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Hellenic Telecommunications Organization SA
ATHEX:HTO

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Hellenic Telecommunications Organization SA
ATHEX:HTO
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Earnings Call Transcript

Earnings Call Transcript
2020-Q2

from 0
Operator

So ladies and gentlemen, thank you for standing by. I am Gelli, your Chorus Call operator. Welcome and thank you for joining the OTE Conference Call on the Second Quarter 2020 Financial results under IFRS. We have with us today, Mr. Michael Tsamaz, Chairman and CEO; Mr. Babis Mazarakis, Chief Financial Officer; Mr. Panayiotis Gabrielides, Chief Marketing Officer, Consumer Segment; Mr. Grigoris Christopoulos, Chief Commercial Officer and Business Segment; and Mr. Evrikos Sarsentis, Head of IR and M&A.

At this time, I would like to turn the conference over to Mr. Michael Tsamaz. Mr. Tsamaz, you may now proceed.

M
Michael Tsamaz
executive

Good morning and good afternoon to all of you. I'm pleased to welcome you to our second quarter 2020 earnings call. I hope you and your loved ones are safe and healthy. It was a very tough first half for everyone. I'm going to start by starting our gratitude -- by stating our gratitude to all the members of the tech community who have worked hard to maintain the highest quality of service and deliver the resilient performance we are reporting today.

Once again, this quarter, our systems experienced huge surges in voice and data traffic, and everyone at OTE did a spectacular job at keeping everything running smooth. I also want to express our solidarity with all our customers in Greece and Romania, who have suffered what we hope was the peak of the pandemic. Its economic impact on our residential and business clients will be long lasting. They should know that they can count on our technology support in this situation. As we had anticipated in last quarter's call, the top 9 impact of the health crisis was more pronounced in the second quarter.

The areas most affected included mobile, telephone and Pay-TV. Mobile, the near-total absence of tourists until June took a toll on roaming, while stay-at-home orders impacted mobile usage. As for Pay-TV revenues, they were mostly affected on the B2B side as we offered rebates to bars, restaurants, betting shops and other businesses that were shut down or had no sports programming to present to their own customers. As our financial performance in the quarter and first half shows that we have been able to mitigate the impact of any top line stickers on our profitability, our EBITDA was up in absolute terms and margins were higher in Romania as well as in Greece.

This is a result of engaged work, making our organization more efficient and more agile. We will continue adapting to the immediate challenges by adjusting the fine-tuning costs in the short term, reducing marketing expenses, travels and other discretionary items. We will also pursue our longer-term reorganization. Our plan to spin-off into 3 wholly owned subsidiaries and our customer service, retail distribution, technology and field operations was approved by the Board of Directors in June. Its implementation will further rationalize our traditional structure and has enhanced our specialization of flexibility, and we look forward to making it a reality starting in the next few months. We also implemented a voluntary leave scheme adopted by approximately 450 OTE employees in Greece in the second quarter. On an annual basis, it should generate savings of approximately EUR 20 million. Further initiatives are expected in this direction later this year, in connection with the organization I just discussed. In Romania, we're also pursuing the active restructuring of our operations. We are making Telekom Romania more competitive and better equipped for the challenges of a tough market. But while we're reducing expenses and making ourselves leaner, we are not cutting down on the investments that are making us faster and better positioned to meet the needs of our customers. We're maintaining our CapEx forecast for the year, notably Fiber-to-the-Home and IT enhancements. We're not cutting down on our ambition to be the digital leader in our markets.

A few weeks ago, the Regulator published the anticipated documentation of the Greek 5G Spectrum auction. We're evaluating the timing and options provided. Currently, we maintain the hypothesis of settling in 2020, the Spectrum we acquire. And therefore, we are not making any change to our free cash flow guidance. In this cost-only evolving situation, our capital allocation policy is unchanged. We have the resources to pursue our investments at the bottom levels and to reward our shareholders. We're also confirming our shareholder remuneration objectives for the full year.

