Annual Report 2001

GRAND
SPONSOR
Annual Report 2001
Dear Shareholders,
It is with great pleasure that I introduce the Annual Report of COSMOTE for the year ended 31 December 2001, as it
provides me with the first opportunity to address the shareholders from the position of Chairman of the Board of
Directors.
COSMOTE is not only the pride and joy of the OTE Group of Companies and one of the most dynamic companies in
Greece, but is indeed an example for many European companies in our sector. At a time when telecommunications is
experiencing turmoil internationally and in a particularly competitive domestic environment, COSMOTE has improved
all its fundamentals, attained high rates of growth and justified its shareholders’ trust.
One of the primary goals of the OTE Group for next year is to increase the synergies between its companies at every
possible level, from financial management and strategic investments to procurement, the development of common
products and services and awaiting of the business opportunities that will be presented as a result of the staging of the
Olympic Games in Athens in 2004. To this end COSMOTE’s contribution will be crucial.
During 2002, COSMOTE - already established as the most customer-oriented mobile telephony operator in the Greek
market - will place an even greater emphasis on the issue of customer satisfaction through the delivery of high quality
of service, the development of innovative products and services and the use of its dynamic distribution network.
Lefteris Antonacopoulos
Chairman of the Board of Directors
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
Dear Shareholders,
2001 was a decisive year for COSMOTE, as demonstrated by a series of important developments.
● In
2001, after approximately three years of operation, COSMOTE attained the leading position in the Greek mobile telephony market,
surpassing even the most optimistic of forecasts. These were three years of intense competition in the marketplace and three years of hard
work from the entire COSMOTE workforce, which ultimately justified our initial vision: to become the leading mobile phone operator in
Greece.
● From the beginning of the past year (January 2001), COSMOTE deployed a nationwide GPRS (2.5G) network and launched services for its
business customers services based on the GPRS technology, leading the development at the pan-European level. In the two following
months, the Company made 2.5G services available to its entire contract customer base, adopting a user-friendly and customer-focused
strategy aimed at familiarising the Greek user with the new technology.
● In
the summer of 2001, COSMOTE acquired a UMTS licence for the provision of 3rd generation (3G) services after participating in the
relevant competition for the necessary radio spectrum. The acquisition of the 3G license will enable COSMOTE to develop a comprehensive
and flexible UMTS network and to advance to the next generation of mobile telephony with ease and most importantly at a lower cost,
since a substantial portion of the necessary investment has already been made as part of the Company’s 2nd generation infrastructure.
● During
2001, COSMOTE continued to lead developments in tariffs and charges. The Company not only maintained its simple and clear-
cut tariff structure, but also reduced its charges further in July 2001. This followed a drastic reduction in termination charges from the fixed
network of OTE in February 2001, which resulted in calls originating on the fixed network made to COSMOTE’s mobile network being the
lowest in the Greek market.
● In
anticipation of opportunities to boost usage and with a view to developing new revenue streams, COSMOTE is employing the most
sophisticated technologies in mobile telephony and is making alliances with leading content providers in order to enhance the range of
services it can offer to consumers.
● During
the summer of 2001, COSMOTE, as part of a consortium with OTE and OTEnet, became a Grand Sponsor of the Athens Olympic
Games of 2004. This move is designed to reinforce the Company’s corporate profile, but above all, to contribute to this great national
effort.
● 2001 was also the first full year of commercial operations for Albanian Mobile Communications (AMC), the Company’s Albanian subsidiary,
as part of COSMOTE, following the Company’s acquisition of 85% of AMC’s share capital in August 2000. During 2001, the customer base
of AMC increased almost 8.5 fold when compared to the previous year, its telecommunications network was strengthened substantially to
cover almost 85% of the Albanian territory, and new products and services were launched. As a result, despite the arrival of a second
operator in the Albanian market, AMC more than tripled its revenues and achieved an EBITDA margin of 68% for the year. The strong
financial performance of AMC makes it one of the most profitable of the sector in Europe and justifies our acquisition.
● In
addition, 2001, essentially the third full year of commercial operation for COSMOTE, closed with the company recording strong rates
of financial growth, significantly higher than the equivalent European averages, as witnessed by strong profitability, a revenue increase of
53%, an EBITDA margin of 44%, and a tripling of net profits.
● Finally, during 2001 COSMOTE stock achieved the best performance among all FTSE/ASE20 companies, with a year on year gain of 32.6%,
and the second best performance of the sector on a pan-European level.
Dear Shareholders,
COSMOTE’s success to date only means that the years to come will be even more demanding. The Company’s management is carefully
planning its next steps so that COSMOTE can maintain its high rates of growth and strong profitability, improve the quality of its services
and further increase the range of its services. We firmly believe that as a result COSMOTE will continue to play a leading role in the Greek
telecommunications market, continue to enjoy the trust of Greek consumers, and above all, continue delivering superior value to is
shareholders.
Evangelos Martigopoulos
Managing Director
1
SELECTED CONSOLIDATED FINANCIAL DATA
Amounts in:
(except share and per share data)
Euro, Million
INCOME STATEMENT DATA
Total operating revenues
Total cost of sales and services provided
Gross profit
Operating income
Income before provision for income taxes and minority interests
Income before minority interest
Net income
2000
607.9
234.0
373.9
125.0
98.0
58.2
57.8
2001
926.9
322.7
604.2
300.1
292.0
179.8
174.1
0.18
316,875,000
0.53
330,000,000
BALANCE SHEET DATA
Current assets
Non-current assets
Fixed assets/license, net
Total Assets
2000
207.9
2.9
598.3
809.1
2001
219.3
3.2
1,015.9
1,238.4
Current liabilities
Debt
Other long-term liabililities
Minority interests
Share capital
Paid in surplus
Retained earnings
Total Liabilities and Shareholders Equity
227.7
226.0
0.7
8.0
155.0
150.5
41.2
809.1
665.6
0.0
45.3
13.3
155.1
156.2
202.9
1,238.4
CASH FLOW DATA
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net increase/(decrease) in cash
Cash at beginning of year
Cash at the end of year
2000
112.8
(263.4)
205.7
55.1
4.9
60.0
2001
356.8
531.0
144.5
(28.6)
60.0
31.4
Net income per share
Weighted average number of shares outstanding
2
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
Key milestones
in the Company’s evolution
●
April 1998
COSMOTE commences commercial operations.
●
December 1998
Launch of COSMOKARTA prepaid service.
●
December 1998
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 reacheds1 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, with a market share that approximated 50% in March
2002.
●
2nd quarter 2000 COSMOTE becomes the second mobile operator in Greece (by total number of
customers), with more than 1.5 million customers, representing an estimated 31.4%
market share.
●
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.
●
December 2000
COSMOTE’s customer base exceeds 2 million, with a market share of approximately
35%. During year 2000, EBITDA margin reaches 30% (compared to 22% in year
1999).
●
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
Nationwide 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
Launch of unique Voice portal services under “MyCosmos” (based on voice
recognition technology).
COSMOTE becomes the market leader in the Greek market and its customer base
exceeds 2.5 million, with an estimated market share of approximately 36.5%.
During the first half of year 2001, EBITDA margin reached 43%.
●
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.
●
March 2002
COSMOTE’s customer base exceeds 3.075 million in the Greek market, reaching a
37.3% market share. AMC’s subscribers exceeds 302 thousands.
3
Contents
1.
GENERAL INFORMATION ON COSMOTE ................................................................... 6
1.1 Overview of the Company......................................................................................... 6
1.2 Telecommunication Licenses .................................................................................... 8
1.3 New EU Telecommunications Regulatory Framework ............................................ 10
1.4 Share Capital ........................................................................................................... 11
1.5 Share Price Performance ......................................................................................... 12
1.6 Shareholders ........................................................................................................... 14
1.6.1 Shareholders Agreement ................................................................................ 15
2.
BUSINESS OF COSMOTE ............................................................................................ 16
2.1 Services and Products ............................................................................................. 16
2.2 International Roaming ............................................................................................ 24
2.3 Customers ............................................................................................................... 24
2.4 Churn ..................................................................................................................... 25
2.5 Distribution Network .............................................................................................. 25
2.6 Corporate Communication ..................................................................................... 27
2.7 Telecommunications Network ................................................................................ 27
2.8 Commercial Agreements ........................................................................................ 28
2.9 Property .................................................................................................................. 31
2.10 Employees ............................................................................................................. 33
3.
MANAGEMENT ........................................................................................................... 34
3.1 Organisation Chart ................................................................................................. 34
3.2 Board of Directors ................................................................................................... 35
3.3 Corporate Governance - Audit Committee ............................................................. 37
3.4 Management Share Option Plan ............................................................................ 38
4.
SUMMARY DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF √PERATIONS ................................................................................ 40
4.1 Financial Review ...................................................................................................... 41
4.1.1 Summary Consolidated Financial Results ....................................................... 41
4.1.2 Albanian Mobile Communications Sh.a (AMC) .............................................. 43
4.2 Operating Review ................................................................................................... 44
4.2.1 COSMOTE (Greece) ....................................................................................... 44
4.2.2 Greek Cellular Market .................................................................................... 46
4.3 Capital Expenditure Plan ........................................................................................ 46
4
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
2001- one of the most
significant years
for COSMOTE
5.
COSMOTE GROUP OF COMPANIES .......................................................................... 48
5.1 COSMO - HOLDING ALBANIA ............................................................................... 48
5.2 ALBANIAN MOBILE COMMUNICATIONS Sh.a ...................................................... 50
5.3 CosmoONE HELLAS MARKET SITE S.A..................................................................... 51
5.4 COSMO - MEGALA KATASTIMATA S.A.................................................................... 52
6.
COSMOTE’S SOCIAL FACE .......................................................................................... 54
7.
COSMOTE: THE ATHENS 2004 OLYMPIC GAMES GRAND SPONSOR ................... 58
8.
STRATEGY AND PROSPECTS ...................................................................................... 60
APPENDICES TO FINANCIAL STATEMENTS
1. Cosmote Mobile Telecommunications S.A. and Subsidiaries
2. Albanian Mobile Communications Sh.a
5
CHAPTER 1
General Information
on Cosmote
1. to install, operate, maintain, exploit, manage and
develop mobile telephone systems and mobile and
wireless telecommunication systems of any nature,
hereinafter referred to as “systems”, at local national
1.1 Overview of the Company
and international level,
“COSMOTE” was incorporated under Law
2. to supply and distribute equipment used in Greece
2190/1920 on October 1996 by the name “Cellular
or abroad in connection with those systems,
Operating System of Mobile Telecommunications
3. to design, develop, produce, supply, use, sale,
S.A.”. Its registered office is located at the
rental, lease and maintain telecommunication-
municipality of Athens, (15, Stadiou Street, GR 105
equipment systems and undertake any activity related
61). The business address of the directors is in
to mobile telecommunications,
Maroussi, (44, Kifissias Avenue, GR 151 25). The
4. to install and operate units for the support of the
Company is registered at the Register for Société
“systems” in Greece or abroad,
Anonymes of the prefecture of Athens, in Greece
5. to develop, exploit, manage and offer mobile
under number 36581/06/B/96/102 and has duration
phone services and related added value services in
of fifty years.
Greece or abroad through the “systems”,
The Company was renamed “COSMOTE Mobile
6. to acquire property or rights of use or exploitation
Telecommunications S.A.”, following the resolution of
nd
through purchase, lease or in any other way
the Annual General Meeting that was held on the 2
whatsoever and the right to dispose or impose
June 1999. The Company uses the brand name
charges on (i) telecommunication services and (ii)
“COSMOTE”.
mobile or fixed assets or other rights, regardless of
The objects of the Company according to article 4 of
their location,
its Articles of Association are as follows:
7. the representation in Greece and abroad of, similar
6
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
to the systems, products and services,
●
8. the design, development, production and sale, and
kind activity and perform every material act or legal
in any other way disposition of electronic commerce
act directly or indirectly related to the objects of the
applications. The provision of electronic commerce
Company or aiming directly or indirectly to the
services and any other activity related to electronic
fulfilment of the Company’s objects.
commerce,
The Company’s objects were modified after the
9. to supply, distribute and sell all kinds of products
resolution of the Shareholders General Meeting on
which will advertise and promote the 2004 Olympic
31.7.2000, with the addition of paragraph 8
Games and the products and services of the
regarding electronic commerce applications.
Company.
Furthermore, after the resolution of the Shareholders
The Company’s objects also include undertaking any
Extraordinary General Meeting on 21.2.2002, the
activity related to wireless, mobile and personal
Company’s objects were also modified, with the
communications, including activities in the fields of
addition of paragraph 9 for the supply, distribution
electronics and data processing in general.
and sale of all kinds of products which will advertise
For the attainment of its objects, the Company can:
and promote the 2004 Olympic Games and the
●
Incur contracts of any nature or agreements with
individuals or legal entities, organizations, state -
Undertake every similar commercial or any other
products and services of the Company.
●
The Company, its subsidiaries and its affiliates are
During 2001 COSMOTE increased all
its fundamentals and justified
its shareholders’ trust.
owned companies, states or international
not involved in any litigation or arbitration
organizations,
proceedings that may result in significant
●
Establish companies of any kind or participate in
consequences in the financial status of the Company’s
companies or syndicates of companies in Greece or
Group.
abroad, which have the same or similar objects or
●
promote in any way the objects of the Company,
significant change in the financial or trading position
●
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 or legal entities in Greece or abroad,
●
Since December 31, 2001, there has been no
of the Company and no material adverse change in
the financial position or prospects of the Company.
●
Arthur Andersen S.A., independent public
accountants to the Company, has audited the annual
financial statements of the Company as of December
2001.
Professionally train personnel for their employment
in the Company or its subsidiaries and affiliates and
provide working or scientific or training personnel to
third parties,
●
Sign loans for own use, accept personal or other
guarantees, undertake obligations, issue bills of
exchange, bonds or other titles on behalf of the
Company,
7
1.2 Telecommunication Licenses
COSMOTE holds the following Telecommunication
The Company’s provision of telecommunications
Licenses:
services within Greece is currently governed by the
Law”) which replaced the previous Law 2246/94 and
I. Special License for Second Generation
Mobile Communications (2G)
by presidential decrees, ministerial resolutions and
(SPECIAL LICENSE FOR THE INSTALLATION, OPERATION AND
resolutions of the National Telecommunications and
EXPLOITATION OF A PUBLIC TELECOMMUNICATION
Postal Commission (the ‘NTPC’) which implement
NETWORK OF 2ND GENERATION MOBILE COMMUNICATIONS
the Telecommunications Law and harmonize Greek
AND THE PROVISION OF 2ND GENERATION PUBLIC MOBILE
Law with applicable EU Telecommunications Law.
COMMUNICATION SERVICES)
terms of Law 2867/2000 (the “Telecommunications
The Company operates in accordance with the
conditions stipulated in its Licenses and, in this
COSMOTE provides mobile telecommunications
respect, is supervised by the NTPC, that is responsible
services in Greece in the 1800 MHz frequency band,
for the regulation and supervision of the
according to the terms of its 2G License. The 2G
telecommunications market. The Ministry of
License was initially granted to OTE as follows: OTE
Transport and Communications (the “Ministry”) is
was authorized by Article 14 of Presidential Decree
responsible for establishing the telecommunications
437/1995 to develop and provide mobile
policy, promulgating regulation and initiating
telecommunications services in Greece, including
legislation.
personal communications services through the
According to the Telecommunications Law, the
technology GSM 1800. The Ministry issued resolution
General Licenses Regulation and the Special Licenses
92093/1995, which granted OTE the right to use the
Regulation, telecommunication activities in Greece
frequency bands 1760-1785 MHz and 1855-1880
may be exercised under a regime of General or
MHz. OTE’s right to develop and provide personal
Special Licenses, depending on the activity. General
communications services using GSM 1800
Licenses are obtained after the lapse of 15 days from
technology, was transferred to COSMOTE pursuant
the submission to the NTPC of o Declaration of
to Law 2465/97 by way of a contribution in kind by
Registration. Special Licenses are issued by the NTPC
OTE, valued at GRD 16,346,823,305, as approved by
according to a specific procedure, described in the
the General Meeting of the shareholders of the
Telecommunications Law and the Special Licenses
Company. The 2G License has a duration of 25 years
Regulation. Special Licenses concern: a) the
starting from November 29, 1995 and can be
installation of telecommunications networks with
renewed following a resolution of the NTPC.
particular rights with regard to access to public or
In December 2001 the NTPC harmonised all 2nd
private land and b) telecommunication services which
Generation Special Licenses. In this respect its
require the use of scarce Resources, such as radio
resolution number 240/1/28.12.2001 was issued in
frequencies, positions in synchronous orbit and
connection with COSMOTE’s 2G License
numbers from the National Numbering Plan.
Based on the 2nd Generation Special License, the
The Special Licenses may not be transferred without
Company offers the whole range of 2nd generation
the prior consent of the NTPC. In addition, any rental
mobile telephony services including many value
or co-exploitation of a Special License or change in
added services, like voicemail, short messages service
the share capital structure of a holder of a Special
(SMS), call diversion and caller identification.
License which could result in a direct or indirect
Furthermore, the Company offers information and
change of its control, is prohibited without the prior
entertainment services (with access to the web) under
consent of the NTPC. Also, any transfer of shares,
the first comprehensive mobile portal «MyCosmos».
through one or more transactions, which in
Since March 2001 the Company offers services based
aggregate represents more than 2% of the paid in
on GPRS technology, that provide the capability of
share capital of the holder of Special License, must be
data transmission at high speed and constitute the
notified to the NTPC within 15 days of its realization.
forerunner for 3rd generation services. Lastly, the
8
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
Company offers its customers the capability of using
packet switched services at a transmission rate in
mobile telephone services in 119 countries, through
natural level of at least 144kbps for the downlink and
the 246 international roaming agreements that had
64kbps for the up-link.
been signed until December 2001. On 31.12.2001
population of Greece, 84% of its mainland and
III. Fixed Wireless Access Special License
(LMDS)
islands and 90% of its territorial waters.
