORATE SERVICES: Trying to meet the growing
needs of its corporate clientele, COSMOTE is constantly
Furthermore COSMOTE’s growth at a consolidated level,
designing and offering new innovative services, aiming to
will be supported by the positive development of its
the fuller coverage of their needs, the increase of their
affiliated companies, as described below:
productivity, and control of their operating expenses,
ensuring, thus, even more important benefits for the
companies.
100
Albanian Mobile Communications
of the relevant programme of its mother company.
During year 2002, AMC’s management successfully
Respectively, to COSMOTE’s SCHOLARSHIPS, the
attained the targets set out in the company’s business plan
company will continue to grant AMC SCHOLARSHIPS,
for the year, succeeding in further expanding customer
while further enhancing its relations with local
base despite the competitive environment, since the
communities, through support of social welfare
operation of a second mobile operator in Albania had
organisations and the mounting of cultural activities. It is
already concluded its first year of operation.
noted that AMC has already adopted an orphanage and a
foundation for children with encephalic paralysis.
Having concluded its basic telecommunications network
throughout Albania, AMC is focusing its strategy for the
AMC is established, in the consciousness of the Albanians,
near future in other sectors. The company’s basic priority
as the largest privately owned company of the country, a
for year 2003 is the reinforcement of its distribution
sound organisation for the employment of personnel, a
network in the regions of the country, so as to increase the
contributor to the country’s events and the national
point of sales for its products and services and thus,
economy and as an entity of technological advancement.
achieve even higher market penetration.
The aforementioned, combined with the low penetration
of fixed telephony in the country, stand in favour of AMC
Special emphasis will be given to the numerous personnel
sustaining a satisfactory financial performance to the
of the company – one of its distinctive advantages – both
benefit of the mother company COSMOTE, but mainly to
through the continuous training and development and
the benefit of its personnel, customers and the social
through the improvement of the working environment.
group in which the company operates in.
Having already effected important deliverables in these
two sectors, AMC has accomplished a high level of
CosmoONE MARKET SITE HELLAS
personnel loyalty, with personnel consisting in its vast
CosmoONE (www.cosmo-one.gr) is the leading Greek
majority of native workers.
company in commercial e-business. The company
develops and provides e-commerce services between
With the purpose of attracting new customers, to sustain
businesses and especially to provide specialised services in
its current customer base, as well as increasing its
the sector of e-Procurement, targeting at the increase of its
revenues, AMC aims to launch new services, with the view
customers’ profitability, through the reduction of their
that the current level of familiarity of the Albanian users
procurement cost.
with mobile services makes the offering of new services,
viable. AMC’s targets also include an emphasis in
Since the beginning of 2001, CosmoONE offers its
corporate clients through the provision of specialised
customers the ability to procure supplies using catalogues,
services and competitive programmes.
through its www.b2bmarketsite.gr electronic marketplace.
This service aims to reduce procedural cost, reduce time
Finally, with its social awareness being one of its main
and monitoring of a company’s procurement system, it is
advantages, AMC will continue with consistency to carry
offered through the Internet and does not require the
out its Social Responsibility Programme, in the framework
acquisition of specific software by the transacting parties.
101
01
02
03
04
05
06
07
08
09
10
Business of COSMOTE
Management
Quality in COSMOTE
Every procurement service is adjusted to the clients’
through the 3rd European Community Support
procedures and can be integrated to its ERP systems.
Framework.
Since mid 2001, CosmoONE also offers its customers an
The future plans of the company include, amongst others,
electronic auctions’ service, through www.b2bauctions.gr,
activities with large organisations, such as the Chamber of
a dedicated hub for online B2B Auctions, with the aim to
Commerce, as well as offering of new services in
reduce their cost for the supply of products and services.
combination with products from other companies.
Through electronic auctions, every company or
organisation wishing to buy products of the lowest
COSMO-MEGALA KATASTIMATA
possible price or sell products or inventories, can contact
COSMO-MEGALA KATASTIMATA’s scope of business is to
CosmoONE and the company "hosts" and executes the
sell through the Internet CD, DVD, CD-ROMs and other
clients’ auction according to its specific needs and
music products offered by the licensee of the Virgin trade
scenario, whether the client is a buyer or a seller
mark in Greece ("VIVERE S.A.").
respectively.
COSMO-MEGALA KATASTIMATA already operates in the
The total value of the transactions through the electronic
Internet Business to Consumer area through the creation
marketplace for 2002 amounted to 233 million euro, thus
of www.virginmega.gr, while at the same time it plans to
increasing by 438% compared to the previous year.
also offer m-commerce services. Through the
Additionally, a 27.5 million euro value of goods was
aforementioned activities, COSMO-MEGALA
auctioned online in 96 auctions, bringing up to 29%
KATASTIMATA has already attracted a large number of
average savings to the originators. The growth rate for
consumers who carry out their shopping through Internet.
auctions in year 2002 compared to 2001 stood at 267%, a
fact which proves the growing interest of companies for
Furthermore, the company in cooperation with COSMOTE
the advantages stemming from this particular form of
has designed and implemented the "Ringtones" and
business negotiations. By the end of 2002 more than 300
"Logos" service that is offered under the "MyCosmos"
companies had used cosmoONE's infrastructure and
mobile portal, and since launch, has been very successful.
services for their e-business needs. Among the companies
In addition it provides and promotes these services
using cosmoONE's services for the first time in 2002, one
through the web pages of the www.virginmega.gr site.
can find Hellenic Post, Agricultural Bank of Greece and
almost all companies of OTE Group.
The target of the company is to enrich the
aforementioned service portfolio with new products and
102
Furthermore, CosmoONE participates in various e-business
services especially targeted to the youth market. The
initiatives in Greece and it is worth mentioning its
company’s plans include the provision of services based on
involvement in the pilot e-procurement/sourcing
picture & voice messages and the continuous enrichment
programme of the Ministry of Development. The
of these multimedia messages services, so as to become
company also submitted applications for financing
the leading company in the field of music products and
other similar products. COSMO-MEGALA KATASTIMATA’s
strategy in order to achieve its targets is based on
continuous growth and expansion through the
development of new innovative services & products and
the provision of high quality Customer Service.
COSMOTE expects that all the activities mentioned
above will have a positive impact on its future outlook.
In its five years of operation, COSMOTE has achieved
high recognition in the consciousness of Greek mobile
users, as a customer-oriented company, with a
significant technological lead and growth rates well
above the European averages in the sector.
During 2002, in a period characterised by prolonged
global and local market volatility, especially in the field
of telecommunications, the Company’s share price
outperformed the Athens Stock Exchange General
Index and the European Wireless Telecom Index, by
17.5% thus placing COSMOTE as the company with
the 6th best performance in the telecommunications
sector on a pan–European level.
COSMOTE will continue its successful path, with the
aim to continually set ambitious targets while at the
same time keep on creating superior value for its
shareholders.
103
Tel.: (+30) 210 680 0706
Annual Report
2002
44, Kifissias Ave., 151 25 Maroussi, Athens, GR
www.cosmote.gr
GRAND SPONSOR

Annual Report 2002

Transcription

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