And now, let me turn the call over to Babis, who will take you through our results in the quarter. Babis?

C
Charalampos Mazarakis
executive

Thank you, Michael. Thank you all for being on the call. I hope you're all doing fine and are able to enjoy December. Obviously, you are welcome to come to spend some time here in Greece. We need all the business we can get.

Let's go through our performance now in the second quarter, which, as Michael pointed out, bears the mark of the pandemic on some of our revenue lines. On group revenues, this quarter amounted to EUR 918 million, down 3% or EUR 29 million from the second quarter of 2019. Nearly, all of this decline came from Greece, whereas Romania was down only moderately. Conversely, adjusted EBITDA after the leases was at EUR 321 million this quarter, and was up 0.8% from the second quarter last year. In the first half, adjusted EBITDA was over EUR 643 million, up 2.6%. The quarterly EBITDA margin is up 130 basis points to 35%, thanks to improvements in both Greece and Romania.

Let's start with Greece, where total revenues at EUR 692 million, were down 3.8% or EUR 27 million less than in the second quarter last year. Total revenues were more or less stable in fixed, and nearly the entire decline came from mobile, which was down 8.8%. About 1/3 of our shops were closed for the whole of April, and we were not fully operational until mid-May in billing collections, upselling and handset sales in particular. Revenues from Greek retail fixed services were down less than 1% in the quarter. We had another strong performance in broadband, with revenues up nearly 7%, with a large number of people working from home or streaming entertainment, many of our customers upgraded their connections during lockdown. We added 53,000 subscribers to our fiber base, bringing the total to 840,000, though this number might be somewhat inflated by the lack of disconnections during the period. Over 90% of these customers used speed of 50 megabit PS or more. And for the first time, speeds of at least 100 megabits PS account for 10% of the total. As already noted, Pay-TV had a more challenging period, though, we had registered an increase in the number of subscribers. On the one hand, we extended the relief to the owners of hotels, cafés and betting shops, who had to close the indoors during the height of the pandemic. Some of these business have gradually reopened. We are also penalized by the lack of sports events impacting advertising revenues.

Finally, our recently launched OTT media service offering should accelerate the take-up of higher speed options and have a positive impact on our overall revenues, but it lowers the average revenue per user. All told, TV revenues were down EUR 3 million in the quarter. ICT revenues resisted well up 5% in the quarter. We are confident it's going to be a positive year overall as the health crisis is not impacting corporate and government interests in improving their systems.

Mobile service revenues amounted to EUR 218 million and were down EUR 21 million or nearly 9% from the second quarter last year. With travel and tourists coming to standstill, visitor revenues were down almost 80%, 8-0 percent. Excluding roaming, mobile service revenues would be down less than 5%. For the first time in 3 years or so, prepaid revenues declined in Q2, down nearly 7%, largely reflecting the multiplicity of promotions and top-ups we made during the health crisis as well as reduced mobility during lockdown. Conditions gradually improved during the quarter, and we expect this trend to continue even if we don't return to past growth rates in the midterm completely. The pre to postpaid migration that has fuel postpaid growth in past quarters, slowed down significantly, particularly in April and May. In addition to the factor, reduced above bundle units, including lower roaming by hotel, domestic customers, who curtailed their trips abroad, postpaid revenues dipped over 3%, reversing the net recovery of the past few quarters. With our retail subsidy open, we expect postpaid trends to improve, but not to the point where they return positive this quarter. Data was once again a key driver and we reported another sharp increase in traffic and all other relevant KPIs for data.

As in the first quarter, our networks handled closely these unprecedented decreases in volume, in voice as well as data. Clearly, Q3 is the most important quarter in terms of inbound tourism, and we are keeping a close eye on all the available data to try to model our roaming revenues. With health statistics changing day-by-day and new warnings being issued in a number of European countries, obviously, this is a moving target. There's no doubt that we will face a material short for the revenue from roaming, but we cannot estimate in size at this point. Revenues from wholesale were up slightly in the quarter on increasing penetration of high-speed products.

