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CASE FOR FINANCIAL STATEMENT ANALYSIS REPORT 2001 HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. Contents I) General Information about OTE page 3 II) SWOT Analysis page 6 III) Balance sheet analysis page 7 IV) Cash flow analysis page 10 V) Income statement analysis page 12 VI) Stock price decrease in 2002 (reasons) page 14 General Information about O.T.E The Hellenic Telecommunications Organization S.A. was incorporated as a societe anonyme under the laws of the Hellenic Republic in 1949, pursuant to the provisions of Law No. 1049/1049. The company is now operating as a societe anonyme subject to the provisions of Law No. 2190/1920 on the operation of societe anonymes and Law N. 2937/2001. The Company was the exclusive provider of public switched voice telephony in Greece and have provided local, long distance and international communication services to Greek and foreign businesses, consumers and governmental agencies. With effect from January 1, 2001, the period of exclusivity in the provision of public switched voice telephony services expired and the market is now open to competition. Within the framework of the competition regulations and the European Union policy objectives, OTE’ s effort is to maintain its position as the dominant provider in the Greek telecommunications market, by exploiting the enhanced capabilities of its network and restructuring its tariffs, as well as expanding the range of its services and remaining actively involved in high - growth business areas. In December 1995, OTE was granted the right to provide mobile telephony services throughout Greece using DCS 1800 technology. In October 1996, COSMOTE was established, to provide mobile telephony services and the DCS 1800 licence was transferred to COSMOTE in April 1997. In May 1997, following an international tender, a 30% interest in COSMOTE was sold to a subsidiary of TELENOR A.S., the leading Norwegian telecommunications company, for an aggregate purchase price of Drs. 26 billion. COSMOTE began commercial operation in April 1998. In October 2000, COSMOTE completed an initial public offering pursuant to which its shares were listed in the Athens Stock Exchange and its Global Depositary Shares were listed in the London Stock Exchange. Following the offering, OTE’ s interest in COSMOTE is 58.98% and TELENOR’s interest is 18%. Through OTEnet, OTE’ s 80.2% - owned subsidiary which is the leading Internet Service Provider in Greece, the Company has expanded its offerings to include Internet Protocol (IP) based products, services and applications. OTEnet offers Internet access to residential and business customers, IP telecommunication services as well as e-business and content services. OTE has also made certain equity investments in public telephony operators in countries with cultural, economic or historical ties to Greece. In June 1997, OTE purchased a 20% stake in Telekom Srbija, the public telephony operator in Serbia, for a total of DM 675 million (approximately Drs. 106 billion or US$ 287 million). In March 1998, OTE invested US$ 142.5 million for a 90% equity stake in ArmenTel, the Armenian public telephony operator, and in December 1998, OTE purchased a 35% interest in Romtelecom, the Romanian public telephony operator, for US$ 675 million (approximately Drs. 189 billion). In August 2000, a consortium of COMSOTE and TELENOR acquired an interest of 85% in the share capital of Albanian Mobile Communications (AMC), the state-owned Albanian mobile telephony company for a purchase price of US$ 85.6 million.
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