(SPECIAL LICENSE FOR THE INSTALLATION, OPERATION AND
the Company’s network covered over 99.5% of the
EXPLOITATION OF A PUBLIC TELECOMMUNICATIONS
II. Special License for Third Generation
Mobile Communications (3G or UMTS)
NETWORK OF FIXED WIRELESS ACCESS AND THE PROVISION
OF PUBLIC FIXED TELEPHONY SERVICES)
(SPECIAL LICENSE FOR THE INSTALLATION, OPERATION AND
EXPLOITATION OF A PUBLIC TELECOMMUNICATIONS
In May 2002 the NTPC authorised, under its
NETWORK OF 3 GENERATION MOBILE COMMUNICATIONS
248/65/15.3.2002 resolution, the transfer of OTE’s
AND THE PROVISION OF 3RD GENERATION PUBLIC MOBILE
25GHz Fixed Wireless Access Special License to
COMMUNICATION SERVICES)
COSMOTE. As a result the Company was assigned a
RD
radio frequency section of 24969 - 25025 MHz and
In August 2001, following a tender of the NTPC for
nd
rd
25977 - 26033 MHz1 . The price that the Company
the granting of 2 and 3 generation licenses, the
paid to OTE for the transfer of the above Special
Company was granted, pursuant to the NTPC
License amounts to euro 9,535,000 and includes the
resolution number 226/1/6.8.2001, a 3rd Generation
goodwill that in the meantime had resulted for OTE
Special License. In this respect, the Company was
since December 2000 (payment date of this Special
assigned for exclusive use 2 Ã 15 MHz paired
License). This transfer was approved by COSMOTE’s
spectrum and 2 Ã 5 MHz non-paired spectrum.
Extraordinary General Meeting, which was held on
Specifically the following radio frequency sections
21st of February 2002. This General Meeting also
were assigned to COSMOTE: 1950.3 - 1965.3 MHz,
approved the transfer to the Company of fixed assets
2140.3 - 2155.3 MHz and 1905.1 - 1910.1 MHz. The
that had already been obtained by OTE for the
rd
total price for acquiring the 3 Generation Special
exploitation of the Special License, at a total amount
License amounted to euro 161,408,657 (55 billion
of euro 5.6 million.
Grd), 70% of which was paid at the time of the
The Fixed Wireless Access Special License lasts until
award of the License, while the remaining 30% will
the 10th of December 2015 and, according to existing
be paid in three annual equal installments starting
legislation, it can be renewed by an NTPC resolution.
from December 2005. The 3rd Generation Special
According to the Fixed Wireless Access Special
License has duration of twenty years starting from the
License, the Company undertakes the responsibility to
6th of August 2001 (until the 5th of August 2021) and
install, operate, maintain and use the necessary
can be renewed by an NTPC resolution. According to
equipment so that it can provide radio coverage at
the 3rd Generation Special License, the Company has
least to the 20% of the population of Greece by
the responsibility to provide:
December 2002, as well as fulfil any request made by
a) at least 25% coverage of the population of Greece
users for the provision of Fixed Public Telephone
until December 2003,
Services and the provision of Broadband Network
b) coverage of the Olympic Games facilities and all
Services.
the areas where respective activities will take place
within Attica, as well as the main road arteries that
IV. General Licenses
lead to the above areas that are located within Attica
The Company also holds General Licenses for the
until June 2004 and
exercise of the following telecommunication activities:
c) at least 50% coverage of the population of Greece
● Capacity
until December 2006.
services (Class A0201 and ∞0202)
The above requirements need to be achieved for
● Data
1
Leasing and Virtual Private Network (VPN)
transmission services (Class ∞03)
OTE maintained its 3.5 GHz Fixed Wireless Access License.
9
● E-mail
(Class ∞0401)
● Network
on that matter, is pending. Also, a) the
recommendation of the Commission for the
operation for Closed User Groups,
including the provision of general telecommunication
identification of those product and service markets
services and voice transmission (Class ∞0602)
within the electronic communications sector, the
● Network
characteristics of which may be such as to justify the
● Internet
● Voice
access services (Class ∞0604)
imposition of regulatory obligations (the
access services (Class ∞0701)
telephony services, via, in whole or in part, a
Recommendation) and b) the guidelines of the
network infrastructure, whose holder has the
Commission for market analysis and the assessment
ownership or management of the network without
of the significant market power, according to article
assignment of numbers from the National
15 of the Framework Directive (the Guidelines),
Numbering Plan (Class ∞1001)
haven’t been issued yet.
● Audiotex
The new EU regulatory framework for electronic
(Class ∞1102)
communications introduces a procedure for the
taking of measures by the National Regulatory
1.3 New EU Telecommunications
Regulatory Framework
Authorities, according to which, when a National
The international framework for telecommunications
that a specific relevant market of products and
has rapidly evolved during the last few years. In this
services isn’t effectively competitive within a specific
respect, the European Parliament and Council have
geographic area, it shall identify undertakings with
issued a set of four new directives and one decision
significant market power on that market and shall
that were published in the Official Gazette of the
impose on such undertakings appropriate specific
European Union on the 24th of April 2002 and must
regulatory obligations provided for in the Access and
be conveyed to the National Legislation of State
Universal Services Directives.
Members until the 24th of July 2003, replacing
During this analysis of the relevant markets, the
existing telecommunication directives. These are:
National Regulatory Authority shall take the atmost
a) Directive 2002/19/EC «on access to and
account of the Guidelines and the Recommendation,
interconnection of electronic communications
in collaboration, where appropriate, with the national
networks and associated facilities» (Access Directive),
competition authorities.
b) Directive 2002/20/EC «on the authorisation of
Some other main aspects of the new EU regulatory
electronic communications network and services»
framework for Electronic Communications are:
(Authorisation Directive),
a) the establishment of a right of appeal against the
c) Directive 2002/21/EC «on a common regulatory
decision of a National Regulatory Authority,
framework for electronic communications network
b) the establishment of a consultation and
and services» (Framework Directive),
transparency mechanism regarding the taking of
d) Directive 2002/22/EC «on universal service and
measures by the National Regulatory Authorities,
users’ rights relating to electronic communications
c) the encouragement of the cooperation of the
networks and services» (Universal Service Directive)
National Regulatory Authorities with each other and
and
with the European Commission,
e) Decision 676/2002/EC «on a regulatory framework
d) the right of the European Commission to request
for radio spectrum policy in the European
from a National Regulatory Authority to withdraw a
Community» (Radio Spectrum Decision).
measure where it concerns a definition of a relevant
This new regulatory framework is the result of the
market different from those defined in the
procedure that the European Committee initiated in
Recommendation, or the designation or not of
1999 for the review of the European
undertakings with significant market power, and
Telecommunications Framework (Review 1999). For
where such decisions would create a barrier to the
the completion of the new regulatory framework the
common market or would be incompatible with
Regulatory Authority (in Greece the NTPC) concludes
th
issuance of a 5 Directive for the protection of
Community Law and in particular the policy objectives
Personal Data, which will replace the existing directive
that National Regulatory Authorities should follow.
10
C O S M O T E
A n n u a l
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2 0 0 1
e) the new content that is given to the meaning of
consisting of 330,000,000 ordinary registered shares
“significant market power”. Specifically, this notion
with a nominal value of GRD 160.1525 or euro 0.47
seizes to associate with a 25% market share, but is
per share.
equivalent to the concept of dominance, as defined
in the case law of the Court of Justice and the Court
The General Meeting of the Company’s shareholders,
of First Instance of the European Communities
held on February 21, 2002, decided, among other
regarding competition. More specifically «an
things a) the harmonization of article 5 of the
undertaking shall be deemed to have significant
Company’s Articles of Association with the
market power if, either individually or jointly with
115/21.12.2001 (3rd matter) Board of Directors
others, it enjoys a position equivalent to dominance,
resolution according to which, pursuant to article 13
that is to say a position of economic strength
par. 9 of Law 2190/1920, the Company’s share
affording it the power to behave to an appreciable
capital was increased by euro 26,258.90 paid in cash,
extent independently of competitors, customers and
55,8702 ordinary registered shares were issued with a
ultimately consumers».
nominal value of euro 0.47 per share and b) the
expression of the Share Capital and the nominal value
only in euro.
1.4 Share Capital
COSMOTE’s paid in share capital amounts to euro
Thus the paid in share capital amounts to euro
155,126,258.90 and consists of 330,055,870
155,126,258.90 and consists of 330,055,870
ordinary registered shares with a nominal value of
ordinary registered shares with a nominal value of
euro 0.47 per share.
euro 0.47 per share.
The General Meeting of the Company’s shareholders,
The table below sets forth, certain information
held on July 31, 2000, decided, among other things,
regarding the evolution of the Company’s share
the following:
capital.
●
a reduction of the nominal value of the shares, from
GRD 1,000 per share to GRD 160 per share (reflecting
a 6.25 for 1 stock split)
●
a share capital increase of GRD 2,800,000,000
through the issuance of 17,500,000 new ordinary
registered shares with a nominal value of GRD 160
per share. These new shares, were offered through a
public offering and a private placement at an offer
price amounting to GRD 3,200 (euro 9.39) each
(excluding 387,660 shares which were offered to the
employees of the Company, at an offer price of 2,560
GRD per share, i.e. a 20% discount on 3,200 GRD)
The General Meeting of the Company’s shareholders,
held on June 12, 2001, decided among other things,
with respect to the conversion of the Share Capital
from GRD into euro, a share capital increase of GRD
50,325,000 by capitalization of above par reserves
together with an increase in the nominal value of
each share from GRD 160 to GRD 160.1525 and the
expression of the share capital and the nominal value
also in euro. Thus the paid in share capital amounted
to Grd 52,850,325,000 or euro 155,100,000
2
Share capital increase due to the exercise of the stock option plan.
11
THE COMPANY’S SHARE CAPITAL
METHOD OF INCREASE
Date of
General
Meeting
Amount of
Share Capital
Increase
Offer
Price
(in GRD)
Paid
in Cash
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
Capitalisation
of reserves
and contribution
in kind (in GRD)
STOCK SPLIT
2,800,000,000
12 June 2001
12 June 2001
Nominal
Value per
Share
(in GRD)
Number
of Shares
Increase in the nominal value of the Company’s shares together with an expression in euro
50,325,000
21 Feb. 2002
21 Feb. 2002
3,200**
Total
Share
Capital
(in GRD)
-
-
50,325,000
Expression of the Company’s share capital in euro
26,258.90
8.24
26,258.90
-
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
155,126,258.90
0.47
330,055,870
* 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
The total number of shares that was offered at the
in the section ‘Management Incentive Plan’, no
Combined Offering amounted to 56,062,500. The
capital of COSMOTE is currently under option or
issue price, as it resulted from the Book Building, was
agreed conditionally or unconditionally to be put
GRD 3,200 (euro 9.39), excluding 387,660 shares
under option.
which were offered to the employees of the
Company at an offer price of GRD 2.560 (euro 7.51)
COSMOTE has no convertible debt securities,
per share, i.e. a 20% discount on GRD 3,200.
exchangeable debt securities or debt securities with
warrants in issue.
The following table includes the closing price of the
share at the last trading day of each month from
It is noted that during the last and current financial
January 2001 until April 2002, the total volume of
year, no public tender was made by third parties in
shares traded per month and the respective turnover
connection with COSMOTE’s shares, nor did
per month.
COSMOTE make a public tender in connection with
the shares of another company.
1.5 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.
12
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
Date
Turnover
per month
(euro thousand)
41,090
45,336
54,414
42,631
83,763
56,786
67,293
32,871
47,612
33,065
79,154
80,325
29,915
35,789
37,469
33,227
31 Jan. 2001
28 Feb. 2001
30 Mar. 2001
30 Apr. 2001
31 May 2001
29 June 2001
31 July 2001
31 Aug. 2001
28 Sep. 2001
31 Oct. 2001
30 Nov. 2001
28 Dec. 2001
31 Jan. 2002
28 Feb. 2002
28 Mar. 2002
30 Apr. 2002
Total Volume
traded per month
Closing
Price
(euro)
9.18
8.84
8.92
9.78
10.30
10.60
10.86
10.26
9.82
10.22
11.90
11.42
11.60
10.10
9.70
10.58
5,201,367
5,009,085
6,108,582
4,565,828
8,332,137
5,482,850
6,350,136
3,137,716
5,155,063
3,289,281
7,179,319
6,902,926
2,550,487
3,387,464
3,631,600
3,349,132
Closing
Price
(GRD)
3,128
3,012
3,039
3,333
3,510
3,612
3,701
3,496
3,346
3,482
4,055
3,891
3,953
3,442
3,305
3,605
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 2001 until the end of April 2002.
Closing Price (ˇ)
Turnover ˇ 000s
25.000
13
20.000
12
11
15.000
10
10.000
9
5.000
8
4/02
02/0
02/0
3/02
02/0
2/02
02/0
1/02
/01
02/1
2
1/01
02/1
0/01
02/1
02/0
9/01
8/01
02/0
7/01
02/0
02/0
6/01
5/01
02/0
/01
02/0
4
/01
02/0
3/01
7
02/0
2
02/0
1/01
0
13
During the same period, COSMOTE’s share price performance, compared to the performance of the Athens Stock
Exchange General Index, was as follows:
2.000
02/0
02/0
02/0
02/0
02/0
2/01
02/1
02/1
0/01
02/1
02/0
02/0
02/0
02/0
02/0
4/01
02/0
2/01
02/0
02/0
02/0
5/02
6
4/02
2.200
3/02
2.400
7
2/02
2.600
8
1/02
9
1/01
2.800
9/01
10
8/01
3.000
7/01
3.200
11
6/01
3.400
12
5/01
13
3/01
3.600
1/01
Cosmote
14
ASE General Index
Athens General
Cosmote
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
160
140
120
100
80
60
5/02
02/0
4/02
02/0
3/02
02/0
2/02
02/0
1/02
02/0
/01
02/1
2
1/01
02/1
0/01
02/1
9/01
02/0
8/01
02/0
/01
02/0
7
6/01
02/0
5/01
02/0
4/01
02/0
3/01
02/0
2/01
02/0
02/0
1/01
40
COSMOTE is included in the ASE General Index (with a weight of 6.26% as of April 30, 2002), the ASE Telecoms Index
(with a weight of 22.96% as of April 30, 2002) and in the FTSE/ASE 20 large cap (“blue chip”) index (with a weight of
2.61% approximately). In addition the Company is included in nine different indices from the Dow Jones Stoxx umbrella of
sectoral and total market indices.
COSMOTE’s market capitalisation as of 30.04.2002 was 3,492 mil euro (or GRD 1,189.9 bn).
1.6 Shareholders
The Company’s shareholding structure, according to the share registry at April 30, 2002 is the following:
14
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
Shareholder
OTE AE
Telenor B- Invest
WR Com Enterprises Ltd
Free Float (Domestic & International
Institutional Investors, & retail holders)
TOTAL
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.
The Company’s principal shareholder is √∆∂.
The Company’s second largest shareholder is
“TELENOR B- INVEST AS”, a holding company, with
headquarters in Oslo, Norway.
As of April 30, 2002 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 0.015%.
1.6.1 Shareholders Agreement
In anticipation of the Combined Offering, OTE and
Telenor-B Invest AS entered into a new shareholders
agreement dated and effective July 28, 2000 (the
“New Shareholders Agreement”) which replaced a
previous Shareholders Agreement (the “Original
Shareholders Agreement”) and which provides
Telenor-B Invest with more limited rights than those
under the Original Shareholders Agreement. The New
Shareholders Agreement provides, among other
things, that, for so long as the shareholding of
Telenor-B Invest in COSMOTE is at least 15%, the
following provisions shall apply:
● Telenor-B Invest has the exclusive right to appoint
three directors to the Board of Directors (including
the Vice-Chairman). In case that none of the three (3)
members that are appointed by Telenor-B Invest are
not present or are not represented in meetings of the
Board of Directors, the Board will postpone the
meeting for a week at the end of which it will meet
again regardless of the absence of the
aforementioned members.
● Meetings of the Board of Directors of COSMOTE
(unless adjourned) are only quorate if an appointee of
Telenor-B Invest is present. Any adjourned meeting
shall be quorate notwithstanding the absence of the
Telenor-B Invest appointees;
● The following matters to be decided upon by the
Board of Directors require the approval of Telenor-B
Invest, which approval cannot be unreasonably
withheld: any significant changes to the annual
budget and business plan of COSMOTE; the placing
# of shares
194,623,760
59,410,510
23,529,000
(%)
58.97%
18.00%
7.13%
52,492,600
330,055,870
15.90%
100.00%
on the agenda of a shareholders meeting of all
resolutions with respect to any increase of the share
capital of COSMOTE by way of the issuance of new
shares or a convertible loan not included in the
relevant annual budget and/or business plan;
● COSMOTE’s managing director can be appointed
only with the approval of Telenor-B Invest, which
approval cannot be unreasonably withheld;
● At the request of Telenor-B Invest, COSMOTE will
employ an International Investments director who will
report directly to the Managing Director and will be
responsible for the development of the Company’s
investments abroad.
● OTE has agreed not to vote at shareholders
meetings in favour of resolutions with respect to the
following matters without the approval of Telenor-B
Invest, which approval cannot be unreasonably
withheld;
(i) increases in the share capital of COSMOTE by way
of issuance of new shares or of a convertible loan
which would result in the dilution of Telenor-B
Invest’s equity interest in COSMOTE
(ii) decrease in the share capital of COSMOTE;
(iii) a merger or change of the legal status of
COSMOTE;
(iv) termination or extension of the term of
COSMOTE or its revival;
(v) any amendment to COSMOTE’s Articles of
Association that materially affects Telenor-B Invest’s
special rights as described above.
All the aforementioned provisions are only accounted
for in the New Shareholders Agreement, with the
exception of the right of Telenor-B Invest to appoint
three directors to the Board of Directors (including the
Vice Chairman), which is included in the Articles of
Association of the Company. However, resolutions (if
any) passed by the shareholders in General Assembly
which contravene the terms of the New Shareholders
Agreement shall nonetheless bind the Company.
The New Shareholders Agreement also contains a
clause for non— competition between COSMOTE
and each one of its two major shareholders.
15
CHAPTER 2
Business of COSMOTE
as it believes that these help increase customer usage
and enhance its market image as a full service mobile
telecommunications provider.
2.1 Services and Products
The Company’s principal business is the provision of
As of December 2001, COSMOTE’s network covered
mobile telecommunications and related wireless
over 99.5% of the population of Greece, 84% of its
services in Greece. COSMOTE has organised its basic
mainland and islands and 90% of its territorial waters.
service and product offerings along two lines of
business based on the type of customers: contract
Contract Services
subscribers, including corporate customers, and pre-
COSMOTE is the leading provider of mobile
paid customers. In addition to its standard and
telecommunications services to contract subscribers in
enhanced GSM 1800 services, including international
Greece with a total of 1,461,767 contract subscribers
dialling and roaming, the Company offers a number
as of December 31, 2001 representing a market share
of standard value added services, including voicemail
of 49.8% (total number of contract subscribers in the
(“VMS”), short message services (“SMS”), call
Greek mobile market at the end of December 2001
diversion, caller identification (“CLI”), as well as a
was 2,934,7281). During the first quarter of year 2002
variety of advanced value added services using WAP,
(at the end of March) the Company’s total number of
SIM microbrowser and Voice Recognition
contract subscribers reached 1,487,851, representing
technologies. In addition, since March 2001 the
a market share of approximately 49.4%3 .