Going forward, and assuming as we hold the health crisis remains under control, we expect business roaming to be the single largest factor weighing on our Greek top line in the coming quarters. We have seen some recovery in both prepaid and postpaid continuing in recent few weeks. Collection of receivables is also improving at the certain percent, reflecting both the reopening of the stores and the return to more normal conditions.

Operating expenses excluding depreciation and amortization and loss increase, totaled EUR 393 million in the quarter, a year-over-year decrease of more than 5% with savings pretty across -- with savings achieved pretty much across the board, notably in commercial expenses, travels, trainings, energy and so on. Personnel expenses were also down 2%. As a result of all this, adjusted EBITDA after leases in Greece was EUR 285 million in the quarter, down just 1.7%, and the margin was 41.2%, up 90 basis points. In other terms, EBITDA was down less than EUR 5 million. So as you can easily see, it would be about 1%, excluding up -- excluding business roaming.

Let's now turn to Romania where the dynamics are not different from what we have seen in Greece with COVID-19 primarily affecting mobile, whereas broadband, ICT and wholesale existed well. Overall, the revenues were down just 1% in the quarter to EUR 229 million as growth in ICT projects and wholesale revenues nearly made up for the drop in service revenues due to COVID-19. Broadband revenues were up more than 8%, partly offsetting the continuing decline in voice and lower TV revenues. Broadband thereby limited the drop in retail fixed services to below 7% at EUR 55 million.

Finally, the FMC solution continued to outperform, even though at a slower pace. Mobile revenues were down nearly 8% at EUR 73 million. Apart from roaming, which was cut by 2/3 as compared to Q2 last year, the decline is entirely due to prepaid. Conversely, postpaid was up from the same quarter last year and stable sequentially. Assuming no worsening of the health situation, we expect these trends to continue to prevail in the second half.

As Telekom Romania intensified its cost reduction and restructuring efforts to deal with pandemic and structurally strengthen these activities, operating expenses, excluding D&A, depreciation and amortization, and one loss in the country were down nearly 2% despite the sharp increase in bad debt. Personnel costs were down close to 15%. During the quarter, the company outsourced its TV production activity and is working on similar plans with regards to its IT business. Adjusted EBITDA after the leases in Romania was at EUR 36 million, an increase of 26% over Q2 2019 where performance was impacted by a tax-related to one-off charge, which was reversed later in the year. The EBITDA margin rose 330 basis points from a somewhat low base to 15.8%, reflecting the company's focus on improving cash conversion, it achieved a considerable improvement in cash flow generation, reaching on an adjusted basis nearly EUR 17 million, up more than 4x compared to the similar quarter of 2019.

Now let's turn to the rest of our financials. At consolidated group adjusted EBITDA after the leases first. As we indicated, it totaled EUR 321 million. The EBITDA margin was up 130 basis points to 35.0%. Group operating expenses, excluding depreciation and amortization and one-off items totaled EUR 586 million, a year-on-year drop of nearly 4%. Personnel costs were down more than 4%. Also, we are down in virtually all key items with the exception of bad debt provisions. Somewhat counterintuitively, commission costs were up as we decided it was important to incentivize third-party retailers as they went through these rough parts. The group depreciation and amortization stood at EUR 161 million, declined sharply this quarter down 41%. In the second quarter of last year, we had taken a significant goodwill impairment charge related to our mobile operations in Romania. This as well as the exceptional write-downs of Q4 2019 also significantly reduced our base. Interest expenses were down almost 3% as lower debt outstanding and lower cost of debt were partly offset by interest booked in the quarter related to nonrecurring indications. If we exclude this one-off, interest expense would be down more than 30%. The repayment of our EUR 700 million bond in early July will further reduce our interest expenses going forward. Adjusted net debt amounted to EUR 848 million at June 30, down a little bit over 16% from a year ago. Adjusted net debt to trailing 12 months EBITDA was 0.6x at the end of the period or 0.3x if we exclude the leases. Reflecting all these factors and despite a 69% increase in income taxes from a low base last year, adjusted net income went up more than 20% to EUR 118 million in the quarter. In the first half, adjusted net income was up 43%.

