Hellenic Telecommunications Organization SA

ATHEX:HTO

Earnings Call Transcript 2022-Q2

[Operator]

Ladies and gentlemen, thank you for standing by. I am Gaily, your Chorus Call operator. Welcome, and thank you for joining the OTE conference call and live webcast to present and discuss the second quarter and 6 months 2022 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Michael Tsamaz, Chairman and CEO; Mr. Babis Mazarakis, Chief Financial Officer; Mr. Panayiotis Gabrielides, Chief Marketing Officer, Consumer segment; and Mr. Evrikos Sarsentis, Head of IR and M&A. Mr. Tsamaz, you may proceed.

[Michael Tsamaz, executive]

Thank you. Good morning and good afternoon to all of you, and welcome to OTE's Second Quarter 2022 Earnings Call. We achieved another solid quarter, and we're pleased with our good performance toward the first half of the year, even as accumulating geopolitical and macroeconomic challenges make the environment harder to forecast and to navigate. We're helped by the fact that we entered this period with strong momentum and with our house in order.

I do not need to dwell on the global challenges that our economies are facing. I should point out, however, that the Greek economy is projected to grow by over 2% next year, driven mainly by new investments in infrastructure, housing and digitization, supported, in part, by the EU recovery fund and a number of financial initiatives.

Our absolute priority is to continue offering our customers, businesses as well as individuals the highest quality of services at prices they can afford. We are constantly enriching content, upgrading speeds, enhancing customer experience and offering them new propositions, all this without raising tariffs. We're convinced that this puts us in a strong position to face an even more competitive environment in the second half of the year.

In Greece, our strategy aimed at enhancing value to customer led to a slight slowdown in the pace of revenue growth in fixed. Our offer of double speeds at no extra cost to eligible customers has been a huge success with a substantial improvement in customer satisfaction, brand perception and customer loyalty. [indiscernible] NPS tests conducted in the upgraded base resulted in scores that were 7 and 26 points higher, respectively. As of the end of June, about 600,000 customers or 80% of the eligible base have been upgraded.

We also continued to improve our Pay-TV content, notably by acquiring the broadcasting rights of Olympiacos, the leading team in the Greek Football Super League, starting with the new season later this month. This gives us far and away the best lineup with the most popular series of sporting events in the country and a definite advantage to acquiring and retaining multiple-play customers. We anticipate that our new sports content will fuel subscriber growth in coming months, more than offsetting any losses we might otherwise incur.

In Greek Mobile, we had a very solid quarter. We owe our continued revenue growth to strength across the board. Our 5G coverage has now exceeded 70% of the population, and we should meet our 80% target by the end of the year and 90% at the end of 2023. Our network's competitive advantage was once again evident in the Ookla speed test rankings and in the unlocked network quality rankings.

Our ongoing investments in our network support Greece's mobile ranking performance. Our more-for-more strategy is paying off in postpaid, while new bundles and special summer offers support the trends in prepaid as well. We're also experiencing a strong tourist season so far, and we expect -- to expect good roaming revenues as a result.

We continue to grow our ICT business, supporting the digitalization of the public sector and private businesses as well as benefiting from the European recovery fund. In Romania, our mobile service is making continued progress in establishing itself as an essential mobile only operator. We had to observe a series of cuts in mobile termination rates over the past year, but its underlying performance is good. Despite the inflationary pressure on our costs, we are posting solid revenue growth and robust margins in both the quarter and first half.

So we are facing the second half of this year with confidence despite the new economic and competitive challenges we are likely to confront. We are forging ahead with our strategy, first and foremost, as it concerns fiber expansion. Our fiber-to-the-home rollout is proceeding at pace. We are far away -- we are far and away the largest fiber network provider in Greece, having installed 78% of the -- of all fiber-to-the-home lines in the country so far. At the end -- at the midyear point, we were close to 700,000 homes passed, and we will reach our objective of approximately 1 million homes at the end of 2022.

We will complete our speed upgrade program and take the required actions in both fixed and mobile, protect our customer base and enhance customer satisfaction. And we will continue practicing a strict discipline to deliver a strong financial performance, regardless of increased competition or inflated cost base. This is why, once again, we're confirming our 2022 outlook.

And now I'll ask Babis to review our performance in the quarter.

[Charalampos Mazarakis, executive]

Thank you, Michael. Hello to all of you on the call. I will provide a little more insight into the components of the solid second quarter performance, which Michael just described.