Company offers to its corporate customers and to all
its contract customers GPRS services. The Company
The Company offers its contract subscribers standard
plans to offer in the future more value added services,
GSM services and a selection of value added services
3
Based on publicly available figures released by VODAFONE (Greece) and STET Hellas
16
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
(e.g. VMS, CLI) at no additional monthly access fee.
●
The Company offers its services to retail contract
subscribers (that is, contract subscribers, including
destination of call;
●
individuals and small business customers, with less
than eleven concurrent connections) on the basis of
churn. The two basic tariff plans have varying
Handset subsidy depending on number of
subscriptions;
●
two programs4 that are intended to maximize usage
and revenue per contract subscriber while controlling
Differential airtime charges, depending on
Heavy usage is rewarded with end of year discounts;
and
●
Handset renewal subsidies are offered, after 12
months, depending on airtime usage.
monthly access fees (of euro 10.27 and euro 7.33
respectively) and same airtime traffic charges for
At the end of December 2001, the Company had
outgoing calls based on seconds of use, plus roaming
4,793 corporate customers (y-o-y growth 96%) with a
charges when customers use the service outside
total of 123,618 connections (y-o-y growth 101%).
Greece.
During the first quarter of year 2002 an additional
1,003 new corporate customers were added to the
COSMOTE’s basic tariff structure does not distinguish
Company’s customer base (up 21% from the year-
between peak and off-peak calls, nor does it
end figures), with 24,395 new connections
distinguish between local and long distance calls
respectively (up 20% from the year-end figures). From
Our vision is to become one of the best
mobile phone operators in Europe.
within Greece. International calls made by COSMOTE
the total number of corporate customers over 165 of
customers are charged at the applicable OTE rate plus
them have more than 100 concurrent connections,
the applicable COSMOTE per second airtime charge
while in addition approximately 68 corporate
provided for in the relevant package.
customers have more than 200 concurrent
connections.
Corporate Services
The Company, as part of its strategy of increasing
The Company, as part of its strategy to increase
revenues from, and numbers of, corporate subscribers
revenues from corporate customers, offers a number
established programs with special reduced tariffs and
of additional value-added services such as Virtual
special features applicable exclusively to corporate
Private Network and Direct Access, tailored to the
subscribers. As corporate customers are regarded the
corporate sector.
business and companies that have more than eleven
concurrent connections. Currently, the basic
characteristics of these tariffs are:
●
●
4
A minimum of 11 subscriptions per corporate
Pre-Paid Services
customer (5 or more subscriptions according to a
In December 1998, the Company introduced its pre-
new plan activated since March 2002);
paid service under the brand name “COSMOKARTA”.
A low monthly access fee set at euro 5.86 per
As of December 31, 2001, COSMOTE had
subscription;
approximately 1,481,765 pre-paid customers
The first with a minimum contract duration of twelve months and the secont with no limitation on contract duration.
17
(representing approximately 50.3% of the total
pre-paid packages (which include a handset, a SIM
COSMOTE customer base) as compared to
card and pre-paid airtime) to its Master Dealers at a
approximately 855,946 pre-paid customers
discount to the retail price of the package. In
(representing approximately 41.5% of the total
addition, the Company sells its Master Dealers SIM-
COSMOTE customer base) as of December 31, 2000.
only packages and pre-paid airtime cards at a
It is noted that, as of December 31, 2001, COSMOTE
discount to the retail price for onward sale to pre-paid
achieved the second position with respect to the pre-
customers. The Company currently offers a variety of
paid telephony segment in Greece with a market
different handsets with a pre-paid start up package.
5
share of 29.5% . During the first quarter of year 2002
COSMOKARTA or WHAT’S UP customers do not sign
the Company’s total number of pre-paid subscribers
any contracts, do not pay monthly access fees and do
reached 1,587,217 representing a market share of
not receive monthly bills. Customers may purchase
approximately 30.4%5. It is noted that during the first
additional airtime by buying pre-paid airtime cards in
quarter of year 2002, COSMOTE attracted
amounts of euro 7, 15 or 30 (including another 3
approximately 52.8% of the net new pre-paid
euro free airtime) from the approved sales points in
additions in the Greek market, re-affirming a trend
COSMOTE’s distribution network. The Company also
that has started since the first quarter of 2001.
offers SIM-only packages (both for COSMOKARTA
and WHAT’S UP) which only include a SIM card and
euro 6 of pre-paid airtime (but no handset). Both
packages are designed to appeal to contract
subscribers who have a second handset. COSMOTE
believes that pre-paid services have a positive impact
“WHAT’S UP?”
on its performance due to improved incoming traffic
In May 2001 COSMOTE launched a new
levels and because pre-paid customers consume
breakthrough pre-paid product under the name
fewer administrative resources. COSMOTE’s pre-paid
“What’s up?”. This new innovative product is mainly
customers pre-pay for COSMOTE’s services and,
addressed to youngsters but also to all other
therefore, do not generate bad debt.
subscribers that choose to principally communicate
through the use of SMS (short text messages). The
In March 2000, COSMOTE introduced a facility for
“What’s up?” product which is offered both in a pre-
pre-paid customers to recharge their pre-paid airtime
paid package (including a handset and a SIM card) as
cards through telephone banking and in addition in
well as in a SIM only connection pack, aims at
April 2001 it introduced a recharge service through
covering in the best possible way the needs of young
ALPHA Bank’s nationwide ATM network. Finally the
people, through the introduction of the following two
Company in cooperation with OTEnet (the Internet
exclusive and unique characteristics:
subsidiary of OTE), offers to its customers that hold a
●
Step down billing in the SMS charging for even
credit card, the possibility to renew their prepaid
more economical charges
●
airtime “on-line” through OTEnet’ s website.
A CHAT service, for easy and effective
communication between existing friends or new
friends
Value Added Services
The “What’s Up?” product will also offer all the
During year 2001 COSMOTE has launched new
existing services of COSMOTE’s pre-paid product,
innovative value-added services that are expected to
COSMO∫∞R∆∞, that include: Free call identification,
further boost the Company ’s strong financial
Voice mail, Automatic Roaming for incoming calls
performance. Value added services are increasingly
and SMSs, MyCosmos mobile portal services,
important to COSMOTE ’s business as they enhance
analytical billing service and 12 month connection
customer usage and serve as a means to educate
period.
customers in the use of mobile phones (as an easy
source of information and a convenient medium for
The Company sells COSMOKARTA and WHAT’S UP
5
effecting transactions). COSMOTE believes that
Based on publicly available figures released by VODAFONE (Greece) and STET Hellas.
18
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
providing a wide range of value added services to its
related to entertainment, communication and
customers also enhances its market image as a full
information. At the end of 2001, more than 500,000
service mobile telecommunications operator and
COSMOTE subscribers are using MyCosmos SIM,
forges stronger customer relationships.
while more than 450,000 subscribers are accessing
MyCosmos services via SMS.
Most value-added services are provided on the basis
of airtime charges without an additional monthly
Access is provided in a simple and friendly manner
access fee. Certain value-added services, such as the
using four alternative technologies, thus the user can
data and fax transmission service and Direct Access,
choose the access method that fits him better
are charged on the basis of an additional monthly
according to the technology supported by his mobile
access fee plus airtime tariff rates for use of the
device. The four ways of access are:
relevant service. Pre-paid customers currently have
access to a large number of value added services,
●
Via a Short Message Service (SMS).
including voicemail, SMS, customer care, directory
●
Via Voice Recognition, which allows customers with
inquiries and connect-through services. COSMOTE
just a phonetic command to ask for any kind of
monitors major market developments with respect to
information. COSMOTE is the first and only mobile
value added services through associations and
operator in Greece and among few operators in
Europe which uses this technology.
international forums and it chooses to introduce
those services that match customers’ needs and have
●
Via WAP (a WAP compatible phone is required).
a positive contribution to the Company ’s revenues.
●
Via the menu of the special “MyCosmos ”SIM card,
in which a SIM Toolkit (STK) Microbrowser is
embedded exclusively by COSMOTE.This SIM card
provides an easy to use menu for services as well as
transaction security.
Innovative Value Added Services
“MyCosmos”: COSMOTE was the first mobile
In order to make it easier for the subscribers to start
operator in Greece that launched an integrated
using the MyCosmos services via WAP, COSMOTE
mobile portal, “MyCosmos” (in September 2000).
offers since October 2001 a Service for Automatic
The portal offers to all COSMOTE subscribers an
Subscription to WAP and Automatic Retrieval of the
umbrella of value added services related to
WAP settings: by sending a simple SMS, COSMOTE
entertainment, communication, information, financial
subscribers are automatically subscribed to the WAP
transactions, etc., that can be accessed through a
service and receive the WAP settings that correspond
wide range of technologies such as SMS, SIM
to their mobile phone, provided that their phone
microbrowser, WAP and voice recognition.
supports over the air configuration.
MyCosmos is the corner-stone of COSMOTE’s
strategy for value added services, which consists of
Voice Portal MyCosmos: During 2001 COSMOTE
offering services that are serving the customer’s
has further exploited its exclusive Voice Recognition
needs, emphasising on the value of the offered
technology, which has launched since 2000 and has
services and not on technology.
created the voice portal MyCosmos. Though the
voice portal all COSMOTE subscribers can access a
“MyCosmos ” consolidates the following features:
●
variety of information and entertainment services with
access to its entire customer base both contract and
the user-friendliest way available today, by simply
prepaid
using their voice! COSMOTE subscribers just dial
●
using any kind of mobile device
1656 from their mobile phone and request the
●
from anywhere in the world
information they need with voice-commands,
without the need to key-in specific codes. More that
During 2001 MyCosmos services have been
5,000 subscribers are calling 1656 every day in order
substantially enriched with a variety of new services
to get the information they need.
19
In order to fulfill the ever-increasing need of the youth
popular game “Who wants to be a millionaire”, the
market segment for messaging, COSMOTE was one of
mobile version of the TV-game which is very
the first mobile operators in the world and the first
successful in the Greek TV.
mobile operator in Greece that launched on June
2001 the CHAT service. CHAT is a new exciting
Ringtones & Logos, that offers COSMOTE’S
mobile messaging service that allows many users with
customers a variety of popular ringtones and logos
common interests to communicate instantly via SMS.
that they can download and store in their mobile
The users of the service can participate in the ‘public
phones. The service is offered in cooperation with
channels’ (or ‘public rooms’) where they ‘discuss’
VIRGIN MEGASTORES. COSMOTE was the first
about music, different sport teams, movies, etc., or
mobile operator in Greece that offered SMS as an
they can create their own ‘private channels’, where
additional method for requesting the selected ring-
they can invite their friends and discuss ‘on-line’. While
tone and logo, which simplified the usage of the
participating in a public or private channel, subscribers
service and contributed to its big success.
can use a nickname and send a message to the whole
group of the channel, or to a specific user.
Financial Services that include Mobile Banking, a
Subscribers can access the CHAT service via SMS,
service through which the user can realise secure
WAP and USSD, depending on the capabilities of
banking transactions. This service will be enriched
their mobile phone and their preference. COSMOTE
with more mobile banking and stock trading services
is the first mobile operator in Greece that offered
when the needed technology becomes more secure,
USSD (Unstructured Supplementary service Data),
reliable and user friendly. A service providing real time
which presents a user-friendly menu to the user. By
stock information for the stocks traded on the Athens
the end of 2001, approximately 25,000 COSMOTE
Stock Exchange is also included. On December 2001,
subscribers were active CHAT users, sending
COSMOTE launched the service “Euroconverter”,
approximately 144 SMSs per month, while the daily
which allows conversion from euro to Drachmas and
average number of active users that simultaneously
vice versa.
participated in chat-rooms was 1,450.
Communication Services, that include the E-MAIL
The “MyCosmos” mobile portal offers the following
Service which gives the COSMOTE subscribers the
services:
possibility to send and receive e-mails using their
Information Services, that include political, financial
mobile phone (without the need to have a fixed ISP
and sports news as well as other general information.
connection). In addition, it includes the
Since May 2001 COSMOTE offers the Travel Service,
aforementioned CHAT service, which has been
which provides information regarding the ships
selected by COSMOTE as the one with the highest
departure timetable. Since January 2002 COSMOTE
potential for market success, versus other messaging
exclusively offers the service “Athens Airport” which
services like unified messaging (that was already
provides on-line information for the departures and
tested before the decision for CHAT was taken).
arrivals to the Athens International Airport. In
addition, the service informs the subscribers via an
It should be noted that, depending on the service,
SMS-alert every time there is new information for the
access is possible via one, two or even more from the
flight that they have requested (follow-me).
above mentioned methods.
Entertainment Services, which are very popular, that
Additionally,“MyCosmos” offers access to other
include a quiz game, card games, TV-guide, theatre
coactive sites like the internationally pioneer
and location-dependent cinema information. Since
portal Yahoo!, the financial mobile portal
February 2002, in cooperation with Flash Multimedia
NAFTEMPORIKH and the infotainment mobile portal
COSMOTE offers music-news from the International
ATHINORAMA.The customer can also have access to
and Greek music scene. Since April 2002, COSMOTE
any Mobile Internet site, provided that it is WAP
exclusively offers, in cooperation with Motorola, the
compatible.
20
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COSMOTE ’s strategy for the development of
the usage and the perceived quality of the service.
“MyCosmos” involves collaboration with a number of
companies, from the Greek or global market.
COSMOTE InfoExpress 1650. This service which is
COSMOTE compensates content providers on the
available to the entire customer base of
basis of revenue sharing or on the basis of the
COSMOTE provides the subscribers with general
number of “hits” achieved by the relevant value
information through a voice response system
added service depending on the content and the
regarding the COSMOTE network and COSMOTE’s
service offered. This compensation structure is
value-added services such as coverage, roaming and
designed to promote risk sharing between COSMOTE
tariffing, for 24hrs per day.
and content providers and to encourage the
marketing and advertising of the relevant value added
Internet Access Service. This service enables
service by COSMOTE and by the content provider. As
COSMOTE ’s customers to access the Internet on
the market for value added service develops,
their personal computers through their mobile
COSMOTE intends to review its pricing strategies for
phones via a national universal Internet access
each category of value added service.
numbers.
In addition, COSMOTE offers the following value
Internet and Mobile Commerce. The Company also
added services:
plans to offer mobile commerce services through “My
Cosmos ”, including stock trading, once the legal
Short Message Service (“SMS”). This service is
framework in Greece for secure transactions develops.
available to the entire customer base and its use is
In August 2000 COSMOTE has entered into a joint
continuously increasing. SMS revenues for the year
venture with the Greek licensee of Virgin trademarks
2001 increased by 95.2% and accounted for
to establish a Greece-based mobile internet site for
approximately 12% of the total revenues compared
on-line sales of CDs, DVDs and other music products.
to 8.6% that they represented a year ago. The
This service is described under “COSMO-MEGALA
number of SMSs per customer per month has
KATASTIMATA ” section, chapter 5.
reached 39 messages compared to 34 messages in
2000.
In addition, since March 2002 COSMOTE has
launched a new mobile commerce application, which
Directory Services and COSMOSYNDESIS. The
is offered to all COSMOTE subscribers. It allows them
Directory Services offer information regarding
to pay their daily subscription at the Internet site of
COSMOTE ’s contract subscribers as well as OTE
the most popular Classified Adds Newspaper “XRYSH
subscribers. Additionally a call connect service is
EYKAIRIA”, through their mobile phone bill or their
offered to all mobile and fixed line numbers in Greece
prepaid account, by sending a short message.
through the same directory service number whereby
the customer that makes the directory inquiry can
Data and Fax Service and Fax Mail Service. These
also be connected through.
services enable contract subscribers to send and
receive data and fax, as well as to access the Internet
Voicemail. COSMOTE ’s voicemail services are
from their mobile phone. The Company has
available to all customers, the majority of whom
upgraded (in March 2001) the existing circuit
utilise this service. The service allows the caller to
switched data transfer service, with the full
leave a message when the customer is not available,
commercial launch of HSCSD (High Speed Circuit
not reachable, busy or outside the coverage area. The
Switched Data) that may offer to the user speeds of
Company also provides advanced voicemail services
up to 57.6kb/sec, provided that the handsets also
such as voice and facsimile messaging, facsimile/voice
support it. In this context, COSMOTE offers a
deposit, facsimile/voice retrieval and SMS notification
comprehensive range of services and thus aims at
services. The Company has improved the Voicemail
satisfying, in the most effective way customers’ needs
service on March 2002, in order to further increase
for fast, reliable and continuous data transfer.
21
GPRS. In the context of preparing for the launch of
to their advanced characteristics like colored screen,
third generation (UMTS) value added services,
powerful processing capabilities, etc.
COSMOTE has completed (in January 2001) the
nation-wide rollout of a GPRS network and started
In this context, COSMOTE offers a comprehensive
offering GPRS services, such as data transmission,
range of data services and thus aims at satisfying, in
WAP and Internet services, at high speeds, to two of
the most effective way customers’ needs for fast,
its corporate customers.
reliable and continuous connection to the Internet
(through GPRS), as well as their needs for real time
By the end of March 2001 the Company started the
specific applications that demand guaranteed high
commercial offering of GPRS services to the whole of
speeds. It is therefore expected that through GPRS
its contract customer base, thus entering the new
(“always on” connection feature), combined with
phase of developments in the mobile
HSCSD (high transport speeds) the usage of the
communications sector. Initial GPRS services offered
mobile phone as a suitable medium for accessing the
by COSMOTE include Internet access over GPRS (e.g.
Internet and corporate Intranets, will be significantly
Web browsing /FTP) and WAP access over GPRS.
promoted, in a much faster and cost-effective way.
GPRS technology may offer data transmission speeds
of up to 171.2 kbp/s enabling customers to access
Third Party Services
Internet and intranet related services more rapidly
During 2001, in addition to the aforementioned
and efficiently. Customers using GPRS services will be
services, COSMOTE started to offer third party
connected constantly to the COSMOTE network but
services in cooperation with third companies like
will only incur charges when they utilise GPRS
ANT1, Mediatel, etc. These services are available to all
services. The Company’s GPRS infrastructure currently
COSMOTE subscribers that may access the new
supports speeds higher than 100 kbp/s compared to
offered services in an easy, fast and reliable way.
the existing 9.6 kbp/s offered by the traditional 2G
The third company has the full responsibility of the
GSM networks.
design, promotion and branding of the service.