Turning now to our cash flow statement. CapEx, excluding spectrum, was EUR 151 million this quarter, down EUR 27 million versus the same quarter last year. For the first 6 months of the year, CapEx is down about EUR 37 million. In the first 2 quarters, some of the outlets have slipped due to the COVID. Nevertheless, we are once again confirming our full year CapEx guidance at around EUR 600 million. Adjusted free cash flow was EUR 185 million in the quarter and EUR 318 million in the first half, an improvement of more than EUR 100 million in the year-to-date versus last year. Reported free cash flow was down slightly from Q2 last year at EUR 125 million. We also confirm our full year guidance for reported free cash flow at EUR 350 million as we do not anticipate any further delays in Spectrum auctions. In other words, we also confirmed our shareholder remuneration guidelines for 2020.

Let's conclude now with the word on outlook and guidance. Anything we might say at this point in the year is, of course, subject to COVID-19 caution. Assuming no substantial return of the health situation increase or around the world, we can assume that the worst of the crisis is behind us. This being the case for most revenue streams, we should gradually return to the favorable trends we were experiencing in the early months of the year. I think gradually because we don't expect this to happen overnight, and because this might not occur until early next year. And I say most revenue streams because roaming is a big unknown. We know it will be down materially, but certainly how materially it will depend on how many tourists we get in the coming months. On the other hand, we have clearly demonstrated that we are able to rapidly adjust our cost base, and the past crisis have given us more experience than many. In the second quarter alone, we reduced operating expenses by EUR 23 million despite raising bad debt provisions by more than EUR 4 million. As normal activity returns, we should be able to absorb the decline in roaming, at the same time, as we continue investing in the future of our business. This is why we are confirming our CapEx plans, the cash flow targets, as I have noted earlier.

And with that, we conclude our remarks. Michael, my colleagues and myself and our other persons around the table, are now ready to take your questions.

Operator

The first question is from the line of Draziotis, Stamatios with Eurobank Equities.

S
Stamatios Draziotis
analyst

My first one has to do with, of course, you seem to have delivered about EUR 25 million of savings in other OpEx level in the quarter. As you said, clearly, part of this has to do with Romania, which benefited from the low base in the same quarter last year. Could you tell us to what extent do you think that curtailment in expenses is sustainable in the future? I'm referring to then payroll. Secondly, just moving on to the top line, if you could elaborate a bit on the trends evidence in the first 2 weeks of Q3 on domestic mobile and the extent of which we've seen notable improvement? And lastly, could you give us an update on the upcoming Spectrum auction in Greece? As I understand, you said that you expect this to conclude in -- by Q4, is that correct?

C
Charalampos Mazarakis
executive

Thank you for the question. Let's talk with the cost, yes, you got it right, the amount to reduce our cost, was in the range you mentioned. There are a few items that are fueling that one, and you spotted the first one, which is the restructuring plan that we had in Romania last year. It was concluded in late last year and a little bit of early this year. So now we see the benefits when we compare versus last year. Secondly, we also see the continuous restructuring we are doing in Greece. And also, the -- here, we have the timing effect on Q2 '20 versus Q2 '19. And obviously -- this obviously, these first 2 items are sustainable and will continue in the future because they are structural changes at reduced cost. Also in Q2, we had a series of costs, some of them were due to the -- special condition we faced, for example, the lockdown of people and the containment of employees from work from home mode resulted in a series of savings in things like traveling, energy, fuel, et cetera. This to the extent that this comes back, of course, all of this will be restored. Also, the commercial activities, as we said we are restrained -- constrained by the fact that most of our shops were closed for the time -- for the biggest time or at least they were operating only for specific -- on limited ships and for specific transactions. And so this cost, of course, were in Q2, but to the extent that the activity comes back, this will restore to the bigger extent. So the learnings were 2. One is that we found that we confirmed that we can move fast, act fast and reduce cost fast, even for temporary period. And also, I think, it confirms our long-term strategy, which is to restructure the company. Even in times where things didn't point out to do so. So the structure both in Romania and the ongoing restructuring in Greece, our activities that have started a long time ago. And now, of course, we adapt this effect.