At EUR 850 million, total group revenues were up 2.7% year-on-year. The slight deceleration related to the previous quarter is largely because of our -- because we are now comparing to a more normal quarters in 2021 when most of the compact of COVID were gone. In addition, the Q2 2021 base of comparison was somewhat elevated due to subsidized sales of handsets. Finally, our selective doubling of broadband speeds capped revenue growth for this quarter in our Greek fixed operations.

On the other side, revenues in Romania were up sharply. Group adjusted EBITDA after leases jumped 7.2% to EUR 333 million in the second quarter. Despite the impact of inflation and our decision not to pass rising cost, notably for energy on our customers, we kept total operating expenses stable year-on-year. Group adjusted EBITDA margin was 39.2% in the quarter, a hike of 170 basis points from the second quarter of 2021, a notable achievement from all our activities.

Let's turn now to Greece where we have another sharp increase in mobile, slightly ahead of the pace in the previous quarter, and the pause in the growth of fixed retail largely due to initiatives we have taken to strengthen our competitive offerings and support our future performance, of course. As a result, total revenues in Greece were up nearly 2%. Revenues from Greek retail fixed services were virtually unchanged this quarter as we have been working hard on improving customer satisfaction and loyalty.

For the third quarter in a row, we achieved double-digit growth in TV revenues. The number of TV subscribers grew by 5,000 in the quarter, reaching 642,000, a year-on-year increase of nearly 11%. The highlight of the quarter was definitely our signing of the Olympiacos football team for exclusive broadcasting rights, strengthening our portfolio of top teams in the Greek Super League. More generally, we are beefing up our superior content offering and our competitive position in a changing TV market.

As we had flagged last quarter, the growth in broadband revenue slowed down from the strong pace of the year over the past year or so. In view of the doubling of speed we offered to other eligible customers, this was to be expected. We are focusing on strengthening our base and enhancing service quality and customer satisfaction to support long-term revenue growth. We are also making progress in fiber to the home and seeing the results of accelerated installation in the satisfactory increase in take up.

We added more than 200,000 new fiber subscribers, reaching a total of more than 1.5 million at the end of June, representing a penetration of 62% of total broadband base. The total number of fiber-to-the-home subscribers is about 92,000 and represents over 14% of households passed.

So the utilization rate is increasing alongside the increase in coverage. The state coupon subsidies that have facilitated take up have been extended through the end of September after a period of a small deduction. As bandwidth needs continue to grow together with greater appreciation of the fiber-to-the-home experience, we anticipate higher and higher utilization rates.

But it is important to also note that our fiber-to-the-home infrastructure ensures our positioning as market leader. Reliable and guaranteed speeds offer increased customer loyalty, while at the same time, improve certain processes like Fault2Repair, and they are all leading to reduced network costs.

Reflecting our upgrade offer, speeds in excess of 100 Mbps now represent 43% of total retail subscriptions, more than double the 20% level we were at just a year ago. ICT revenues were up nearly 12%. As the European recovery fund, ERF, gains traction, we expect to see a growing number of projects come on stream, generating new sources for ICT revenues. We had a deep, enhanced revenue compared to last year, but that was because government subsidies for the purchase of tablets and laptops by students boosted that low margin line in Q2 and Q3 of last year.

Greek Mobile service revenues recorded another quarter of very solid growth, up nearly 5%. We are taking advantage of our technological edge to consolidate our remarks and brand positioning rather than compete solely on pricing. Digital roaming was up more than 80%, 8-0, compared to the second quarter last year, returning to pre-pandemic levels. Q3 is, of course, a critical quarter for roaming, as it typically accounts for about 2/3 of total. In 2021, tourism has already recovered quite nicely by the third quarter. So we expect growth to remain positive, but obviously at a slower pace in the latter part of the year.

Growth in mobile service revenues was driven by both postpaid and prepaid and from the implementation of our more-for-more strategy in both segments. The unlimited voice packages we introduced in the postpaid market were well received as measured by high customer awareness. The support migration on customer loyalty, achieving a 30-point increase in NPS data.

In prepaid, we are recording positive trends and constantly working on new offers. Our summer data promotions are always very popular, and summer 2022 is no exception. All mobile data KPIs are moving in the right direction, and we expect to beat average users records once again during the peak summer season.

We are also strengthening our portfolio of services, and you should see some new and original offers from us in the coming months in such areas as deliveries and digital wallet.