Terminals currently available in the market may carry
COSMOTE provides access to the service, facilitates
data at speeds of up to 40 kbp/s. It is expected that
the billing by charging its subscribers for the usage of
within 2002, new advanced terminals will be available
these services and provides a percentage of the
in the market that will support higher data speeds
revenues to the third company.
and will improve the customer experience when
using GPRS services. The usage of GPRS services is
INTERFLORA: The service is offered since February
expected to increase gradually, according to the
2002 to all COSMOTE subscribers that can order
availability of terminals provided by suppliers.
flowers or wines for their friends in Greece or abroad.
Contract customers have a discount in their monthly
The proliferation of new technologies that will allow
bill, while prepaid subscribers get additional airtime in
higher data speeds and the gradual adoption of GPRS
their account. In addition, subscribers are informed
are expected to further boost MyCosmos Services,
via SMS for the status of their order and the time of
while at the same time improve their functionality.
the delivery.
These technologies will allow the development of
new services related to communication and
XRYSH EYKAIRIA: The service is offered to all
entertainment, with the addition of image and video
COSMOTE subscribers, since March 2002. It allows
that will make the services more appealing and
them to pay their daily subscription for the Internet
exciting to use. New devices that have already been
site of the most popular Classified Adds Newspaper
announced and are expected to be delivered by the
“XRYSH EYKAIRIA”, through their mobile phone bill
terminal manufactures later in 2002, will further
or their prepaid account, by sending a short message.
contribute to the increased usage of such services due
22
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“STOIXHMA”: The Company in cooperation with
corporate customers with a large number of mobile
Databank offers since 2001 to all COSMOTE
connections to the COSMOTE network and is utilised
subscribers the official results of the game
by a direct connection between a corporate
“STOIXHMA” of the National Organization for
subscriber ’s PBX and COSMOTE ’s network. Besides
football-games predictions OPAP.
increasing airtime usage, this service also acts as a
loyalty program for corporate subscriptions, as special
“BIG BROTHER”: In cooperation with the Greek TV-
installation is required.
channel ANT1, the service has been offered to all
COSMOTE subscribers since the beginning of the first
Wireless Office. This service is exclusively provided
round of the game, in September 2001. The service
by COSMOTE since April 2000. The wireless office
provides news upon request, or periodically (alerts)
service is basically a mini GSM system within the
regarding the game, as well as voting via SMSs.
customer’ s premises, installed by the Company. For
an additional monthly fee, wireless office provides
“BAR”: In cooperation with the Greek TV-channel
enhanced coverage within the subscriber’s office or
MEGA, the service has been offered to all COSMOTE
plant and calls to and from a handset can be routed
subscribers since March 2002. The service provides
through the company’s network as if the call were
information regarding the new events of the game
being made from or received on a desk telephone,
and voting.
with no extra charge. This service has a secondary
effect as a loyalty program for corporate
subscriptions, as special installation is required.
Value Added Services
to Corporate Subscribers
Leased Lines. The service provides connectivity to
The Company offers a number of additional value-
corporate customers for voice, data or fax calls
added services tailored to the needs of the corporate
through a private telecommunication network
customers. The Company believes that there is
provided by COSMOTE. The “Leased Lines” service
significant opportunity for growth in the corporate
is offered for a fixed monthly fee independently of
sector of the market and intends to continue to focus
the number and the duration of the calls.
on such customers. The services that are offered to
the corporate customers are:
Business Line. This service provides a special rate
for calls made between the fixed and mobile
Virtual Private Network. The Company launched a
telephones of a corporate customer, through
VPN service in April 2000 for corporate
COSMOTE’s network. The service was launched in
subscribers. VPNs allow companies to define a private
February 2000 and is addressed to companies with
numbering plan (closed user group) for users within
less telecommunication needs, in comparison to
an organisation. Short dialling, call barring and
the “Direct Access” service, which is addressed to
favourable pricing are provided for users within the
larger companies.
VPN group. This service’s capabilities may be partly
expanded to the corporate customer’s fixed
The Company offered GSM Pro6 on a pilot basis to
telephones while if it is combined with the “Direct
two of it’s corporate customers, but did not to
Access” service, the corporate customer’s PBX can be
proceed with the commercial deployment of the
a full member of the Virtual Private Network and
service as new competitive technologies, that cater
further utilise the service’s capacities.
for this type of market needs, have been developed
in the mean time.
Direct Access. This service was launched in April
2000 and offers reduced tariffs for calls made
Always consistent with its growth strategy and in
between the corporate subscriber’s PBX and
order to meet the increasing and evolving market
corporate mobile phones. This service is offered to
needs, the Company is testing and planning a
6
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.
23
range of new value-added services. These are
GSM 900 customers to use GSM 1800 network)
described in more detail in chapter 8 (“STRATEGY
grows, its geographic coverage of the Greek islands is
AND PROSPECTS”).
further expanded and the number of GSM 1800
networks worldwide increases.
2.2 International Roaming
International roaming enables a mobile phone user to
2.3 Customers
make and receive calls using a foreign country’s GSM
Since the introduction of mobile telecommunications
network while paying the home GSM provider for the
services in Greece in 1993, the market has sustained a
calls. As of December 31, 2001, the Company had
rapid annual rate of growth. Based on management
246 roaming agreements with mobile
estimates and publicly available information,
telecommunications operators in 119 countries, of
approximately 73.1% of the Greek population7,
which 210 agreements in 105 countries were
representing approximately 7.96 million people, were
operational. As of March 2002, the Company had
mobile phone users as of December 31, 2001.
256 roaming agreements with mobile
COSMOTE’s total number of the customers at the
telecommunications operators in 122 countries, of
end of December 2001, reached 2,943,532, with an
which 217 agreements in 105 countries were
estimated market share of 37.0% (based on publicly
operational. The Company regularly reviews
available information) [more details in chapter 4,
opportunities to enter into agreements with other
Operating Review].
mobile operators with the purpose to expand its
international roaming capabilities, in order to service
During the first quarter of 2002 COSMOTE added
its own customers’ requirements for international
131,536 new net additions, bringing the Company’s
roaming, and to enable it to capture an increased
total customer base, at the end of March 2002, to
share of the roaming traffic originating from tourists
3,075,068 with an estimated market share of 37.3%.
and business travellers from abroad.
Total number of customers in the Greek mobile
market as of March 31, 2002 was 8,239,288
The Company provides this service to all its contract
(according to publicly available information released
customers. Since the first quarter of 2001 the Company’s
by Vodafone of 2,965,804 total customers and STET
prepaid customers can also receive calls and SMSs while
Hellas of 2,198,416 total customers, for the first
roaming abroad. Roamers are charged on a per 30
quarter of 2002).
seconds basis at the rate of euro 0.1453 per 30 seconds,
plus the applicable PSTN charges, if calling a destination
Management believes that providing customers with
abroad, depending on the country, plus their network’s
a single, direct point of contact with the Company,
mark-up. COSMOTE customers while roaming are
rather than through independent service providers,
charged for incoming calls according to the international
allows the Company’s customer care personnel to
call charges of COSMOTE.
develop a stronger relationship between customers
and the Company. The Company currently has call
Greece hosts over 10 million tourists and business
centres that operate for 24 hours a day, seven days a
travelers each year. In 2001, such visitors made over
week, providing general assistance as well as specific
55.1 million roaming calls, using the COSMOTE
customer service lines to handle order processing and
network. Roaming calls made by visitors in Greece
credit checks, service charges, direct link directory
and COSMOTE customers roaming outside Greece
assistance, operator assisted short message service,
represented approximately 3% of the Company’s
collections and billings.
total revenues in 2001. COSMOTE expects its
roaming revenues to increase in the future as the
COSMOTE currently has a skilled multi-lingual
distribution of dual band handsets (which enable
customer service staff of approximately 500
7
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.
24
C O S M O T E
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employees, and a voice activated automated
collection times and reducing the potential for bad
information system enabling technology to support
debt problems to arise.
its customer care efforts. As part of its ongoing
commitment to customer service, the Company has
established specific contact groups to target
2.5 Distribution Network
corporate accounts, new accounts and sales. The
The Company distributes its services and products
establishment of a specific contact group for
through a distribution network comprised as follows:
corporate customers is one of COSMOTE’s strategic
initiatives to target corporate customers.
●
A Master Dealer network consisting of seven
exclusive and one non-exclusive master dealer and
five smaller distributors (together, the “Master
2.4 Churn
Dealers”);
Churn refers to total disconnections of customers that
●
take place either involuntarily (e.g. due to lack of
in Thessaloniki and one in Heraklion, Crete;
payment), or voluntarily (e.g. due to termination of
●
COSMOTE’s corporate accounts sales forces; and
contract). Also, the number of customers that
●
Two distributors of the COSMOKARTA packages
disconnect from a certain package or program in
and pre-paid airtime cards: Elgeka S.A. (“Elgeka”) and
order to reconnect to a new COSMOTE package or
the Greek Post Office.
Eight COSMOTE branded stores, five in Athens, two
program is included in the reported churn rate per
period. Based on this, the Company’s rate of churn
during 2001 was approximately 19.8%. It is noted
Master Dealer Network. The Master Dealers, directly
that of this churn over 70% is due to internal8
and through their network of independent dealers,
contract churn as well as prepaid churn.
operate a network of approximately 3,000 points of
sale throughout Greece, the majority of which are
The Company has put in place a number of measures
located in major cities. The Master Dealers act as the
to limit voluntary churn. These measures include a
commercial agents of COSMOTE in the distribution
reduction in monthly access charges as a loyalty
of its contract and pre-paid services for the payment
bonus on the renewal of contracts. In addition, the
of commissions pursuant to distribution agreements.
Company has established a churn group specifically
The seven exclusive Master Dealers are: OTE, Altcom
for the purpose of limiting churn rates. The Company
S.A. (“Altcom”), S. Benroubi S.A. (“Benroubi Net”),
also uses information technology systems to
Klimaphone S.A. (“Klimaphone”), Plaisio Computers
understand, monitor and control voluntary churn by
S.A. (“Plaisio”), Sanyocom S.A. (“Sanyocom”) and
focusing marketing resources on customer retention.
SpacePhone S.A. (“SpacePhone”).
To date, the Company believes that it has been
successful in retaining customers who have expressed
The Company has also entered into a non-exclusive
a wish to disconnect voluntarily through applying
agency agreement with Germanos Batteries S.A.
customer service resources to address their
(“Germanos”) whereby Germanos agreed to
complaints and to provide an improved service. The
distribute the Company’s products and services
Company provides incentives to its distributors to
through its chain of 310 stores operating in
reduce churn by paying them Connection Bonuses,
specialized retailing in the telecom and small
which take into account customer disconnections
consumers electronics area (including the points of
during the relevant period.
sale of MULTIRAMA, a specialised arm of Germanos in
digital products).
In the context of minimising the level of involuntary
churn, the Company seeks to persuade its customers
COSMOTE has also entered into agreements with five
to pay by credit or debit card thereby improving
smaller distributors: “Maritel” (a subsidiary of OTE
8
i.e.: change of number or/and program and reconnection to the Company’s network.
25
that provides telecommunications services to the
Carrefour and ONE WAY, are prohibited by the terms
marine industry), “Eurobank Cards S.A.” (a credit card
of their distribution agreements from selling any other
provider and a subsidiary of EFG Eurobank Ergasias, a
mobile telecommunications service but may and do
Greek bank), “Valuenet S.A.”(a distributor of OTEnet’s
engage in other businesses such as the sale of other
services), “ONE WAY - Commercial & Industrial
electronic goods.
Company of IT and Telecommunications Limited” (a
chain of stores with digital products specialising in
COSMOTE Branded Stores. The Company operates
information technology and telecommunications
eight COSMOTE branded stores; five in Athens, two
offerings) and “Carrefour” Super Market chain in
in Thessaloniki and one in Heraklion, Crete. These
Greece.
branded stores provide both sales and customer
support services, such as payment collection, basic
The following table sets out the number of outlets
handset repairs and billing claims reception. They also
distributing COSMOTE’s services as of December 31,
provide the Company with a valuable promotional
2001.
vehicle for increasing brand awareness of the
Company’s services and products as well as providing
Distributors
OTE
Altcom
Benroubi Net Phone
Germanos
Klimaphone
Plaisio
Sanyocom
SpacePhone
Others (Maritel, Valuenet,
Eurobank Cards, OneWay,
Carrefour - Marinopoulos)
Total
Number of Outlets
470
485
85
310
259
14
489
583
the Company with marketing information
intelligence. COSMOTE plans to open one more
branded store before the end of May 2002.
COSMOTE’s Corporate Accounts Sales Force. The
Company’s corporate accounts sales force focuses on
marketing the Company’s services to corporate
customers. Approximately 35 people are employed in
the corporate accounts sales force. The number of
account managers is expected to reach 49 by the end
of 2002.
215
2,910
Elgeka and the Greek Post Office. Elgeka is a
distribution company and acts as distributor of
COSMOKARTA and ‘WHAT’S UP?’ pre-paid airtime
The Company pays each Master Dealer a series of
cards through approximately 9,000 kiosks and small
bonuses, like an airtime bonus based on monthly
shops. These kiosks and shops are located in large
airtime revenues generated by each contract
and small population centres thereby providing
subscriber the Master Dealer acquires for COSMOTE,
convenient outlets for pre-paid customers to purchase
a connection bonus payable for each new corporate
additional units for use in topping up COSMOKARTA
contract acquired by the relevant Master Dealer, a
and ‘WHAT’S UP?’ cards. The Greek Post Office also
safe payment bonus payable where the new contract
acts as a distributor of the COSMOKARTA and
subscriber agrees to pay his bill by credit or debit
‘WHAT’S UP?’ range of products through
card; and annual, semi-annual and quarterly
approximately 800 branches.
bonuses payable if the relevant Master Dealer
achieves prescribed targets for numbers of new
The Company has devoted considerable
contract subscribers connected to the COSMOTE
management time and effort to building up its
network during the relevant periods. These bonuses
distribution network over the past three years.
are designed in part to maintain the loyalty of the
COSMOTE plans to expand its distribution channels
Company’s Master Dealer network and to encourage
to include additional COSMOTE branded shops and
them to contribute to the promotion of COSMOTE’s
other agents, to market its pre-paid COSMOKARTA
services.
and ‘WHAT’S UP?’ packages through large
distribution agents throughout Greece, and to target
The Master Dealers, with the exception of Germanos,
26
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more of its large customers with direct sales efforts.
characteristics is better suited to densely populated
urban areas such as Athens, Thessaloniki and Patra
(where approximately 65% of the Greek population
2.6 Corporate Communication
live). The Company’s network design objectives
COSMOTE places emphasis on corporate
require that the network be sufficiently versatile to
communication as a means for the promotion of its
support its value-added services.
services and products as well as its brand name.
The basic elements of COSMOTE’s GSM 1800
During year 2001, marketing activity focused on the
network are its BTSs which house radio transmission
introduction of new value-added services (under
and reception equipment to perform signal
‘MyCosmos’ and through cooperation with third
processing activities. As of December 31, 2001, the
parties), new products launched (‘WHAT’S UP?’) and
Company’s network was made up of 2,206 BTSs
new, lower tariffs.
linked to 47 BSCs. At the end of year 2001,
Television, the press, radio, outdoor posters and the
COSMOTE leased 1,088 sites for these BTSs from
Internet are the means that the Company uses during
OTE. Cellular traffic is collected from a number of
its advertising campaigns. These means are diversified
BTSs and routed to a BSC. The BSCs allocate radio
and enriched according to the target group, with the
channels among BTSs, manage intra-BSC handoffs
aim to promote awareness of COSMOTE’s services
among the BTSs and interface with the mobile
and products and ensure that a unified message is
switching centres (“MSCs”). Each BSC is controlled
sent to the Greek public.
by an MSC, which is connected to other MSCs in the
network as well as to other fixed or mobile
In addition, the Company has strengthened its brand
telecommunications networks.
through focused advertising campaigns and other
forms of direct and indirect marketing campaigns
As of December 31, 2001 there were 16 MSCs in
(sponsorships in the fields of culture, sports, sciences
COSMOTE’s network. MSCs also control the billing of
and technology), whose aims are to target potential
calls and allow mobile telephone users to move freely
customers while not alienating existing subscribers.
from cell to cell while continuing their calls.
Connections between BTSs, BSCs and MSCs consist
COSMOTE believes that the combination of its range
of transmission lines, including fiber optic cables,
of products and services and innovative advertising
copper cables and microwave links. The Company is
campaigns to support them has helped shape the
gradually, in specific cases regarding certain parts of
Greek wireless market and generate significant
Greece, replacing the use of leased lines by its own
goodwill for COSMOTE.
microwave network. The Company’s network is
interconnected with OTE’s PSTN in Athens,
Thessaloniki (through which international traffic is
2.7 Telecommunications Network
also routed) Patras, Larissa and Heraklion, with the
Quality and geographic coverage of the network are
network of VODAFONE (Hellas) in the same cities and
key factors for the success in the distribution of
the network of STET Hellas in Athens, Thessaloniki,
mobile telecommunications services. COSMOTE has
Patra and Larissa. The Company co-locates its
constructed a high capacity network covering over
equipment sites with the other mobile and fixed
99.5% of the Greek population, 84.3% of the Greek
operators where local conditions make this practical
mainland and islands and 90% of Greece’s territorial
and cost effective.
waters as of December 31, 2001. The Company
currently has significant capacity on the basis of the 2
The operation of BTSs is subject to receipt of required
x 25 MHz allocated to it in the 1800 MHz frequency
permits from the Ministry and local planning
band, and the 2 x 15 MHz paired (FDD) and 5 MHz
authorities. Spectrum availability is limited and is
non-paired (TDD) spectrum.
allocated by the NTPC (EETT).
COSMOTE’s GSM 1800 network, due to its technical
The Company currently optimises its existing
27
spectrum allocation by adding more BTSs in
value added services and to position the Company for
combination with existing technology such as cell
third generation UMTS technology. The Company
splitting, software feature optimisation, frequency
offers nation-wide GPRS commercial services since the
reuse and cell sectoring. In order to avoid capacity
first quarter of year 2001.
constraints the Company has started employing
microcells, while a number of additional measures,
such as frequency hopping, could be used in the
2.8 Commercial Agreements
future to achieve clearer frequency utilisation and
For the smooth end effective execution of its
higher capacity.
operations, COSMOTE has entered into commercial
agreements both with its principal shareholder, OTE,
COSMOTE has developed a comprehensive process
as well as with other suppliers and associates.
to monitor the performance of its network on a
continuous basis. The network performance indicators
Interconnection Agreements
are monitored and evaluated on a national and
The Company, like other mobile telecommunications
regional basis by using advanced, real time
operators, requires interconnection with fixed line
information systems to collect relevant data
networks and other mobile telecommunications
continuously from all the network elements and takes
networks to enable customers to initiate and receive
proactive measures to address any shortcomings in
calls to and from customers of these other networks.
network performance.