So second question was about spectrum. We said that the spectrum option will take place towards the end of the year, and our working hypothesis is that the amount that we based on the Spectrum that we decide to buy, to acquire, will be paid this year. That's why, as I think we mentioned in the presentation, we confirmed the cash flow targets under the assumption that the Spectrum will be paid this year and I want this to be made very clear towards the audiences that the confirmation of our free cash flow delivery assumes we pay the Spectrum this year.

The third question is about the trends we observed in Q3 -- in the early weeks of Q3. I think we see more or less what we are expecting, i.e., the -- first of all, the business roaming being down versus last year, albeit increasing terms, but still down versus last year and for the own customers, we continue to see a recovery which we have projected, now that the activity is coming back to normality. However, as we said very clearly, this recovery is not overnight. So we see the improving trends. And the hope is that assuming that the situation will remain calm. We will see a continuous ramp up of the usage in order to return to the previous -- to the pre-COVID-19 trends later in the year or early next year.

S
Stamatios Draziotis
analyst

All right. And just a quick follow-up. In terms of competition, have you been seeing anything material or anything that might be alarming? I don't know, on behalf of competition or are the dynamics relatively stable vis-Ă -vis the competitive era.

C
Charalampos Mazarakis
executive

So I think our competition is always active and we are operating in a very competitive market. That's true and this hasn't changed. And even if your question directly points out to Forthnet or not, I must say that with or without Forthnet, we are in a very competitive market, which requires day-by-day to be vigilant and to fight in the market in order to gain the preference of our customers. So nothing changed during this quarter, and we don't think we'll see less competitive trends in the coming quarters. So competition is always there and very active.

Operator

Next question comes from the line of Patrick, Maurice with Barclays.

M
Maurice Patrick
analyst

Just a couple for me. You talked about some of the savings that you made being structural, I think you were referring to Romania. But of the cost savings you saw this quarter, I'm just curious as to that EUR 23 million number, just curious as to how much of that you think will naturally extend into the following quarters because it's the savings you've put in place that can continue even if in the new economy can impact. And the second question is on towers. Vodafone has obviously made the move to acquire the WIND's towers to create, I guess, now you have 2 tower companies in Greece. I guess your thoughts in terms of, would you consider using them as a tenant if there was a potential to save money? Or how you think the economics of towers will evolve in the Greek market?

C
Charalampos Mazarakis
executive

Thank you for the questions. On the first question, which is about savings. I would say that 60% or 70% of the number we saw as a post-cut in this quarter are sustainable. And for the rest, some of them will come back as activity recovers. But as I said, there are learnings we gained through the crisis, which point out to be smarter in utilizing the resources even for energy, traveling, fuel, et cetera. So I'm confident that we are more experienced on how to move fast on the costs.

Regarding the tower deal of Vodafone and WIND, obviously, we cannot comment about more competition, which is something that it's also observed in other countries. As similar to Greece and other countries, you have people who are joining the forcing towers, and they are doing well or they don't do well. And you have companies that do not join forcing towers and they are doing well and some of them are not doing well. So to us, it's not a prerequisite to perform well to have done a deal at the tower level. And each company has its own strategy. Our strategy is to continuously invest in our network in a way that is the benefit of the consumer that gives tangible benefits to the consumer in terms of coverage and speed and is easy of users. And this is what we'll continue to do. Now whether we join or not, obviously, this question cannot be answered now, but I'm saying that it's always -- the retro is very precious and the essential assets of our infrastructure. And for us, it's not just in infrastructure, it's a kind of -- it's a resource that affects the customer experience. And this is how we look at it.