In Greece, total operating expenses, excluding depreciation and amortization and one-offs, were flat in the second quarter despite the sharp increase in facilities costs due to the higher energy bills. Energy cost was approximately EUR 10 million higher in this quarter and EUR 20 million higher in the first 6 months of the year. As we have already communicated, we hedged about 3/4 of our electricity cost in late Q3 last year.

In addition, in the second quarter of last year, we had incurred significant charges related to the separation of Romanian Mobile and fixed operations. To strengthen our competitive status, we incurred a 36% increase in marketing spend in the quarter. Part of this reflects shifts between Q1 and Q2 of this year. However, in the first half, marketing costs were up by less than EUR 2 million.

Personnel expenses rose nearly 5% this quarter, but that was mainly to an increased one-off personnel remuneration recorded in the period. We have a charge of EUR 33 million, which represents the bulk of the costs associated with the early retirement program we discussed last quarter. This program covered about 300 people.

The approximately EUR 14 million in annualized savings the plan is expected to generate should already start showing in our P&L in the next quarters. So while in Q2 we faced some temporarily higher costs, they will be reverting to normal going forward with better comparisons on energy in half 2 of this year, a reduction in personnel costs and other improvements as well.

At EUR 319 million, adjusted EBITDA after leases increase was up 5.1% in the second quarter, in line with the increase in Q1. The margin was 41.3%, a 130 basis point increase compared to the second quarter of 2021.

In Romania, total revenues were up nearly 5%. As in Q1, much of the revenue increase reflects MVNO services provided to [indiscernible] involving substantial sales of handsets. By contrast, service revenues were lower, but otherw3ise virtually all the drop is attributable to mobile termination rate cuts imposed by the regulator. The impact of MTR cuts should gradually dissipate as we pass the anniversaries of the most severe reduction. It is, therefore, important to note that excluding the MTR cuts, mobile service revenues would have been roughly stable this quarter, confirming the improvement of the underlying business.

In the quarter, Telekom Romania Mobile's total number of subscribers was up 11% year-on-year and 3% sequentially, continuing the positive momentum in postpaid, while some promotional activity in prepaid resulted in higher prepaid registrations. Recently, Telekom Romania announced significant improvement in mobile coverage, which together with enhanced capacity and other initiatives, are strengthening the company's competitive position.

Total operating expenses, including depreciation and amortization in Romania, were down 9% in the quarter as bad debt provisions normalized following the pandemic period. As a result of that, Telekom Romania Mobile's adjusted EBITDA after leases more than doubled to nearly EUR 14 million. Excluding the impact of one-offs, adjusted EBITDA would have been about EUR 10 million, getting us closer quarter-to-quarter to our profitability target.

Let's now look at the rest of our P&L. Group operating expenses, excluding depreciation and amortization as well as one-offs, were essentially unchanged relative to the second quarter of last year. At the group level, energy and other facility costs were up nearly EUR 13 million from the 2021 level. Group adjusted EBITDA after leases was up more than 7%. And the margin, as I pointed out, was up sharply, benefiting from higher service revenues, the profitability in Romania business and the one-off expenses recorded last year. Interest expense was down more than 26% from the Q2 2021 level, partly reflecting the lower cost of debt.

I would like to mention here that we have raised EUR 300 million in June and July in 2 separate transactions. In total, the cost of this funding is significantly less than the EUR 375 million bond, which we repaid 2 weeks ago and shows that in a higher interest rate environment, we still succeed in lowering our cost of debt. Incoming taxes were nearly halved, but this is due to the reduction in corporate income tax rate last year, which led us to lower our deferred tax asset base this year.

Turning to cash flow. Adjusted CapEx was EUR 168 million, up 22% from the second quarter in 2021. As we anticipated last quarter, we are now incurring payments for the fiber-to-the-home rollout and a more normal pace of TV content payments. If you look at the first 6 months of the year rather than just the quarter, adjusted CapEx is up 10% to above EUR 260 million, putting us on track to reach our EUR 620 million CapEx guidance for the full year due to the usual second half seasonality.

Reported free cash flow after lease was unchanged in the quarter as higher profitability in the quarter offsets the increase in CapEx spending just described. Payments for the last round of voluntary exit schemes will mainly be incurred in the second half of the year. We maintain our stated guidance of EUR 600 million in reported free cash flow for the full year as well as our EUR 500 million shareholder remuneration guidance. Our EUR 250 million dividend was paid out almost a month ago.