The Company therefore requires interconnection
During the next two years, the Company plans to
arrangements with the other holders of the respective
invest approximately EURO 380 million for upgrading
individual licenses.
and enhancing its current network 2 and 2.5G
network, excluding the cost of developing a 3G
Interconnection Agreements are governed by the
network and/or regional and domestic acquisitions,
recent Telecommunications Law 2867/2000 and the
joint ventures or other equity investments. In addition
Directive 97/33/EC of the European Parliament and of
during year 2002 the COSMOTE will invest
the Council of 30 June 1997 on interconnection in
approximately EURO 15.1 million for the transfer of
telecommunications, which is incorporated into
OTE’s Fixed Wireless Access license (LMDS) at the 25
Greek Law with the Presidential Decree 156/99. In
GHz band and respective equipment (EURO
the process of the review of the regulatory framework
9,535,000 cost of license and up to EURO 5,600,000
of the European Union concerning
cost of installed equipment).
telecommunications (Review 1999), on April 24,
2002 was published in the Official Journal of the
Also during year 2002 the technical analysis with
European Community a new Directive on Access and
respect to the Company’s 3G network is expected to
Interconnection (Directive 2002/19/EC on Access)
be conclude, while in year 2003 COSMOTE plans to
which replaces the Directive 97/33/EC and shall enter
invest around EURO 60 million for the pilot rollout of
into force in Member States on July 25, 2003.
its 3G (UMTS) network.
With respect to this issue, there is also a recent
The Company is developing its network coverage by
decision (15.3.2002) of NTPC, which nominated
building additional BTSs, BSCs and MSCs and other
COSMOTE and VODAFONE as Organizations with
network elements. In this respect it plans in year
Significant Market Power (SMP) in the
2002, to install approximately 300 additional BTSs,
telecommunications market. According to a relevant
six (6) new BSCs and to replace four (4) existing
interpretative announcement of NTPC the companies
MSCs with new high capacity MSCs. Furthermore
with Significant Market Power in the mobile market
during the same year it plans to expand the capacity
have the following indicative obligations:
of 450 existing BTSs. These developments are
1. Each operator must have one fee for calls
designed to extend coverage in response to existing
terminating into its network, irrespectively of whether
and projected customer demand for new advanced
the originating network is fixed or mobile.
28
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2. The termination fee on a per minute basis must be
Agreement signed with InfoQuest.
lower than the lowest “on-net”9 retail tariff offered by
each provider of mobile telecommunications services.
According to the recent decision of NTPC, which
3. Discount policies must be transparent and not
nominated COSMOTE and VODAFONE as
discriminating.
Organizations with Significant Market Power (SMP) in
the mobile market, the termination fee received by
Interconnection Agreement with OTE
the Company for all incoming calls initiated from the
COSMOTE and OTE are parties to an interconnection
other three mobile networks shall gradually reach the
agreement dated April 9, 1998, concerning the
level of the termination fee received for incoming calls
interconnection of calls originating on the PSTN
initiated from fixed telephony networks.
network owned and operated by OTE or the GSM
1800 network of COSMOTE and terminating on
COSMOTE’s or OTE’s network, as the case may be.
Interconnection Agreement with OTE
(see above)
The term of the Interconnection Agreement is 10
years (expires at 2008). Both parties have the right to
Leased Lines Agreements
terminate the Interconnection Agreement for
As of December 31, 2001, OTE and COSMOTE had
substantial breach of its terms, if the said breach
entered into agreements for the leasing of
remains unremedied for one month by submitting
approximately 3,200 OTE lines for the COSMOTE
written notice thirty days after relevant notice is
network. The Leased Line Agreements are for an
received by the other party.
indefinite period with a minimum term of 6 months.
COSMOTE can terminate a Leased Line Agreement at
Furthermore, up to 30.4.2002 COSMOTE had
any time after the expiration of the minimum term by
entered into an interconnection agreement with
giving seven days’ written notice. The lease of these
Quest Wireless which is granted an individual license
lines can be discontinued by OTE in case of
for Fixed Wireless Access, whereas COSMOTE was in
emergency. OTE is responsible for the maintenance of
the process of negotiating similar agreements with
the leased lines.
other holders of individual licenses.
COSMOTE pays OTE connection fees as well as
Interconnection Agreement With VODAFONE, STET
monthly rents for the use of its lines both of which are
Hellas and InfoQuest
set at rates determined unilaterally by OTE from time
The Company has entered into Interconnection
to time, plus the relevant VAT. The Leased Lines
Agreements with the three providers of mobile
Agreements are governed by Greek law and the
telecommunications services (VODAFONE, STET-
parties are submitted to the jurisdiction of the
Hellas and InfoQuest) on December 12, 1997,
competent courts of Athens in connection with
December 13, 1997 and May, 2002 respectively.
disputes between them.
Until 29.11.2002, the Interconnection Agreements
Framework Agreement for the Secondment of
with VODAFONE and STET Hellas provided that
Personnel and Leasing of Property
charges for calls between the mobile networks will be
On September 22, 1997, OTE and COSMOTE
accounted for on a “bill and keep” basis (i.e., the
entered into a framework agreement for the
operator of the network in which the call is initiated is
secondment of personnel to COSMOTE. Pursuant to
entitled to retain the entire amount charged for the
this agreement OTE is obliged to assign personnel to
call). These agreements were amended on November
COSMOTE for full or part-time employment, to train
29, 2001. The amended agreement provided that as
the assigned personnel and to lease premises to
from 1.1.2002, every mobile telecommunications
COSMOTE for the operation of its business. The
company will receive a termination fee for every
Framework Agreement is open-ended and has no
incoming call initiated from another mobile network.
fixed or minimum term.
A similar provision is included in the Interconnection
9
Calls that are initiated and terminated to the same network.
29
OTE Site Leases
COSMOTE. The above Agreement gives COSMOTE
At December 31, 2001, OTE and COSMOTE were
the right to act as a contracting party to similar
party to 1,088 lease agreements regarding OTE sites
agreements with other commercial distributors as well.
for the installation of COSMOTE’s equipment for
terms of nine to twelve years duration. Both parties
In addition, COSMOTE has signed with OTE (and
pay equal amounts of stamp duty. COSMOTE has the
other associates) agreements for the bill printing,
right to terminate a Site Lease Agreement at any time
enveloping and collection of the bills of COSMOTE’s
by giving one month’s notice. The Site Lease
contract subscribers. Furthermore COSMOTE and
Agreements are subject to Greek law and the parties
OTE Leasing S.A.10, a former subsidiary of OTE, are
submit to the jurisdiction of the competent courts of
parties to a framework leasing agreement dated
Athens.
January 31, 1997 which currently governs eighteen
individual sub-leasing agreements, mainly including
BTS Maintenance AgreementsAfter the expiry of the
the leasing of office equipment (furniture and
previous BTS Maintenance Agreement with OTE, the
personal computers). COSMOTE estimates that all the
Extraordinary General Assembly of the Shareholders
terms of the aforementioned agreements with OTE
of COSMOTE which was held in Athens in
are just and fair.
21.02.2002, approved the terms of the new BTS
Maintenance Agreement. This Agreement is valid
All transactions between OTE are cleared on a
from 01.01.2002 until 01.01.2004 and may be
bimonthly basis.
renewed each time for another year after written
agreement of the parties upon the same terms and
All the aforementioned agreements have been
following revision of the prices. COSMOTE may
approved by COSMOTE’s General Meetings,
terminate this Agreement at any time by giving three
according to article 23a of law 2190/1920, except
months written notice to OTE.
from the interconnection and leased lines agreements
that represent standard commercial agreements,
Under these BTS Maintenance Agreement,
based on OTE’s published tariffs used for all similar
COSMOTE pays OTE fixed sums for acting as
agreements with all its leased lines and
maintenance contractor and for carrying out
interconnection customers, and thus they do not fall
preventive maintenance and for repairs performed,
out of the scope of day to day transaction of
depending on the location of the BTS and the nature
COSMOTE.
and severity of the problem. The BTS Maintenance
Agreement is subject to Greek law and the parties are
submitted to the jurisdiction of the competent courts
Agreements with other Suppliers
of Athens in connection with any disputes between
The Company’s network utilises standard equipment
them.
that is available from a limited number of suppliers.
The Company’s major GSM 1800 infrastructure
OTE Master Dealer Agreement
contractor is Nokia and its affiliates which supplies the
COSMOTE and OTE are parties to a master dealer
Company with MSCs, BSCs and BTSs, operations
agreement dated May 25, 1998 and expiring on May
support systems and cross connect systems
25, 2001, pursuant to which OTE is obliged to
equipment. In July 1997, COSMOTE entered into an
promote and distribute COSMOTE’s services. The OTE
agreement, which was amended in January 2000 and
Master Dealer Agreement may be renewed on an
April 2001 and 2002 with Nokia for the supply of
annual basis thereafter. Under the terms and
GSM 1800 transmission and other equipment and
conditions of the agreement OTE is allowed to
services. This agreement expires in June 2003.
delegate the performance of its obligations to
In August 1999, the Company entered into a
promote and distribute COSMOTE’s services to
purchase agreement with Ericsson for the supply of
sub-dealers of its own choosing. The respective
network infrastructure equipment and related services
sub-dealership agreements have to be approved by
for the Company’s network in the northern part of
10
OTE has transferred OTE Leasing to “Piraeus Leasing”
30
C O S M O T E
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Greece. This agreement expires in 2003. COSMOTE
Information Technology
also purchases additional network elements such as a
COSMOTE relies on IT systems for the accelerated
pre-paid platform, voicemail servers and SMS centres
deployment and efficient operation of its network
and a billing and customer care system from other
infrastructure, the provision of effective customer
network suppliers.
services and the smooth and efficient operation of its
internal business. The Company’s main IT systems are
briefly described below:
2.9 Property
Intellectual Property
COSMOTE owns twenty-two trademarks registered in
its name with the Greek Ministry of Commerce which
are used in connection with the marketing and sale of
its services and products. The Company has applied
to register a further five trademarks with the Greek
Ministry of Commerce and it has applied to the Office
for Harmonization in the Internal Market for seven
Community Trademarks. The Office’s headquarters
are in Alicante in Spain.
Buildings and Sites
COSMOTE leases its headquarters (including a
COSMOTE branded store) which occupies 5,351 m2
over five floors at 44 Kifissias Avenue, Athens pursuant
to a nine year lease entered into in November 1997,
which may be renewed unilaterally by COSMOTE for
a further six years. COSMOTE leases the premises for
its COSMOTE branded stores in Athens and
Thessaloniki. It also leases substantially all the sites
where its mobile telecommunications network
equipment is installed. During year 2001 the
Company had 1,088 of its sites leased from OTE and
1,136 of its sites leased by third parties.
Telecommunications Equipment
As of December 31, 2001 the Company operated the
following telecommunications equipment:
●
2,206 BTSs (all over Greece)
●
47 BSCs, of which 14 were based in Athens, 4 in
Thessaloniki, 3 in Patras 2 in Kavala, 2 in Livadia and 2
in Siros, while 1 BSC was based in each of the
remaining twenty (20) largest cities in Greece.
●
16 MSCs, of which 9 were located in Athens, 3 in
Thessaloniki, 2 in Patras, 1 in Heraklion and in Larisa
respectively.
The Company’s fixed assets are free of mortgages,
prenotices and other liens.
31
BILLING AND CUSTOMER ADMINISTRATION
SYSTEMS
Customers - Suppliers, Distribution and the Retail
System area.
The necessary functions for supporting billing and
customer administration activities are provided by the
INTRANET
Business Support and Control System (“BSCS”). BSCS
The Company has developed internally an
is a client-server billing and customer administration
Employees’ Corporate Portal (“Intranet”) where all
system developed by LHS, presently named
the corporate announcements, phone directory,
SchlumbergerSEMA, for the telecommunications
organisation chart and procedures may be found.
industry. BSCS’s current version (v5.21) provides the
Company with capabilities for the development of a
NETWORK STATIONS MANAGEMENT
tariffing policy customised to the needs of GPRS
COSMOTE has developed a site manager system that
billing. During billing, BSCS summarises account and
manages network element installation and network
service data, calculates charges, discounts and taxes
status reporting. COSMOTE’s site manager system
and generates the necessary bill data that are
supports all processes related to network
provided to the customers.
maintenance and is integrated with IFS’s module for
project management, budgeting and cost control.
SALES AND MARKETING SYSTEMS
The Company has a number of IT systems designed
to assist the sales and marketing functions
●
Commission Handling System (“CHS”): CHS is a
system for calculating and processing dealer
commissions developed by Intrasoft for COSMOTE.
●
Application Request and Activation System:
COSMOTE developed the ON LINE system with the
National Technical University of Athens to automate
elements of the customer acquisition process (like
subscription and activation).
●
Customer Service Systems: The Company has
implemented an electronic subscriber document
management system for the collection and filing of all
customer application documentation, supporting
documents at activation time, bill images11 and faxes
sent by customers.
●
Fraud Management System: In order to protect its
customers from unauthorised use, the Company has
implemented the CFMS, Fraud Management System,
developed by COMPAQ.
ENTERPRISE RESOURCE PLANNING SYSTEMS
IFS Telecom (“IFS”): IFS is an enterprise resource
planning system, especially customised for
COSMOTE. It covers all necessary functions to
support multiple currency and multiple dimension
accounting, suppliers, customer orders, invoicing and
consolidation of branches. The business areas of
COSMOTE, supported by IFS are the Financial,
11
To be concluded within 2002.
32
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2.10 Employees
The average number of COSMOTE’s employees (including outside contractors and personnel on secondment from OTE)
for the last two years was:
Average number of Employees
COSMOTE
OTE
Telenor
Other
TOTAL
2000
338
76
1
500
915
2001
467
68
0
819
1,354
2000
61
30
494
330
915
2001
90
150
626
488
1,354
The above employees were occupied in the following sectors:
SECTOR
Administration (including Legal, HR, Quality etc)
Financial
Commercial
Technical
TOTAL
Total payroll expenses in year 2001 amounted to euro 44.7 million (GRD 15.2 billion) compared to euro 27.3 million (GRD
9.3 billion) 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.
33
CHAPTER 3
Management
3.1 Organization Chart
BOARD OF DIRECTORS
INTERNAL AUDIT DIRECTOR
MANAGING DIRECTOR
(CEO)
GENERAL COMMERCIAL
DIRECTOR
GENERAL TECHNICAL
DIRECTOR
CHIEF FINANCIAL
OFFICER
CORPORATE SALES DIRECTOR
RADIO COMMUNICATIONS
DIRECTOR
PROCUREMENT AND PROJECT
MANAGEMENT DIRECTOR
LEGAL COUNSEL/COMPETITION
AND LEGAL AFFAIRS DIRECTOR
RETAIL NETWORK SALES DIRECTOR
SWITCHING AND NETWORK
MANAGEMENT DIRECTOR
INVESTOR RELATIONS
OFFICER
HUMAN RESOURCES
AND QUALITY DIRECTOR
CUSTOMER SERVICES DIRECTOR
OPERATIONS AND MAINTENANCE
DIRECTOR
PRODUCTS, SERVICES
AND MARKETING DIRECTOR
CONSTRUCTIONS DIRECTOR
2004 OLYMPIC GAMES
SPONSORSHIP DIRECTOR
INFORMATION TECHNOLOGY
DIRECTOR
NORTHERN GREECE
REGION DIRECTOR
MEDIA AND CORPORATE
COMMUNICATIONS OFFICER
34
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3.2 Board of Directors
Arve Johansen, Director, Senior Executive Vice
The Company’s Board of Directors comprises of nine
President of Telenor since 1999 and Chief Executive
(9) members who serve three-year terms. Six
Officer of Telenor Mobile Communications since
members (including the Chairman) are elected by the
2000.
Shareholders in the General Meeting, while the
remaining three, including the Vice-Chairman, are
Mr. Sliper, Mr. Johansen and Mr. Sarantitis are
nominated by Telenor-B Invest AS, as long as Telenor-
appointees of Telenor-B Invest in accordance with the
B Invest holds at least 15% of the Company’s shares.
terms of the Shareholders Agreement and the Articles
Telenor-B Invest AS must exercise its nomination
of Association. The remaining members of the Board
rights prior to the election of the six members the
of Directors are elected by the General Meeting of the
Shareholders in the General Meeting. In case Telenor-
Company’s Shareholders.
B Invest AS exercises its nomination right, it cannot
The Board of Directors term ends on 8.6.2003.
participate in the election of the remaining six
Of the above members, only the Managing Director,
members that are elected by the Shareholders in the
Mr. Evangelos Martigopoulos is a performing
General Meeting. In case Telenor-B Invest AS does not
member, while the other eight (8) are non-
exercise its nomination right, it can participate in the
performing members, according to Corporate
General Meeting for the election of Board members.
Governance Principles.
Corporate Governance is at the centre
stage of our attention.
The Board comprises of the following members:
Mr. Leonidas Asimakis is an independent member,
Eleftherios Antonakopoulos, Chairman12, Chairman
meaning that he doesn’t have any other relation with
and Managing Director of OTE since March 2002.
the Company and its Shareholders except for his
Ivar Sliper, Vice Chairman, Telenor Group Executive
participation in the board of Directors.
Evangelos Martigopoulos, Managing Director,
The Managing Director, represents the Company
Managing Director of COSMOTE since June 2000.
before the Courts, as well as any other judicial and
Yorgos Ioannidis - Director, Managing Director of
public authority, binds the Company and stipulates
OTENet since June 2000.
on behalf of the Company for contracts of any kind
Leonidas Asimakis, Director, Chairman of Asimakis
up to euro 2,100,000.
Educational Group, and owns 80% of the shares of
Asimakis Schools S.A.
The total aggregate of the remuneration paid to the
Christos Economou, Director, Secretary of
Board of Directors for their duties amounted to euro
International Relations of OME-OTE (the OTE trade
52.5 thousands (17.9 million Grd). The only Board
union) and a Member of the Steering Committee for
member that receives a monthly salary is the
Social Affairs of the European Commission.