Operator

Next question comes from the line of Arbuzov, Roman with JPMorgan.

R
Roman Arbuzov
analyst

The first one is a high-level question just on the outfit for the Greece business. You have mentioned that you are targeting keeping profitability flat and you've also made very clear that there are a lot of unknowns and moving parts at the end of the year. But nonetheless, do you think it's a reasonable expectation that you will keep your Greek EBITDA flat in 2020? Any comments there would be helpful. And secondly, just in terms of the turnaround trajectory, there's many moving parts again. And you mentioned the roaming part in particular, which is the unknown, but by and large, the business is moving in the right direction, I guess, is the key message gradually from here and onwards. So is it fair to assume that Q2 is the trough in terms of revenue and EBITDA decline for the GREEK business? And do you think things will get better from Q3 onwards?

C
Charalampos Mazarakis
executive

Thank you for your question. If I got it right, the first question was rather to, I think, and please revert if I don't answer to that one. But the way I understood it is that similar to what we said in our Q1 results, what we expect to see regarding EBITDA profitability for Greece for the year is it excluding the impact of business roaming, which we said is something that we cannot difference at all. We expect the rest of the business to produce more or less a flat EBITDA versus last year, which means more or less, with a kind of here or there, more or less that means that while the domestic business recovers after the COVID-19 quarter in Q2, this recovery happens gradually. We expect that the post containment and the measures we are taking, will offset this, except for the business roaming hit that will come. This is what we said more or less in Q1. This is what we reiterate now. And of course, this has a bit disclaimer in the assumption, which is in the 5 years -- in the 5 months ago for the year, we would not see any other crisis. That's a very, very important assumption.

Now on the second question, it's very difficult to monetize what we see as a trough or as a kind of beginning of the trough. But we have made the statement we did before, we -- what we are monitoring, and sorry if I repeat the same, but it's -- we're monitoring every day the performance of our customer base users and activities, metavision, et cetera, in order to make sure that in all of our segments, we spot the gradual recovery towards Romania. That's what we do. So if we are -- we have it right, then obviously, Q2 was the bottom of the situation. But this assumes again that there is no further COVID-19 or any other pandemic crisis for the coming months. I'm sorry, I cannot be more specific, but just directionally, that's what we are looking for. And at the same time, we try to save all of our resources that we can, without, of course, bidding the things like customer experience and performance of the network, et cetera, in order to make sure that we fund the whatever tab is created towards the recovery in the very short term.

R
Roman Arbuzov
analyst

Can I just ask a follow-up on the cost? The 60% to 70% structural cost reduction that you mentioned in your answer to the previous question. Does this relate to the Greek business as well or was that only Romania or is this everything?

C
Charalampos Mazarakis
executive

I think as I said before, the 2 big elements of the savings was restructuring in Romania, which is permanent. And the ongoing restructuring in Greece, which we saw some weeks last year, wave in Q2. And there might be more in the coming quarters. So something that is permanent. And as I said, some of the savings we experienced on the other, let's say, if you want to call them less elastic items, some of them also can give some lessons of how they may become optimized and rationalized, but to your modeling, it's about 60% of the savings are permanent.

Operator

The next question comes from the line of Ierodiaconou, Georgios with Citigroup.