So all in all, it's been a good second quarter and first half. Greece continued to take advantage of its advanced infrastructure and brand positioning, while Romania benefited from one-off factors while it rebuilds itself as a new kind of player. In both of our markets, as in the world of late, conditions in the second half of the year are challenging, but we are ready. We have taken plenty of actions to make sure that we are well prepared for the new competition and tougher economic conditions.

At this point, Michael Tsamaz and myself and our other colleagues around the table are ready to take your questions. Operator?

[Operator]

[Operator Instructions] The first question is from the line of Patrick Maurice with Barclays.

[Maurice Patrick, analyst]

It's Patrick Maurice from Barclays. So if I could ask a little bit about competition, please. A couple of unrelated questions. On competition, you made some comments about fixed line competition. I saw service revenues on fixed line retail slowed from like 2% to 3% to just to flat. Just curious to understand was that driven by competition? Was it you deliberately sort of pushing off voluntary government scheme? So just a sense of what drove that slowdown? And if it's going to change or improve or get worse in the coming quarters?

And the second question, I have to apologize for not understanding the Greek Super League as well as I maybe should do. But if you could just give us a bit of help understanding a bit about the TV business and the extent to which the football rights will impact market share growth, OpEx, EBITDA, some of the moving parts, more for modeling, but also understanding a bit about the importance of it would be very helpful.

[Operator]

Can management hear us?

[Michael Tsamaz, executive]

Yes, we can hear you. Can you hear us?

[Operator]

Yes, we can hear you. I don't know if you would like to proceed with your answers to Mr. Patrick?

[Michael Tsamaz, executive]

Yes. We are already answering that.

[Maurice Patrick, analyst]

I guess you didn't understand, I didn't hear any of the responses. I'm not sure whether I was muted or my line was muted, but it would be helpful if you could repeat it. I didn't get any of it.

[Charalampos Mazarakis, executive]

Okay. Can you hear me now? Is it better?

[Maurice Patrick, analyst]

I can hear you now, yes.

[Charalampos Mazarakis, executive]

Sorry for the confusion. So to your first question about the fixed revenue trajectory, what we have done this quarter, and I think it was evident from our script, is the commercial, let's say, the customer offerings that we are putting in the market, which is in the context of offering -- continuing to offering value for money to our customers in order to ensure loyalty, lower churn and, of course, competitiveness in the market.

So what we were doing this quarter was to upgrade the eligible customers from the lower speed to the higher speed at the same cost. This has resulted to tremendous loyalty and improvement in the legacy indexes. And this one actually is the reason why we see this temporary slowdown in Q2 and maybe a little bit in Q3 because the upgrade continues and paves the way in an area where -- in a point where all of our customers are feeling the pressure from the macro environment, et cetera, to offer a value proposition that buys them better value from our products and prepare also the world of fixed in Greece, for when our fiber-to-the-home rollout will become much wider and they will be able to upgrade those -- these customers from their upgraded speeds to the fiber-to-the-home domain.

So it's another long-term strategy, this is how we look at it. And if someone asks why is it the right time to do it? We say that this is the absolute perfect timing because not only it responds to the competition, but also it offers [indiscernible] to our customers, a positive offering to our customers in a moment where all the family budgets are kind of under pressure to prepare them for a proposition, which drives loyalty, i.e., lower churn. We are observing that one. And that was done in a quarter where, basically, the whole market was down in the broadband, and we were able to add 18,000 new customers.

So it's a mixture that we're going to observe also in Q3. And then as of Q4, when also our fiber-to-the-home rollout is becoming more evident, then the next time will be to offer to these customers a new set of service, which will be the fiber to the home.

Now on the TV and the policy -- you can follow up, of course, but if I understand correctly the question about TV was what is the model we are using and how do we market the TV in Greece in terms of our propositions. TV is an integral part of our customer offering. Actually, it's bundled and it aims at complementing the fixed services that we are offering and also over-the-top services.

By ensuring a combination of exclusive content that makes sense and is very relevant to our customers, and this is how we are recycling our content in order to be able to offer more meaningful content to our customers. And this is what has driven the growth that we have posted in our results. I stop here because just to make sure that you got the feedback that your questions were asking for.

[Maurice Patrick, analyst]

Yes. I mean just follow up, if I may, just on the TV side. I mean it is something with the new rights, we're going to see sort of OpEx go up faster or less than revenues as a result of it? How should we think about the impact on the earnings from the rights?