Managing Director, Mr. Evangelos Martigopoulos,
George Maniatis, Director, Managing Director of
whose payments and other benefits for the year
Hellascom Telecommunications Company S.A.
ended December 31, 2001 amounted to euro 266.6
Yiannis Sarantitis13, Director, lawyer.
thousands (Grd 90.8 million, including his
12
13
Until 30.4.2000 Mr. Nikolaos Manasis was Chairman of the Board
Mr Ioannis Sarantitis is son of Mr. Vassilios Sarantitis, that holds an indirect shareholding interest in COSMOTE (through WR Com Enterprises Ltd)
35
performance bonus). The Shareholders General
University of Ioannina, Greece, an MSc in
Meeting has approved the aforementioned
Mathematics from the State University of New York,
remuneration package of the Managing Director.
Oswego, NY, USA, and an MSc and a PhD in
Electrical Engineering and Computer Science from the
Details of the officials that form the Company’s
University of California at Berkeley, USA.
Executive Committee are set out below:
Megaklis Stoukidis - General Commercial Director.
Evangelos Martigopoulos - Managing Director (CEO)
Mr. Stoukidis, 48, is the General Commercial Director
Mr. Martigopoulos, 43, has been the Managing
of COSMOTE since August 2000. Prior to joining
Director of COSMOTE since June 2000. Between
COSMOTE, Mr. Stoukidis was the Director for
March 1998 and February 2000, Mr. Martigopoulos
Communications Devices Division for Greece and the
was Sales and Marketing Director of COSMOTE. In
Balkans at Siemens AG. He has also served as
February 2000, he assumed the functions of General
Marketing Accounts Manager at VODAFONE
Commercial Manager of COSMOTE. Prior to that, he
(Greece), Marketing Manager for the General
was Sales Manager at Databank, syNET and NCR
Business Unit at IBM Hellas and Staff Engineer at
Hellas, as well as Sales Account Manager at Digital.
Foster-Miller Inc. Mr. Stoukidis holds a BSc in
He has also worked as a Systems and
Electrical-Mechanical Engineering from the National
Communications Analyst at Bull. Mr. Martigopoulos
Technical University of Athens, Greece and a MSc in
holds a M.Sc. in Power Electronics from Brunel
Engineering Management from Northeastern
University, England and a B.Sc. in Electronics from the
University of Boston, United States.
University of London, England.
Irini Nikolaidi - Legal Counsel - Competition and
Elias Fotiadis - Chief Financial Officer.
Legal Affairs Director.
Mr. Fotiadis, 46, is the Chief Financial Officer of
Ms. Nikolaidi, 33, joined COSMOTE as its Legal
COSMOTE since it commenced commercial
Counsel at the time of its incorporation in October
operations. Prior to his current position he was Chief
1996. Before that she had served at OTE and private
Financial Officer and Member of the Board of KINO
law firms as an expert in telecommunications and
S.A., and, prior to that, Chief Financial Officer at
company law, with a focus on mobile telephony
J.N.Leoussis S.A., a conglomerate of advertising and
projects. Ms. Nikolaidi obtained a law degree from
marketing companies, a Financial Consultant and an
the University of Athens, Greece as well as a Master
Auditor/Consultant with Price Waterhouse. Mr.
Degree (LL.M.) in International Business Law from the
Fotiadis has a BA in Economics and Government from
University of London (UCL), England, where she
Essex University, England and has a Post-graduate
specialised, among other subjects, in International
Diploma in Economics from the University of Surrey,
Finance and International Trade Law.
England.
According to decision 5/204/14.11.2000 of the
Nikolaos Tsolas - General Technical Director.
Hellenic Capital Markets Commission Board of
Mr. Tsolas, 50, is the General Technical Director of
Directors, the Company has hired Mr. Spyridon
COSMOTE since June 2000. Prior to joining
Mavrogalos to be the Internal Audit Director and Mrs
COSMOTE, he was Executive Director of Network
Myrella Ioannidou as the Investor Relations Officer:
Development and Operations at STET Hellas. Mr.
Tsolas has also served as Director of Communications
Spyridon Mavrogalos - Internal Audit Director.
at Commercial Capital, Director of Services and
Mr. Mavrogalos, 33, joined COSMOTE as Director of
Product Development at STET Hellas, Systems
Internal Audit in April 2002. He is a Certified
Engineer at Siemens AG, Munich, Germany and
Chartered Accountant. Prior to joining COSMOTE, he
Member of Technical Staff in the New Services
worked for six years at EFG Eurobank Ergasias in a
Division at AT&T Bell Laboratories, New Jersey, USA.
number of positions, including Head of Integration
Mr. Tsolas holds a BSc in Mathematics from the
Office, Head of Market & Operational Risk
36
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Management and Audit Manager. He has also
and the Legal Counsel attend the meetings without
worked as an Auditor at ABN AMRO Bank and KPMG.
voting rights. Other executive officers may attend per
Mr. Mavrogalos holds an MBA in Financial Studies
committee’s request.
from Nottingham University of England and a B.Sc. in
Business Administration in Computer Information
The Audit Committee’s main responsibilities are:
Systems from Deree College.
●
The assessment of the adequacy and effectiveness
Myrella Ioannidou - Investor Relations Officer.
of the internal control system of the Company and
Mrs. Ioannidou, 35, has been Investor Relations
the monitoring of the Internal Audit Division’s work.
Manager of COSMOTE since August 2000. Prior to
Emphasis shall be given in matters of independence
joining COSMOTE, Mrs. Ioannidou worked in a
and in the quality and scope of audits.
similar position at VODAFONE (Panafon). She has also
worked as a Business Analyst at OTE responsible for
●
the company’s international offerings, Alpha Bank
the external auditors.
The provision of an opinion about the selection of
and Ernst & Young. Mrs. Ioannidou holds a B.A. in
Business Administration, Systems Analysis and
●
Operational Research from the University of Athens,
compliance with the regulatory framework.
The assurance to the Board that the Company is in
Greece and a M.Sc. in Information Systems and
Telecommunications from the London School of
●
Economics, England.
statements and other important information to be
The total aggregate of the remuneration paid and
disclosed or submitted to the authorities.
The independent review of the annual financial
benefits in kind granted to the aforementioned
officials for the year ended December 31, 2001 was
●
approximately euro 910 thousands (Grd 310 million).
Board, the Management, the Internal Audit Division
The above figures include provisions for annual
and the external auditors of the company regarding
performance bonuses of up to 3 monthly salaries,
the exchange of opinions and information.
The facilitation of the communication between the
according to a relevant approval from the
Shareholders General Meeting.
No director of COSMOTE has been involved in
significant transactions outside of COSMOTE, while a
number of the Company’s directors participate in the
management of Companies of OTE Group.
3.3 Corporate Governance
- Audit Committee
The Company places great emphasis to proper
Corporate Governance. In this respect, on April 2002,
by decision of the Company’s Board of Directors, an
Audit Committee has been formed with the intention
to assist the Board of Directors in the practice of their
duties regarding matters of internal audit and to
ensure transparency in corporate activities.
The Audit Committee consists of three non-executive
members of the Board of Directors, that possess the
necessary knowledge and experience and the
Managing Director, while the Internal Audit Director
37
3.4 Management Share Option Plan
(The Management Incentive Plan)
under all other employee share schemes adopted by
The Company has established a Management Share
COSMOTE’s share capital and in any event, may not
Option Plan intended for the management
exceed 10 per cent of the existing shares of the
(Chairman, Managing Director, Legal Counsel,
Company.
COSMOTE may not exceed 5 per cent of
General Managers, Directors, Deputy Directors and
Heads of Departments) for the purchase of
The Basic Options are gradually converted to
Company’s shares. The Plan has been approved by
Definitive, thus 40% with the completion of one year
resolution of the General Meeting held at 6.9.2000
from the initial grant, 30% with the completion of
and amended by resolutions of the General Meetings
the second year from the initial grant and 30% with
held at 12.6.2001 and 21.2.2002. Eligible persons are
the completion of the third year after the initial
entitled to options in respect of ordinary shares with
grant14.
an aggregate value of between two and five times
their respective annual gross salaries, depending on
As far as the Chairman is concerned, his Basic Options
their position (Basic Options). Further grants of
are turned into Definitive after one year.
options may be made by the Board of Directors to
participants at the end of each year in respect of
Additional Options are turned to Definitive after three
ordinary shares with an aggregate value equal to their
years.
respective annual gross salary (Additional Options).
The Basic Options can be exercised in whole or in
The Exercise Price for acquiring shares is defined as
part until the fourth year from the initial grant. The
follows:
Additional Options can be exercised in whole or in
part during their maturity year or the year after.
a) The exercise price payable for each ordinary share
under options granted at the time of the
Share options expire if the beneficiary leaves the
establishment of the Management Incentive Plan was
Company or is fired before they are turned into
10% below the bottom end of the range for the Offer
Definitive, independently of their exercise date.
Price during the Company’s IPO (i.e. euro 8.24 per
Following a resolution of the Board of Directors, in
share).
the year 2000, Options have been granted to 40
b) The exercise price for the purchase of ordinary
managers (including the Chairman of the Board) for
shares under options granted on subsequent
the purchase of 1,187,010 shares of the Company, in
occasions by the Board of Directors will be the
total, at the price of GRD 2,808 or euro 8.24 per
average closing price of the shares for the month
share.
preceding the grant of options, determined by
reference to the Daily Bulletin of the ASE. The same
Also, in 2001 the Board of Directors approved the
exercise price will be valid forthe Additional Options
grant of: a) Basic Options to 114 Officers for the
as well.
purchase of 950,390 shares of the Company in total,
at the price of euro 9.78 per share (these grants
The number of ordinary shares which may be issued
mainly concern Department Directors, which were
in any five year period after the establishment of the
included in the Plan after its expansion by resolution
Management Incentive Plan pursuant to its terms or
of the General Meeting held at 12 June 2001) and b)
to the terms of any other share option scheme or
Additional Options to 38 officers for the purchase of
14
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.
38
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
296,920 shares of the Company, at the price of euro
9.78 per share.
Finally, 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.
The total aggregate of the remuneration paid and
benefits in kind granted from subsidiaries and
affiliated companies of COSMOTE to the Board of
Directors for the year ended December 31, 2001 was
approximately euro 9 thousands (Grd 3 million).
39
CHAPTER 4
Summary Discussion and Analysis of Financial
Condition and Results of Operations
Management aims at strong growth rates,
above the European average for the sector.
40
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
4.1 FINANCIAL 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, 2000 and 2001, which have been audited by Arthur Andersen S.A., independent public accountants (please
see Appendix).
4.1.1 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 AMC15 (Albanian Mobile Communications sh.a).
CONSOLIDATED RESULTS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 2001 AND 2000 (US GAAP)
Amounts in euro (‘000),
Except per share data
Revenues
Of which telecom revenues
EBITDA
EBITDA Margin
EBT
Net Income (after taxes)
Net Income (after minority interests)
Net Income Margin
Earnings per Share (euro)
Weighted average number of
Shares outstanding
2001
926,877
895,007
408,377
44.1%
292,026
179,801
174,112
18.8%
0.528
2000
607,929
569,174
185,565
30.5%
98,025
58,173
57,824
9.5%
0.182
330,000,000
316,875,000
% change
52.3%
57.3%
120.1%
197.9%
209.1%
201.1%
190.1%
The Company reported continuing and sustainable strong growth in its financial results for the period ended December 31,
2001. COSMOTE’s consolidated operating revenues for the period under review amounted to euro 926.9 million, 52.3%
higher compared to revenues in year 2000. 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 10% of consolidated
revenues).
Within the competitive Greek market and despite the 14% tariff cut that was implemented in July 2001, COSMOTE
achieved a significant profitability (i.e. EBITDA) increase y-o-y of 120.1% and posted an EBITDA margin of 44.1%,
compared to 30.5% in the previous period (year 2000), demonstrating the company’s strong ability to sustain high
profitability rates, mainly attributed to efficient cost structures and economies of scale.
Overall the full year 2001 financial results reflect the sustainability of our strong growth in domestic operations and
continuing positive contribution from Albanian Mobile Communications consolidation.
15
More on AMC in section 5.2 of this Annual Report.
41
More analytically, total operating revenues for the twelve months ended December 31, 2001 increased by 52.3% to reach
euro 926.9 million. This increase reflects a 43.2% increase in monthly access fees and a 58.1% increase in airtime revenues
(that include outgoing calls, incoming calls and prepaid airtime revenues). Revenues from telecommunications services
increased by 57.3% during the period under review, representing approximately 96.6% of total sales compared to 93.6% a
year ago.
Continuous robust and sustainable growth in COSMOTE’s revenues reflects its rapidly growing subscriber base, that has
expanded by over 43% during year 2001. Furthermore it should be noted that revenues grew faster than customers did,
underpinning the quality of COSMOTE’s customer base that results in exceptionally strong financial performance.
In addition data revenues (which include mainly SMS and WAP revenues) have increased by 95.2% and at the end of the year
2001, represented approximately 12% of total operating revenues compared to 8.5% during the respective period last year.
Roaming revenues have grown by 94% and account for almost 3% of total revenues, compared to 2% during year 2000.
Up to the end of December 2001 the Company has signed 246 roaming agreements in 119 countries.
ARPU & AMOU data
H1-00
FY-00
91
94
120
124
49
47
36.1
33.8
46.1
45.3
18.8
18.4
33
34
AMOU, blended (min)
AMOU, contract
AMOU, prepaid
ARPU, blended (euro)
ARPU, contract
ARPU, prepaid
# SMS, blended (sub/mon)
H1-01
89
128
40
29.9
40.5
17.6
40
FY-01
89.5
137
36
29.5
41.4
15.3
39
Blended AMOU16 during the period under review was 89.5 min, compared to 94 min during the same period last year. This
is attributed to the continually increasing share of pre-paid customers in COSMOTE’s total customer base (50.3% pre-paid
as at 31.12.2001 vs. 41.5% as at 31.12.2000), which was partly offset by the 11% increase in contract AMOU on a yearly
basis, to reach 137 min at the end of 2001. It is noted that contract AMOU shows a steadily increasing trend since the
beginning of the Company’s operations.
As a result blended ARPU17 at the end of December 2001 stood at euro 29.5, diluted by only euro 0.40 compared to ARPU
during the first half of the year, despite the tariffs cuts effected in July 2001. The overall y-o-y reduction in ARPU, mainly
reflects the aforementioned contract tariff reduction (decreased by 14% during Q3-01) coupled with the increased share of
pre-paid customers in COSMOTE’s base.
The blended average monthly number of SMS18 per customer stood at 39, compared to 34 SMS during year 2000.
Total operating expenses have increased at a much slower pace, by approximately 23.5% (less than half the rate compared
to the growth in total operating revenues). This is mainly attributed to the reduction of distribution expenses (mainly
including subscriber acquisition costs, i.e. SACs and other related distribution costs) as a percentage of total revenues, to
18.3% in year 2001, down from 28.5% a year ago.
Consequently, EBITDA has expanded by 120.1% and amounts to euro 408.4 million at the end of year 2001. More
significantly EBITDA margin has added 13.6 p.p. on a yearly basis, and reached 44.1% up from 43.5% in 9m-01 (and
16
AMOU(min): Average monthly minutes of use per customer.
ARPU (euro): Average monthly revenue per customer.
18
SMS: Average monthly short messages.
17
42
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
30.5% in year 2000). The overall EBITDA margin improvement is attributed to the effective cost management combined
with economies of scale, generated by “critical mass”. For example, despite the growth in customers by 43% y-o-y,
distribution expenses (including SACs) have decreased by 2% y-o-y, thus resulting in considerable operational efficiencies
and EBITDA enhancement.
Profitable growth is also evidenced by the growth of Net Income by 201.1% to reach approximately euro 174.1 million,
representing 18.8% of total operating revenues (compared to 9.5% during year 2000). Earnings per share grew by 190.1%
compared to the twelve months of 2000 (as a result of the growth in earnings by approximately 201% slightly diluted by
the increased average number of shares outstanding for the period19). EPS for the year ended December 31, 2001 stands at
approximately euro 0.53 up from euro 0.18 a year ago.
4.1.2 Albanian Mobile Communications Sh.a (AMC)
COSMOTE started consolidating its subsidiary in Albania during the fiscal year 200020 and has managed in a very short time
to achieve significant returns on this investment. During the twelve months ended December 31, 2001 AMC continued its
strong financial performance and contributed by 9.6% to the Company’s consolidated revenues and by approximately
15% to the Company’s group EBITDA.
SUMMARY FINANCIAL RESULTS FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 2001 AND 2000 (US GAAP)
AMC STAND ALONE
Amounts in euro (‘000) 21
Total operating revenues
Operating expenses
EBITDA
EBITDA margin
Depreciation
EBIT (Operating Income)
Interest and other financial income/(expense), net
EBT (income, before provision for income taxes)
Provision for income taxes
Net Income (after taxes)
Net Income margin
2001
93,496
39,242
64,030
68.5%
9,776
54,254
1,776
56,030
(14,535)
41,495
44.4%
2000
23,647
8,774
17,067
72.1%
2,194
14,873
(372)
14,501
(5,065)
9,435
39.9%
% change
295.4%
347.2%
275.2%
345.6%
264.8%
N/A
286.4%
187.0%
339.8%
(Financial Statements for the years 2000 and 2001 according to the US GAAP, auditors report in Appendix 2)
AMC’s revenues during year 2001 were approximately 295% higher compared to the previous period (full year 2000) and
exceeded euro 93.4 million. This is attributed to fast growth in AMC’s customer base that at the end of December 2001
reached 273,088 customers (representing an impressive 33.7% increase on a quarterly basis, compared to the first 9
months of 2001 and almost 8.5 times higher compared to last year). Of these, 249,924 (or 91.5% of total) are prepaid
customers that have no bad debt and high profitability margins, while 23,164 are contract customers.
19
Capital increase effected in October 2000 (during IPO) brought total number of shares to 330,000,000 compared to previously 312,500,000.
Thus weighted average number of shares outstanding for year 2000 was 316,875,000 compared to 330,000,000 in 2001.
20
Through Cosmo-Holding Albania, which is a 97% owned COSMOTE subsidiary, acquired in August 2000 85% of AMC.
21
Exchange rates for 31.12.2000: Leke 1.00 = GRD 2.488 and euro 1.00 = GRD 340.75 and for 31.12.2001,1 leke = 0.007912 euro
43
Evolution of AMC customer base
2000
Customers
20,376
8,399
28,775
Contract
Prepaid
Total
2001
% of total
70.8%
29.2%
100.0%
Customers
23,164
249,924
273,088
% of total
8.5%
91.5%
100.0%
Based on the above and publicly available information, it is estimated that, AMC’s market share at the end of year 2001,
stood at approximately 70%. It is also noted that mobile telephony penetration in Albania, at the end of year 2001, is
estimated around 10% compared to 7% fixed telephony penetration and less than 1% mobile penetration in year 2000.