G
Georgios Ierodiaconou
analyst

It's just a couple of follow-ups, actually. The first one, obviously, you mentioned the transformational plan and the change of the structure of the group into 3 divisions for, I think, service, maintenance and shops. Is it possible to give us an indication of how this could affect the costs later this year or next year, any clarity on that will be great to have. And also, if you don't mind, there was this answer to Roman's question earlier about EBITDA being broadly flat, excluding roaming. I think last year, in the fourth quarter in Romania, you had a big positive one-off. Just wanted to clarify that it's excluding this positive one-off, the run rate you see for the second half. And then a question on mobile. Is it possible to give us an indications of how you see the overall market? I think you mentioned it remains rational. Is there any actions you are taking to perhaps improve performance later on in the year?

M
Michael Tsamaz
executive

I will start with the easy question. Obviously, the Q4 numbers will exclude the one-off -- the big one-off positive in Romania. And thank you for pointing it out because we're bringing about operational performance here. The -- so that's something that we need to observe. Now on the first question about the spin-offs and the savings, they are all interrelated. So the spin-off is another way of making the group more rational and more optimized, while at the same time, voluntary exit schemes will be offered. So it's a combination of the 2 and we have been doing voluntary exits for quite a number of years now. And every time there is a different or a variation of how you need to structure the remaining operations, and optimize them in order to have a voluntary time schemes that can be effective. So you can see the combination. So we do the spin-offs and together with the voluntary exit schemes, they would produce further restructuring savings. So that's something that will come in the next quarters. And the -- and of course, these savings will be permanent, just to add to the previous question.

Now the overall market, I didn't say that the -- maybe I want to repeat what I said. I said that the competition in the market remain competitive, right? The competition does their work, and we are doing our work. So sometimes, it is rational, sometimes it's not rational, but point out that we are foreseeing all these, let's say gradual recovery while the competition remains competitive. And the way we respond to this competitiveness is through the things that you know we have been saying for some quarters now, which is the fiber internet, continuous transformation of our customer base, broadband customer base from traditional ADSL to fiber internet, VDSL and Fiber-to-the-Home. We are investing in our network to expand the home parts of Fiber-to-the-Home in order to be able to offer additional speeds to both the residential and business customers, as the society demands for more bandwidth and higher speeds. And obviously, the lockdown have brought relation to all of us how important it is to have a high-speed and fast internet. On the mobile side, we are working with our network, our 4G plus network, with 98% population coverage in order to be able to offer more and more of data. To be able to move our customer base to higher bundles in order to enjoy more data for free. This is value for both the consumer and the business. And also to buy great customer for prepaid to postpaid. So this strategy doesn't change. And in order to deliver this strategy, you need the network, you need the customer experience touch and also you need the brand. And of course, all the people of OTE will support these actions. So this doesn't change. And this is how forward while at the same time, we are saving costs here and there in order to fund the growth and also in this quarter to fit in the debt, that this temporary situation created.

Operator

We have a follow-up question from Mr. Draziotis, Stamatios with Eurobank Equities.

S
Stamatios Draziotis
analyst

Yes. Just can I ask a question on the debt side, could you tell us roughly how much the cash outlay related to financial expenses might be this year or, I guess, alternatively, the annualized savings from the recent bond visions will be and whether you plan to make a new foray into the market at some point?

C
Charalampos Mazarakis
executive

You mean for the one we paid, the differential is about 30%. So the saving -- was a little bit less than 30%. So the interest expense, we expect to save for next year, of course, because this year is half, is about EUR 15 million, EUR 16 million. That was your question?

S
Stamatios Draziotis
analyst

I guess. And actually, whether you have any plans to take a window to tap the credit markets in the coming months?

M
Michael Tsamaz
executive

Well, these plans, as you know, they are not announced. We just hit the market. So if we see, we do take it.

Operator

Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.

M
Michael Tsamaz
executive

Okay. Thank you, everyone, for being present today with our teleconference. Thank you for your attention and your questions. We have had a resilient performance in the first half of the year. I hope that we have demonstrated that we are ready to confront the challenges of the coming months. We wish you all a nice day and restful summer. And above all, please stay safe and keep healthy. Thank you.