OTE Group Reports 2008 Second Quarter Results

ATHENS, Greece — Hellenic Telecommunications Organization SA (ASE: HTO, NYSE: OTE), the Greek full-service telecommunications provider, today announced reviewed consolidated results (prepared under IFRS) for the quarter and six months ended June 30, 2008.

RomTelecom

OTE, through its wholly owned subsidiary OTE International Investments Ltd, holds a 54.01% interest in RomTelecom S.A., the incumbent telecommunications operator in Romania.

RomTelecom’s operating revenues in Q2’08 rose 2.7% year-on-year as the company succeeded in keeping churn under control, while growth in new service revenues (Broadband, Business Data & TV) offset the drop in traditional telephony revenues.

The pace of line losses is slowing down considerably: the total number of lines dropped approximately 3% in the year to June 30, 2008, as compared with an 18% decline in the comparative prior period. RomTelecom also recorded a significant increase in PSTN usage, with local traffic up 14% in Q2’08 as compared to Q2’07, and long-distance traffic up 24% over the same period. Targeted campaigns combining new packages and dedicated network roll-out projects led to a significant increase (+48%) in PSTN gross additions in Q2’08.

The 9% increase in wholesale traffic in Q2’08 compared to the same period of 2007 could not offset the overall decline in interconnection tariffs, resulting in an 8% drop in wholesale revenue. Data services (ADSL, VPN, other broadband services) achieved further significant growth, with revenues up 48% year-on-year in Q2’08. As of June 30, 2008, RomTelecom ADSL lines amounted to 505,000, nearly tripling the level achieved one year earlier.

The direct-to-home (DTH) TV service ‘Dolce’ continues to be commercially successful, as the total number of customers reached 528,000 by the end of Q2’08, more than double the number at June 30, 2007. Reflecting the significant growth in RomTelecom’s data and DTH TV customer base, sales of consumer premise equipment (CPE) rose sharply (+201% in Q2’08 vs. Q2’07).

Operating expenses excluding depreciation and amortization rose by 7.8% year on year in Q2’08. The launch of a wide range of new packages and products resulted in a €12mn or 239% increase in cost of goods sold, mainly due to CPE. Third-party-services rose by 47%, reflecting expenses related to the Company’s corporate transformation and marketing repositioning programs. Also during the quarter, higher interconnection costs (up 6.8%) were generated by the increased international transit and growth in international calls, as a result of the Company’s improved offering.

Reflecting the above, OIBDA for Q2’08 dropped by 7.3% compared to the same period in 2007. Strategic projects and initiatives are on track. The Company’s corporate transformation program has already resulted substantial cost-reductions. In particular, headcount decreased by 16% in the first half of the year to 10,523 employees at June 30, 2008.

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