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 2001 covered approximately 80% 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 64 million. More importantly EBITDA margin reached 68.5% despite the introduction of a
second player in the Albanian mobile market during August 2001. In addition strong growth is also exhibited in Net
Income margin, which exceeded 44% during year 2001.
4.2 OPERATING REVIEW
4.2.1 COSMOTE (GREECE)
The following selected non-financial operating data has been prepared by the Company based on Company data and
publicly available information. The selected non-financial operating data set out below is that used by the Directors in
managing COSMOTE’s business. The following table illustrates the evolution of COSMOTE’s customer base and relevant
market penetration of mobile telecommunications in Greece for the period 2000-2001.
31.12.2000
1,048,352
1,012,659
2,061,011
1,205,065
855,946
97%
13.20%
5,932,572
34.7%
19%
54%
COSMOTE total number of customers, beginning of period
COSMOTE total new additions for the period
COSMOTE total number of customers, end of period
Number of Contract customers
Number of pre-paid customers
% change (total number of customers)
Churn rate
Total number of customers in the Greek mobile market
COSMOTE market share
COSMOTE penetration in the Greek mobile market
Penetration
31.12.2001
2,061,011
882,521
2,943,532
1,461,767
1,481,765
43%
19.80%
7,963,742
37%
27%
73%
SUBSCRIBERS: As of December 31, 2001 COSMOTE’s customer base stood at 2,943,532. The company continued to
dominate the contract customers segment with approximately 50% market share. Penetration in the Greek market at the
end of year 2001 stood at around 73%.
During the twelve months of 2001 COSMOTE’s total net new additions were 882,521 customers. Of these, 29% or
256,702 were contract net additions and 71% or 625,819 were pre-paid net additions. Overall, during year 2001,
COSMOTE attracted the majority of total net new additions in both contract and pre-paid market segments (54.4% and
40.1% respectively). In addition, the company has achieved market leadership in terms of net additions for the past ten
quarters consecutively (i.e. 2.5 years).
44
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
As a result active contract customers at the end of
breakthrough pre-paid product under the name
December 2001 reached 1,461,767 increasing by
‘WHAT’S UP?’. This new innovative product is mainly
21.3% compared to one year ago, while active
addressed to youngsters but also to all other
prepaid customers during the same period amounted
subscribers that choose to principally communicate
to 1,481,765, 73.1% more than December 2000.
through the use of SMS (short text messages). Since
The overall split between COSMOTE’s contract and
launch and until the end of 2001, around 25,000
prepaid customers at the end of year 2001 was
COSMOTE customers are active CHAT users. These
49.7% - 50.3% (for the first time in favor of prepaid
send approximately 144 SMS per month, while on a
customers demonstrating a stabilisation trend in the
daily basis the average numbers of users
contract segment of COSMOTE’s customer base and
simultaneously using the service has exceeded 1,450
the contract market in Greece overall).
customers.
COSMOTE’s churn rate during 2001 stood at 19.8%
(compared to 13.2% for the full year 2000), which is
below the average European rate. It is noted that of
this churn approximately 70% is due to internal
contract churn as well as prepaid churn to the new
‘what’s up?’ product. It is noted that active ‘what’s
up’ customers at the end of the year 2001 have
exceeded 165,000, in less than six months.
It is also reminded that subscriber acquisition costs for
contract customers have remained unchanged for the
whole of year 2001 (since November 2000), when
they were last reduced to euro 11722. Prepaid SACs
have been eliminated entirely since the beginning of
year 2001.
NEW SERVICES: Furthermore, as already mentioned
in chapter 2 above, COSMOTE was the first operator
in Greece to launch a comprehensive23 mobile portal,
‘MyCosmos’, which includes a variety of services,
such as E-mail, Mobile Banking, Information and
Entertainment Services, as well as Customer Care
Services that are also accessed through voice24. It is
noted that during year 2001 over 500,000 customers
use these services through the STK (SIM toolkit
microbrowser). These customers send on average
around 30,000 requests per day (via SMS) to access
various services offered within COSMOTE’s portal. In
addition the number of customers that use
‘MyCosmos’ services through the exclusive use of
SMS is over 450,000 users. Moreover 5,000
customers call in the voice portal, on a daily basis,
with main emphasis on the entertainment services.
In addition in June 2001 COSMOTE launched a new
22
Of which euro 88 is handset subsidy and euro 29 is connection commission to dealers.
The portal is accessible by the whole customer base, irrespective of their handset type. This is effected through four different access methods: SMS, SIM
toolkit microbrowser, WAP and Voice Recognition.
24
In May 2001 COSMOTE launched its exclusive voice portal services. The voice portal is based on the advanced Voice Recognition technology that is used
exclusively by COSMOTE in Greece and by few operators worldwide (developed by NUANCE, which is the world leader in the field of voice recognition
technology).
23
45
4.2.1 GREEK CELLULAR MARKET
Based on publicly available information released by the three mobile operators, COSMOTE, VODAFONE (Greece) Î·È STET
Hellas, the evolution of the Greek cellular market during year 2001 is portrayed in the following table:
NET ADDITIONS DURING THE PERIOD 1.1.2001 - 31.12.2001
Operator
COSMOTE
VODAFONE (Greece)
STET Hellas
Total net additions
Contract customers
Net additions
(and respective %)
256,702
54.4%
69,770
14.8%
145,385
30.8%
471,857 100.0%
Prepaid net additions
(and respective %)
625,819
588,933
344,561
1,559,313
40.1%
37.8%
22.1%
100.0%
Total net additions
(and respective %)
882,521 43.4%
658,703 32.4%
489,946 24.1%
2,031,170 100.0%
CUMULATIVE CUSTOMERS AS AT DECEMBER 31, 2001
Operator
Total Contract customers
(and respective %)
COSMOTE
1,461,767
49.8%
VODAFONE (Greece)
810,198
27.6%
STET Hellas
662,763
22.6%
TOTAL NUMBER OF CUSTOMERS 2,934,728 100.0%
Total Prepaid customers
(and respective %)
1,481,765
29.5%
2,074,674
41.3%
1,472,575
29.3%
5,029,014 100.0%
Total Customers
(and total market share)
2,943,532
37.0%
2,884,872
36.2%
2,135,338
26.8%
7,963,742 100.0%
4.3 CAPITAL EXPENDITURE PLAN
Capital Expenditures 2000-2001
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 2001, the Company has invested close to euro 1 billion (or
approximately euro 984 million) resulting in a superior network with nationwide coverage and superior quality, providing a
wide range of mobile telephony services.
During the period 1997-1999, the Company had a total capital expenditure of approximately euro 272 million that was
invested in start up costs and the build-out of its network. Out of this amount the majority, amounting to euro 234 million
approximately was invested in telecommunication equipment for the development of the Company’s network.
During year 2000 the Company invested in capital expenditures approximately euro 226 million. Out of this amount the
majority was related to the installation of new telecommunication equipement (BTSs, MSCs etc). In year 2001 consolidated
capital expenditures amounted to euro 370 million, out of which euro 305 million was invested in the existing 2 and 2.5G
network in Greece and the rest (approximately euro 65 million) in the development and expansion of AMC’s network, our
subsidiary in Albania (see section 4.2.1 above).
The Company’s investments during year 2001 were financed mainly by cash generated by the Company’s operating
activities as well as by the new syndicated loan signed in November 2000, of euro 350 million (that replaced the previous
senior credit facility).
46
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
Finally the use of proceeds that were raised during
170 million for “traditional” capex and euro 60
the IPO Combined Offering (through the Company’s
million for the initial rollout of the 3G network).
capital increase, effected in Oct. 2000) was
completed with the payment of euro 45.5 million for
the participation in COSMO-HOLDING ALBANIA’ s
capital increase.
Capital Expenditure Plan for 2002-2003
During the next two years, the Company plans to
invest approximately euro 380 million for upgrading
and enhancing its current network, excluding the
cost of developing a 3G network and/or regional and
domestic acquisitions, joint ventures or other equity
investments.
More specifically COSMOTE plans to invest euro 380
million in increasing the capacity and improving the
service quality of its existing 2 and 2.5G network.
Investements will also include the installation of new
BTSs, BSCs and MSCs with the purpose of increasing
coverage in remote areas. At the same time the
Company plans to develop a range of new valueadded services with the aim to continue providing an
attractive offering aiming at contibuting to
COSMOTE’s profitable growth. Over the next two
years, COSMOTE’s working capital and capital
expenditure requirements will depend on a number
of factors including the rate at which it builds out its
network (both voice and data network infrastructure),
expenditure on pilot projects, research and
development and the expansion of its marketing and
distribution capabilities.
In addition during year 2002 the COSMOTE will
invest approximately euro 15.1 million for the transfer
of OTE’s Fixed Wireless Access license (LMDS) at the
25 GHz band and respective equipment (euro
9,535,000 cost of license and up to euro 5,600,000
cost of installed equipment).
Also in year 2003 COSMOTE plans to invest around
euro 60 million for the pilot rollout of its 3G (UMTS)
network.
It is estimated that approximately a total of euro 225
million will be spent in year 2002 (euro 210 million
for “traditional” capex and euro 15 million for the
LMDS), while a consolidated amount of euro 230
million is expected to be invested in year 2003 (euro
47
CHAPTER 5
COSMOTE Group of Companies
COSMOTE
COSMO-HOLDING
ALBANIA: 97%
CosmoONE
HELLAS MARKET
SITE: 26%
COSMO MEGALA
KATASTIMATA: 40%
ALBANIAN MOBILE
COMMUNICATIONS: 85%
5.1 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
48
C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
amounts to GRD 32.2 billion represented by 3,220,000 shares with a nominal value of GRD 10,000 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:
Evangelos Martigopoulos
Elias Fotiadis
Megaklis Stoukidis
Nikolaos Tsolas
Irini Nikolaidi
Chairman and Managing Director
Vice Chairman
Director
Director
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.
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.
COSMOTE exploits new business
opportunities and enhances
its profitability.
The first audited financial statements of COSMO-HOLDING ALBANIA refer to the (over 12 months) period ended
December 31, 2001.
The table below presents the key financial data of CHA for year 2001 (in year 2000 no statutory accounts existed, as this
was not a full year of operations):
COSMO-HOLDING ALBANIA
(euro, thousands)
Current assets
Non-current assets
Fixed assets, net
Total assets
2000
926
16,868
74,843
92,637
2001
1,110
16,868
69,673
87,651
Current liabilities
Debt
Other long term liabilities
Share capital
Paid in surplus
Retained earnings / (accumulated deficit)
Total liabilities and shareholders Equity
47,833
0
0
46,955
0
-2,151
92,637
589
0
0
94,497
0
-7,436
87,651
Total operating revenues
Operating expenses
EBITDA
Depreciation
Interest and other financial income / (expense), net
Other revenues / (expenses)
Income tax benefit / (provision)
Net loss (after taxes)
0
-87
-87
-1,969
-95
0
0
-2,151
0
-338
-338
-5,062
10
0
106
-5,285
49
5.2 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
COSMO-HOLDING ALBANIA
Albanian Ministry of Public
Economy and Privatisation*
TOTAL
Number of Shares
691,749
%
85.0%
122,073
813,822
15.0%
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.
On 31.12.2001 the company had 226 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 contract is governed by the Greek law and any dispute for
this contract will be settled by the courts of Athens.
AMC is being managed by a Supervisory Council and the Board of Directors. The Supervisory Council consists of three
members: Eleftherios Antonacopoulos, President, Megaklis Stoukidis, Vice President and one representative of AMC’s
employees that has not been elected yet. The Supervisory Council elects the company’s Board of Directors, which currently
consists of the following:
Evangelos Martigopoulos
Elias Fotiadis
Stefanos Oktapodas
Nikolaos Tsolas
Irini Nikolaidi
President
Vice President
Managing Director
Director
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 were 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.
On 31.12.2001, the customer base of AMC has increased by approximately 8.5 times compared to last year and had
273,088 customers (as opposed to 28,775 at the end of 2000), with an estimated market share of 70%. From those
customers, 249,924 (91.5% of the customer base) were prepaid and the rest 23,164 contract customers. In the end of
March 2002 that total number of customers amounted to 302,396. ∆he financial situation of AMC is briefly described in
section 4.2.1 of this Annual Report.
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5.3 CosmoONE Hellas Market Site S.A.
COSMO-ONE Hellas Market Site S.A. (“CosmoONE”) founded by COSMOTE and Dienekis Plirophoriki and was
incorporated on June 6, 2000. Its registered office is located at Agia Paraskevi, Attiki, Greece. The duration of the company
is 50 years.
Its purpose is the establishment and the provision of B2B services. CosmoONE uses the software of COMMERCE ONE,
one of the most renowned American companies in B2B applications. CosmoONE has already established and operates a
horizontal market place offering electronic sales, purchasing and e-auction services.
The main object of CosmoONE is e-procurement, which it realizes through the e-market place that it has created, through
two basic purchase scenarios, the purchases through electronic price list and through e-auctions. By using the electronic
price lists the user can easily find the product (or the service) needed. In regards with e-auctions, every organization
or company that either wants to purchase products at the lowest possible price, or sell out its reserves etc, can contact
CosmoONE, which “hosts” the e-auction and executes it according to the wishes and the scenarios of the buyer or
the seller respectively.
CosmoONE’s target is to simplify, through its services, the commercial exchange process between companies, to minimize the
costs relating to procurements and orders, to add value to the participants, and finally, to make e-commerce available to every
company, irrespective of the sector and its size.
The initial share capital of CosmoONE was 300,000,000 GRD, with 80% owned by the Company and 20% by Dienekis
Plirophoriki. Following two share capital increases, one in October 2000 to 2 billion GRD, and another in March of 2001,
CosmoONE has today a share capital of GRD 2.5 billion consisting of 2,500,000 shares with a nominal value of GRD 1,000
per share.
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.
Name of Shareholder
COSMOTE
OTE
Dienekis Plirophoriki S.A.
Alpha Bank
National Bank of Greece
Total
Shares Number
650,000
650,000
450,000
375,000
375,000
2,500,000
%
26
26
18
15
15
100
As of today, the shareholders of CosmoONE are as follows:
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 Dienekis Plirophoriki 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 Dienekis Plirophoriki S.A.
●
Each one of Alpha Bank, National Bank of Greece and Dienekis Plirophoriki 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.
51
The company’s Board of Directors serves a three year term and consists of the following nine Directors (30.03.2002):
Evangelos Martigopoulos
George Ioannidis
Evangelos Rizos
Elias Fotiadis
Efthimios Papapostolou
Dimitrios Kouvatsos
Epaminondas Gardelis
Sotiris Lyssandrou
Yiannis Parlitsis
Chairman
Vice Chairman
Director 25
Director
Director
Director
Director
Director 26
Director 27
The General Manager of CosmoONE is Mr. Athanassios Petmezas.
In December of 2001 the company employed 29 people, while up to March 31st 2002, the company employed 31 people.
CosmoONE started commercial operations in December 2000. In its clientelle 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 2001 the total value of transactions through the Electronic Market amounted to euro 65 million, while 36
auctions were conducted with a value in auctioned goods and services amounting to euro 12 million, which contributed an
average decrease in the cost of the auctioned goods of 19%.
Until the end of 2001, more than 100 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 first audited financial statements of CosmoONE refer to the (over 12 months) period ended December 31, 2001.
The company’s first financial year ended as at 31.12.2001 with revenues reaching approximately euro 2.7 million.
5.4 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.
Shareholder
Megala Katastimata S.A.
COSMOTE
TOTAL
Number of Shares
12,000
8,000
20,000
25
Mr. Rizos is the BoD Member appointed by DIENEKIS.
Mr. Lyssandrou is the BoD Member appointed by the NATIONAL BANK OF GREECE.
27
Mr. Parlitsis is the BoD Member appointed by ALPHA BANK.
26
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%
60%
40%
100%
COSMO-MEGALA KATASTIMATA S.A. is a joint venture between COSMOTE and Megala Katastimata S.A. (“MK”), the
Greek licensee of Virgin trademarks for music products. Its purpose is the establishment of a Greece-based Internet site for
on-line sales of the products sold by MK in Greece, such as CDs, DVDs and other music products. MK has authorized
COSMO-MEGALA KATASTIMATA to use the trademarks “Virgin”, “Megastore” and “Virgin Megastore” in connection with,
and in the ordinary course of operations of, COSMO-MEGALA KATASTIMATA.
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*
Panagiotis Kalkalos
Stavros Piladakis
Konstantinos Papanastasiou
Sotirios Mitsidis
Irini Nikolaidi*
Chairman
Vice Chairman
Director
Director
Director
Director
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,
The General Manager of the company is Mr. George Hatzelis, while at the end of 2001 the company employed one
person.
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
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 company’s first financial year ended
as at 31.12.2001, with revenues reaching approximately EURO 23 thousands and operating income of EURO 7 thousands.
53
CHAPTER 6
COSMOTE’S
Social Face
In 2001, COSMOTE supported a number of
prominent events during 2001 in line with its policy
of corporate responsibility and sponsorship. On the
one hand, these were designed to improve the quality
of life of all Greek citizens and strengthen Greek
cultural identity and people’s understanding of Greek
heritage, and on the other to familiarise public
opinion with COSMOTE’s ongoing contribution to
the public good.
During 2001, COSMOTE’s social activities were many
and varied demonstrating once more that, aside from
its technological dimension, COSMOTE has a social
conscience and a sense of corporate responsibility.
Consistent with this philosophy, the Company funded
a number of social programs, which supported
vulnerable social groups such as children and
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residents in border regions. Furthermore, the
Company supported significant events in the areas of
Culture, Entrepreneurship, Environmental Protection
and Athletics.
SOCIAL CONTRIBUTION
As part of its philosophy that “contributing to society
is one of our obligations”, COSMOTE supported the
annual program for 2001 of the “Friends Association
of Social Pediatrics - Open Arms”, acting as Golden
Sponsor, for the second consecutive year. The
program included two preventive medicine
campaigns in the frontier islands and Thrace and a
one-day conference which focused on analyzing the
results of these two campaigns. Extremely valuable
conclusions were derived from those events,
Contribution to the society is our duty.
regarding health issues and the local residents’ level of
awareness. The crowning achievement of this
program was the donation of medical equipment to
the Premature Unit and the Cardiology Department
of the A&K Kyriakou Children’s Hospital, which took
place early in 2002. In addition, since the beginning
of 2002, the Company has undertaken Exclusive
Sponsorship of the campaigns by the Friends
Association of Social Pediatrics in the border regions
of Thrace, the infrequently used shipping lanes in the
Cyclades, the islands of the Northern Aegean, and the
Dodecanese islands.