[Michael Tsamaz, executive]

The TV works, we have stand-alone offerings and we have integrated offerings with fixed, so it's combined package and stand-alone packages. I mean the way to follow the performance is obviously the growth of our customer base that we are observing, almost 11% growth year-on-year. And this is also accompanied by the equivalent increase in the revenues. So -- which also supports the total fixed service revenues. And this is how it works.

[Operator]

Next question is from the line of Ierodiaconou George with Citi.

[Georgios Ierodiaconou, analyst]

The first question is just on the broadband, dabbling of speed and the slowdown we've seen, and I'm sure, Bobby, you've already mentioned that the third quarter will also be affected by this. Is it possible to give us a bit of an idea of how this could develop more in the medium term? Do you expect this to be a temporary slowdown and then the upgrades to come? Or is it more of a 1- or 2-year process before the uptake into fiber starts to become relevant? And if I could, whether you're doing this because you have other revenue streams coming in ICT and other areas which kind of offset in the meantime, that's the way we should be thinking about it?

And then my second question is on Romania. I'm just trying to understand, obviously, there's been some very strong performance this quarter. But if I'm not mistaken, there is a wholesale support, which may prove temporary. Do you mind just giving us a bit of an idea of how we should think about this into the second half and into next year and what will be reasonable assumptions for us to have in mind?

And then the final question is around the cost. I know you've already highlighted about the second half that there will be some easier comps in the cost base. I was wondering if you can give us a bit of an update about 2023, when you did the hedging of the energy cost in the second quarter of last year? Or was it something that's going to last for a few years? Or is it more temporary? Just to get an idea of the outlook beyond this year.

[Charalampos Mazarakis, executive]

Thank you, George, for the questions. Starting -- trying to go one after the other. So broadband is -- it's very like to say that this initiative comes at a very well thought timing. And this is because we are, let's say, somehow bridging the time when the fiber-to-the-home rollout will reach a size that we'll be able to start migrating most of our customers from broadband to fiber to the home.

It will also come -- it also comes to a point where we are doing this while we are enjoying a very good growth in mobile, which can also support -- keep the total revenues growing and also the ICT revenues which is growing. And we should be a bit patient for the next couple of quarters, up until the effect of the -- this upgrade fades out and the connections on the fiber to the home start getting more and more traction.

And to this one, also the coupon that is contemplated to support the connections of fiber to the home is -- we'd expect it to keep in the next 3 months. It's also something that will help substantially. So that's for the broadband. And also one has to always look at what is total market doing in broadband. As I said, in this quarter, we managed to grow our broadband base whereas the total market was a little bit flat.

In Romania, the revenues that we described -- I mean we separated total revenues from service revenues. Service revenues are being impacted by the MTR cuts that are being implemented this year in line with the glide path from the local regulator. If we strip this off with -- these MTR cuts have basically need a profitability effect or very small. And also, the underlying service revenues, i.e. the ARPU revenues, were flat.

And if one considers the magnitude of the competition and also the fact that we are coming back from an inverse of this -- of the company and the operations, it's good to see that we have reached a point to have flat service revenues while we are growing our customer base. And this is -- if you expect us to see even service revenue growth, excluding MTR cuts in the coming quarters.

I think on the profitability, we mentioned that there is a one-off release from budget provision we had booked back in the COVID period. But now it looks like they are not needed, so we release them. But even without that one, the quarterly EBITDA was quite higher than last year, almost by EUR 2 million.

And for the costs, well, starting from energy, I think for this year and coming back to the last point of your question, our current contracts secure that we will have 75% of our consumption under the agreement we did last year till the end of 2023. So that's there. So all the effect we see is from the remaining 25% that is basically floating -- with floating market rates.

And on that one, I think we have seen the worst because the half 1, we compared the very high price of this year with extremely very low prices of last year because if you recall, the [ office ] in Greece, the wholesale prices start climbing as of September 2021. So while we expect to observe equally high wholesale prices in the next half, yet this will be compared with more and more higher wholesale prices in 2021.

On the other side, as I think we mentioned in the script, we -- last year, we had some one-off hits in our P&L because of the implementation cost for the separation in Romania, which were booked in our accounts and this will not be repeated this year. So that's why we are confident that we will not have cost increases in the coming months in terms of our planning. And therefore, this is why we reiterate our cash flow generation.

Now in 2023, it all depends on -- again on the part of our energy consumption, which is not under the contract, which is basically up in the market. And it remains to be seen how severe this will be. We are examining various ideas how to cover this for 2023, but we wouldn't like to expand now since we are in some negotiations.