During Christmas 2001, the Company made a
significant offer to the Hellenic Association for the
Protection and Rehabilitation of Handicapped
Children (“ELEPAP”): a medical system for testing and
monitoring the walking balance of children with
55
special needs. For the third consecutive year, the
Company donated part of its revenue from text
messages (SMS) sent by its subscribers on New Year’s
Day to the welfare organizations “Hope”, “Flame”, “A
Child’s Smile” and “Friends Association of Social
Pediatrics - Open Arms”, thus, sending a message of
love and hope to all children and promoting its
awareness of social welfare issues.
CULTURE
In supporting cultural events, the Company has
focused on programs concerned with the promotion
of Greek heritage both domestically and abroad and
which strengthened its corporate social profile.
COSMOTE has supported major cultural events in
various parts of Greece which focused on Theatre and
Music. The main cultural activities supported by
COSMOTE in 2001 were the sponsorship of the
productions of ancient drama “Nefeles and Electra,”
which toured the country, exclusive sponsorship of
the N. Kosmos Theatre for a second consecutive year,
various music events of which the major one was the
“COSMOTE Kassandra Festival” in Halkidiki and local
festivals in Attica. At the same time, within the
framework of the Sponsorship of the Athens 2004
Olympic Games, the Company supported two major
events at the Lycabetus Theatre with famous Greek
artists. The Company’s position as a major sponsor of
the country’s cultural activities was sealed with the
support of the New York City Ballet performances at
Herodium, which were held in support of the
establishment of the American - Greek Arts Centre in
Halandri, which is due for completion in the Spring of
2004.
ENVIRONMENT
In 2001, COSMOTE continued to sponsor
environmental programs which have as their object
the promotion of environmentally friendly measures.
With a view to increasing the environmental profile of
COSMOTE among its customers and the wider
public, COSMOTE was the central sponsor of two
programs which are being implemented following a
Municipality of Athens Company (“DEPPE”) initiative
under the auspices of the Ministry of Environment.
Having adopted the slogan “The Environment is
Everybody’s Business”, the Company was the central
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sponsor of the program “For Clean Seawater and
Shores” for the second consecutive year. It also
sponsored a second pioneering environmental
program entitled “Our Country’s Rivers and Lakes”
which ran in Greece between the Autumn of 2001
and the Spring of 2002. The program’s slogan is
“Greece is beautiful - let’s discover it” and it is
designed to raise public awareness of the need for the
protection of our country’s water elements and to
motivate the public to discover the natural wealth of
the Greek countryside.
TECHNOLOGY AND ENTREPRENEURSHIP
Finally, the Company made a noteworthy
contribution to strengthening entrepreneurial activity
by sponsoring the annual program of EASE (the
Association of Business Executives), for the second
year. In addition, the Company sponsored two
important conferences - organized by “The
Economist” in Athens in the Spring of 2001 - which
were attended by delegates from all over the world,
three important technological conferences (SISPAD,
3rd Telecommunications Conference, ICT Forum) and
a conference on digital technology and the Media
which was organized by the Athens National &
Kapodestrian University.
57
CHAPTER 7
COSMOTE:
The Athens 2004
Olympic Games
Grand Sponsor
the International Sponsors who are selected by the
International Olympic Games Committee.
COSMOTE’s contribution consists of the supply of
mobile phone, voice and data services to the
Organizing Committee of “Athens 2004”, at the
preparation stage and during the Games. In this
The 28th Summer Olympic Games will be held in
context, COSMOTE has acquired, amongst other
Athens in August 2004 and represent one of the
things, the right to use the Committee’s intangible
major challenges faced by Greece over the last few
assets (such as trademarks and Olympic logos) of the
years at an organizational and reputational level, vis-
sponsorship, access to the hospitality program, as
à-vis the international community.
well as accreditation rights for COSMOTE guests
during the Games.
In recognition of the particular importance these
Olympic Games have for Greece, COSMOTE is a
The Olympic Games is considered to be the largest,
staunch and active supporter of the Games as a
most sophisticated and popular athletics event
member of the OTE - COSMOTE - OTEnet
globally. In comparison with other sponsorships, the
Consortium and in its capacity as a National Grand
Olympic Games is characterised by its complexity in
Sponsor of the 2004 Olympic Games for
relation to organizational aspects and resource
Telecommunications.
availability, as well as for their duration. However, all
these challenges present a unique opportunity for
This title is at the top level of the National
COSMOTE to reap the significant long-term benefits
Sponsorships Program and is second in importance to
that accrue from such a sponsorship.
58
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COSMOTE’s position as a National Grand Sponsor
the exclusive sponsorship of four Greek Olympic
presents a great challenge for the Company on a
athletes (Pyrros Demas, Constantinos Kenteris,
business level:
Anastasia Kelesidou and Katerina Thanou) and of
1. In order to support the Games, COSMOTE will
another five promising athletes in the expectation that
strengthen the existing telecommunications
they will achieve distinction in the Olympic Games.
infrastructure and will create new
telecommunications infrastructure, which will
Other Athletic Events
continue to be used beyond the Olympic Games and
With a firm belief in Athletic ideals, COSMOTE also
which will yield significant long-term benefits both to
supported separate athletic events during 2001, such
the Company and to Greece. In 2001, the initial
as:
feasibility study to ascertain the telecommunications
1. Sponsorship of Sailing Games organized by the
needs for the Games was completed, while in 2002
the second phase of the feasibility study to consider
the applications is being monitored.
2. Given the growing penetration of mobile
Athens Water Athletics Association.
2. Sponsorship for a second year of the long-distance
“Spartathlon” Games.
3. A one-day conference entitled, “Voluntarism - The
telephony globally, the convergence of technologies
Citizens’ social response”, which was held at
and mobile phone networks’ rapid evolution,
UNESCO’s initiative in November 2001.
Olympic Games stand for
communication between people
and nations.
COSMOTE will have the opportunity to develop new,
credible and pioneering value added services to the
Organizing Committee “Athens 2004”, the wider
Olympic Family, the Greek and international Mass
Media, its customers and the visitors. This will boost
the Company’s reputation in Greece and abroad.
3. The Company’s participation in the ‘OTE COSMOTE - OTEnet’ Consortium provides a unique
opportunity to achieve synergies in key areas and
maximize the overall benefit to be derived from the
Olympic Sponsorship.
4. The exclusive right to use the Olympic Games’
trademarks and logos along with the Company’s
identity on its products, services and all levels of
marketing activity and public relations, will contribute
to improving its image and reputation and will
generate additional revenues for the Company.
In the context of its support for the Olympic Games,
COSMOTE, in association with OTE, has undertaken
59
CHAPTER 8
Strategy and
Prospects
In addition the Company has achieved at the end of
2001, the second position in the prepaid segment
(attaining a 30% market share) while it has
consolidated its number one position in the contract
Prospects of the Greek mobile market
segment, reaching a 50% market share (end 2001).
The Greek mobile telecommunications market in
The latter is considered as an important advantage, as
which COSMOTE operates, has grown significantly
the contract customers are expected to be the ones
during the last years, since the Company entered the
that will be potentially mostly interested in the new
market. Market penetration at the end of 2001 stood
future 2.5 and 3G services. Furthermore, with respect
at around 73%28 compared to approximately 54% at
to the prepaid segment, that is the main driver for
the end of 2000, rapidly converging with the
future growth in the Greek mobile market, COSMOTE
European average (which stood around 76% at the
attracted the vast majority of net additions (52.8%)
end of 2001). Following the trend established since
during the first quarter of 2002, thus enhancing its
mid 1999, the Company continued in year 2001, to
market share to 30.4% and establishing the position is
attract the vast majority of the total net additions per
has gained since the fourth quarter of 2001.
quarter, in both segments of the market. More
specifically it gained 54.4% of the total new contract
According to reports published by distinguished
customers and 40.1% of total new prepaid additions.
international investment firms, it is expected that by
It is noted that COSMOTE has achieved market
2004, the basic operational and financial indices of
leadership in the Greek mobile sector since June
the Greek mobile market will converge with the
2001, a position that has been steadily reinforced
respective average European indices. This indicates
ever since.
that until that time there is room for further growth in
the Greek mobile market, and the Company’s
28
According to the latest population census, that resulted in 10.9 million inhabitants.
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performance in particular, with the prospect that
± Make selective investments abroad
penetration will reach or even surpass, the 85% mark
± Leverage all business opportunities stemming from
in the next two years. COSMOTE plans to continue its
the Company’s capacity as a grand sponsor of the
balanced growth strategy, with the aim to
ATHENS 2004 Olympic Games.
continuously increase its revenues and profitability,
reflected in the Company’s EBITDA and net income.
In order to meet its subscribers’ needs and achieve its
COSMOTE’s EBITDA margin for year 2001, stood at
targets the Company intends to offer the following
approximately 44% (compared to 30% a year ago)
value added services, but also increase the usage of
29
which is above the European average for the sector .
existing services. A significant factor that is expected
to contribute positively to this end, is the launch of
During 2001 and only after three and a half years of
new terminals with enhanced characteristics (such as
commercial operations, COSMOTE realized its vision
powerful processing capabilities, embedded cameras,
to become the leading mobile operator in Greece.
color screen etc) combined with a wider range of
The Company’s strategic target in the next years, is to
GPRS terminals.
reinforce its leading position in the Greek market in all
levels - market share, profitability and quality of
EXPANSION AND UPGRADING OF “MyCosmos”
service - so as to become one of Europe’s best mobile
SERVICES: The Company plans to upgrade the
Our aim is to continue delivering
superior value to our customers,
our employees and our shareholders.
operators and continue delivering superior
services it provides through its mobile portal,
shareholder value. To this end, the Company will
emphasizing in the development of innovative
sustain its successful customer-oriented policy and will
entertainment and communication services targeted
exploit potential opportunities in the developing
to the youth market. Furthermore, the Company
mobile market in Greece and abroad, with an
plans to enrich and increase the personalization of the
emphasis on the following:
offered services via «alert» services, which are
± Exploit the technological advantage of its network
designed to send specific information to each
± Continue to promote a simple, user-friendly tariff
customer. In addition, depending on its customers’
structure
± Provide wide access to advanced value added
services
needs and technology trends, COSMOTE will develop
services that are based on the geographical location
of the subscriber at the time of the request.
± Deliver high levels of customer care and control
churn
± Further enhance the usage (per sub/month) of
traditional voice services
± Increase revenues from corporate customers and
roaming revenues
± Develop new mobile Internet services and exploit
new technologies
29
VOICE SERVICES: The Company will examine the
offering of additional 2G services in order to further
boost the usage of the mobile phone for traditional
voice communication. In addition, the Company will
further improve existing services, such as the
VoiceMail, aiming in increasing the use of the service
as well as customer satisfaction.
Average European ∂BITDA margin of listed mobile companies is 38% (source: published research reports on these companies).
61
SPECIAL SERVICES FOR ROAMERS: The Company
plans to provide within 2002, more services especially
designed for the needs of visiting roamers, such as
tourist information services etc. Furthermore,
COSMOTE will offer prepaid visiting roamers the
capability to use their mobile phones without any
restrictions or complex procedures.
THIRD PARTY SERVICES: The Company will further
collaborate with third parties with the purpose to
offer to its customers an easy, fast and reliable way of
accessing services provided by those parties.
MULTIMEDIA MESSAGING SERVICE:
Corresponding to the increased demand for
messaging through the mobile phone, the Company
plans to launch within 2002, advanced services that
will offer new capabilities and at the same time are
expected to boost the usage of GPRS. Text messages
will be enriched with images and sound utilizing the
messaging capabilities offered by Multimedia
Messaging combined with the high data transmission
rates of GPRS.
rd
UMTS - 3 GENERATION MOBILE TELEPHONY:
During the next years, COSMOTE plans to develop a
UMTS network, in order to be in a position to offer
respective 3G services according to the terms and
conditions of the 3rd generation license it acquired in
August 2001.
Third generation mobile telecommunication
technology is expected to bring full interactive
multimedia capabilities in addition to enhancing the
quality of the existing voice traffic. More specifically,
UMTS technology provides the capability of faster
data transmission as well as image and sound
transmission through the mobile phone. Therefore
the use of text messages, which has already taken the
form of e-mail exchange through the mobile phone,
may gradually evolve into the exchange of electronic
pictures and later video-clips. Fastest access to
Internet or Intranet, games between multiple remote
users, purchasing of tickets and on-line banking
transactions, will be made possible through the use of
3G mobile telephony, which will be in essence a
personal microcomputer.
COSMOTE’s current network presents certain
advantages for the fastest and cost effective
deployment of a UMTS network, basically derived
from its state-of-the-art technology and distributed
architecture. As of May 2002 the Company had
installed more than 2,250 base stations, while it is
estimated that for the needs of its existing 2nd
generation network, the Company will have installed
a total of approximately 3,000 base stations by 2003.
Furthermore COSMOTE’s growth at a consolidated
level, will be supported by the positive development
of its affiliated companies, as described at the
following:
∞lbanian Mobile Communications
During year 2001, AMC’s management successfully
attained the targets set out in the company’s business
plan for the year. More specifically the following
milestones were achieved:
± modernization and expansion of AMC’s
telecommunications network in order to provide
coverage to the largest part of Albania,
± development of the company’s commercial strategy
and identification of the distribution network’s
goals, and
± training of its personnel.
The company’s future targets include further upgrade of
AMC’s network, with the aim to enhance quality and
coverage and development of new products and
services, with the purpose to enhance its offering range
and increase their contribution to the company’s
revenues. Moreover during year 2001 the
reorganisation of the company’s commercial division
has started and the expansion of its distribution network
is being implemented, with the target to improve
customer care services and increase the points of sale
that AMC’s products are promoted. It is noted that
during May 2002 AMC’s first shop has been put into
operation.
The telecommunication infrastructure developed by
AMC distinguishes the company as the largest
telecommunications provider in the country. From
2003 onwards, when the Albanian telecommunications
market will be gradually liberalised, AMC will be in a
position to provide a full range of integrated
telecommunications services to business customers. In
this respect, AMC will start promoting, within year 2002
services like leased lines, that are in great demand by
business that operate in Albania.
AMC’s strategic goal remains the continuous
expansion of its customer base through the increasing
penetration of mobile services in the Albanian market
coupled with ongoing strong financial performance,
as portrayed by the 68% EBITDA margin that
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positions the company as one of the most profitable
companies on a pan-European level.
CosmoONE MARKET SITE HELLAS
CosmoONE (www.cosmo-one.gr) is the leading
Greek e-business enabler. It provides buyers and
suppliers with robust web-based applications and
services. Through its creation of b2bmarketsite
(www.b2bmarketsite.gr - a B2B electronic
marketplace) and b2bauctions (www.b2bauctions.gr
a dedicated hub for online B2B Auctions),
CosmoONE is aiming to provide profitable solutions
to all companies. CosmoONE solutions and services
are based on COMMERCE ONE’s technologies and
software, which is among the leading B2B software
companies for e-business applications.
CosmoONE’s strategic goal is the provision of all
necessary infrastructures in order to make electronic
commerce accessible to all businesses through simple
procedures, irrespective of their size and sector.
Within this context, CosmoONE has already
established and operates an electronic marketplace
for the provision of procurement, order management
and purchasing workflow services. Furthermore, the
venture provides the capability of electronic auctions,
while its near future plans include the creation of
vertical markets (addressing specific business sectors),
supplier sourcing, contract negotiation and
management infrastructure as well as value added
services, such as EBPP (Electronic Bill Presentment &
Payment), Logistics and Community Services. In
addition, cosmoONE constitutes the Greek hub for
international business transactions via the “Global
Trading Web” (GTW), Commerce One’s global
network, through which Greek companies may trade
products and exchange information with other
companies worldwide.
COSMO-MEGALA KATASTIMATA
COSMO-MEGALA KATASTIMATA’s scope of business
is to sell through the Internet CD, DVD, CD-ROMs
and other musical products offered by the licensee of
Virgin Megastores trade mark in Greece (“Megala
Katastimata”). COSMO-MEGALA KATASTIMATA
already operates in the Internet Business to Consumer
area through the creation of www.virginmega.gr,
while at the same time it plans to also offer mcommerce services. Through the aforementioned
activities, COSMO-MEGALA KATASTIMATA has
already attracted a large number of consumers who
carry out their shopping through Internet.
Furthermore, the company in cooperation with
COSMOTE has designed and implemented the
“Ringtones” and “Logos” service that is offered under
‘MyCosmos’ mobile portal, and since launch, has
been very successful in the market. In addition it has
assumed the content provision and promotion of this
service’s web pages at the www.virginmega.gr site.
The target of the company is to enrich the
aforementioned service portfolio with new products
and services and become 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 enhancement of its
offering range, the development of new innovating
services and products and the provision of high
quality Customer Service.
Within 2001 over 100 companies have benefited
from CosmoONE’s services and the transaction
volume of its marketplace exceeded 65 million Euro.
Additionally to that a 12 million Euro value of goods
was auctioned online in 36 auctions, bringing up to
19% average savings to the originators. The company
experiences a high transactional growth and it is
estimated that within 2002 more than 200
companies will be using CosmoONE’s infrastructure
and services for their e-business needs. Furthermore
CosmoONE participates in various e-business
initiatives in Greece and it is worth mentioning its
involvement with the pilot e-procurement/sourcing
program of the Ministry of Development.
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COSMOTE expects that all the activities
mentioned above will have a positive impact
on its continuous growth in the future.
Through its customer-oriented strategy and
results driven policies the Company has
gained up to date a significant position in the
Greek mobile market and is regarded as the
operator of choice between Greek mobile
users. At the same time, following
COSMOTE’s listing in the Athens and London
stock exchanges in October 2000 and during
a period characterised by global and local
market volatility, especially in the field of
telecommunications, the Company’s share
price during year 2001, had the best
performance among all FTSE/ASE20
companies (with a year on year gain of
32.6%) and the second best performance of
the sector on a pan-European level,
considerably outperforming the European
Wireless Telecom Index.
COSMOTE plans to continue its balanced
growth stragegy with the aim of creating
continuous value to its customers and
employees and above all to its shareholders.
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C O S M O T E
A n n u a l
R e p o r t
2 0 0 1
44, Kifissias Ave.
151 25 Maroussi
www.cosmote.gr