So apologies for the long speech, but you had some questions. So I tried to answer all of them.

[Operator]

[Operator Instructions] The next question is a follow-up question from Patrick Maurice with Barclays.

[Maurice Patrick, analyst]

It's Maurice again. Sorry, if I could just -- you did touch on it, I think, in the prepared remarks, but just on the European recovery fund, just in terms of what we should be thinking in terms of timing for that would be helpful. Sorry if I missed it earlier.

[Charalampos Mazarakis, executive]

No, that's okay. For the recovery funds, I think we start seeing the first signs now that all these are being auctioned and awarded. We said that our ICT revenues, and this is [indiscernible] on ICT basically because the way it works is that most of these projects that fall under the fund, they become state initiative projects, some of also private ones. And then we bid, we win and we do the job and we book the revenues.

So ICT revenues is something that is reflecting from that direction. And we posted a very good growth in Q2 and half 1, and we expect to continue to grow this line of business. However, as -- I always like to remind when we talk about ICT is the margin of these businesses is not as high as the core business, yet it's a sticky business, and it's good to go after.

Margins in this area is probably around 20% as an average, and it varies from project to project. So this is how we look at ERF, they're good. The biggest part of the ERF is in front of us.

[Operator]

The next question is from the line of Annenkov Evgeny with Bank of America.

[Evgeny Annenkov, analyst]

I have 3, please. First, in the press release, you have mentioned that you expect growth to moderate in 2H compared to 1H this year. Can you please specify in which areas do you anticipate this slowdown other than lower growth for handset sales that obviously had a high base last year?

Second question is you're obviously enjoying very strong tourist flows, recovery in Greece. Of course, it's positive for roaming revenue. But can you maybe remind us a broader impact on your business that you see from tourist flows, like stronger demand from bars and restaurants for Pay-TV, et cetera?

And thirdly, on ICT projects, besides this recovery fund, can you please give an update on the project for Greece in new security forms? Do you think the project might be awarded already in Q3 this year?

[Charalampos Mazarakis, executive]

Thank you for the questions. Regarding the forecast for revenues, I mean our comments are always cautious because also of the challenging environment. We talked about the broadband. Also, the -- when we look at the roaming revenues and we're comparing with last year, let's remind that last year in Q2 2021, we still have COVID restrictions. So this is why we have seen this 80% increase in roaming revenues for the first half. However, comparing with the second half of last year, which was basically COVID-free in terms of restrictions, one should not anticipate to see the same range of growth. And that was the comment behind that one.

On the other side, in the first half, our total revenue growth was impeded by comparing the handsets and the equipment sale because in 2021, we had an initiative from the government to subsidize iPads and the laptops, which we're also selling. So our equipment sales were skyrocketed last year, didn't happen this year. So the 2 things are crushing down.

So if we blend all this together in 2 -- in half 2, it turns out that we expect a tremendous slowdown of what -- of the numbers we have seen in Q2. But the forecast of growth and the slowdown will come -- it will be a little bit different. This is what we tried to say in our press release in half 2 versus half 1. But overall, we -- our anticipation is that we will continue to grow.

On the ICT and the roaming, just to repeat that ICT, I think we covered before that it's resilient and recovery fund started flowing into the market, and we are winning the ICT projects. On the roaming part, we are direct recipient of the traffic. I think your question is where do tourists spend money? I think it's everywhere basically, in hotels, in food, in the restaurants. And this will also create some demand for our products, like, for example, in the hotels, they need a good Wi-Fi. So they connect with the leader of the market, which is us, and so on.

For the projects of -- the ICT project for the security is something that we wouldn't like to comment now because it's under the preparation in the auction. And as we are very cautious not to preempt any action from the owner of this project, we wouldn't like to say more things because we don't actually -- we're not really positioned to know more things.

[Operator]

[Operator Instructions] 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.

[Michael Tsamaz, executive]

Thank you all for your attention and questions and your interest in OTE. We achieved a very satisfactory performance in the first half, and we're ready for whatever challenges could come our way during the remainder of the year. We will see a nice month of August, particularly for those of you who will come roaming in our beautiful islands. And we look forward to our next meeting in November. Have a nice day for the rest of the day. Thank you very much, operator. Have a good evening.

[Operator]

Thank you, sir. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephones. Thank you for calling, and have a good evening.