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Thank you for standing by, ladies and gentlemen, and welcome to the OTE conference call on the fourth quarter 2017 financial results under IFRS. We have with us Mr. Michael Tsamaz, Chairman and CEO; Mr. Babis Mazarakis, Chief Financial Officer; Mr. Kostas Nebis, Chief Commercial Officer, Consumer Segment; and Mr. Evrikos Sarsentis, Head of IR and M&A. [Operator Instructions]
I must advise you that this conference is being recorded today. We now pass the floor to Mr. Michael Tsamaz. Please go ahead, sir.
Good morning, everyone, and welcome to OTE's conference call to review our results for the fourth quarter and full year of 2017. I will make brief comments on the period and Babis will go over our performance and financials in more detail. And then we will answer to all your questions. We ended 2017 on a solid quarterly performance in Greece, rewarding the hard work of our people throughout the year.
Focusing on the group and the full year for a moment. Our top line was down just a little over 1% or EUR 51 million, with most of the drop coming from our operations. Our Albania subsidiary was also down in the full year. By contrast, our 4 largest activities fixed and mobile in Greece and Romania all achieved increases in full year revenues. In Greece, in particular, our data operations showed strength, with revenues from retail fixed assets. Mobile sales revenues both up in the full year and they delivered particularly robust fourth quarter. This continued the good trends we have seen picking up during the year assured by growing demand, forever faster fixed-mobile data, a strong appetite for our TV offering. We're proud of this development as it results directly from our excellent networks and the ever-expanding reach of our fiber network infrastructure and has also been helped by improvements in the economy. Total revenues in Greece were down a little over 1% in the full year due to low revenues from our other operations, including international wholesale and the end of construction of the Rural Broadband project, as you know, both are low-margin activities. We are proud to have completed the Rural Broadband project on time and delivered an entirely new network of 12,000 kilometers, reaching remote areas that had no access to broadband until now. Our fixed operations did well in full year. Erosion in fixed voice is slowing year-after-year and it's more than offset by broadband activity, to where we are continuing to enforce our competitive positions. The Greek Mobile top line was driven by data and roaming and while we will be working against a tougher base in 2018, we are confident that positive trends will continue. Our attractive data bundles and our robust network support our momentum. It is really satisfying to see that our investments and efforts over the past 2 years are paying off. Demand on VDSL is strong and fueling the growth of our broadband revenues. The introduction of our vectoring high-speed solutions late in the year was well received and while subscriber numbers are still limited, it's also driving the perception of OTE as a technology leader, offering the most advanced services in the Greek market. There are no better marketing tools than positive experience of the first users to energize demand in the course of the year.
The result of this favorable elements in Greece, full year adjusted EBITDA was up in absolute terms and EBITDA margin rose by 70 basis points. In addition to steady revenues from our higher-margin activities, this reflects our continued vigilance on the cost side. In Romania, revenues in the full year were down just over 1%, mainly reflecting mobile resilience. EBITDA in the country was more impacted, largely due to higher costs aimed at sustaining our growth, notably in mobile. Conditions remained challenging in Romania, and we accelerate our initiative to improve our competitive positions. Finally, while the year was particularly tough in Albania, the good news is that the market finally saw some rationalization, with the exit of the fourth mobile operator this January. On our part, on a country basis, we'll show a return to top line growth in the fourth quarter resulting in a pickup in EBITDA margin. As we have announced, 2017 was a year of big investments into our future. To build the infrastructure, our clients need for work and entertainment. We ended the year with adjusted capital expenditures just below EUR 800 million, a guidance I'd given at the beginning of the year. Much of this due to the acceleration of our fiber investments in Greece in order to meet the schedule mandated by the regulator. New generation networks support exclusive growth of mobile data traffic investments in our TV content as well as 4G coverage in Romania account for most of the balance for our capital investments through the year. Also, as announced, this infrastructure investments impacted our cash flow generation this year, which was just above EUR 100 million in line with our largest -- latest guidance. We expect that after this big investment year, capital investments will gradually return to more normal levels, however, 2018 should still see elevated CapEx of approximately EUR 700 million as we have indicated in our release. As a result, free cash flow should increase in the full year. Currently, we're expecting to generate about EUR 300 million -- EUR 350 million in adjusted cash flow, which corresponds to an estimated EUR 260 million in reported free cash flow.
In the past, we have mainly communicated on the basis of our adjusted cash flow where the reported numbers are taking a renewed importance. As you know, a month ago, we announced a new shareholder remuneration policy. With the economic situation stabilizing in Greece and our [ best, excellent ] performance after a number of more difficult years, we proposed to the Board of Directors to resume a fair, more generous remuneration to our shareholders who have supported us during these years. We have announced that we will distribute 100% of our annual reported free cash flow, about 2/3 in the form of dividends and 1/3 in the form of share buybacks. The dividend of EUR 0.35 per share, we are proposing more than double the EUR 0.16 we paid last year takes this new remuneration policy into account. Now that has been approved, we will launch our share repurchase program within the next few days. We are glad to be able to mark our return to a more favorable climate, with a policy of more appropriate return to shareholders. We want to make sure of their confidence, not just in us, but in the recovery of our market is justly rewarded. These are my views on the year and our prospects.
Let me now turn the call to Babis for a review of the quarter.
Thank you, Michael, and good day, or good afternoon, to all. The positive trends we have experienced all year in Greece, both in fixed and in mobile, continued in the fourth quarter. Our international operations, by contrast, remained under pressure. To strengthen our existing positions and support our future growth, we pursued our profitable investment drive. We are already seeing the benefits of these efforts in our performance, not just in the numbers but also in customer satisfaction and the image of our brand in the marketplace.
Now let's look in more detail the quarter. Total group revenues amounted to EUR 998 million in the fourth quarter and adjusted EBITDA at EUR 337 million was down a little less than 2%. This led to a pretty good EBITDA margin of 33.8%, up 30 basis points. The group EBITDA margin for full year of 2017 was also 33.8%, unchanged from the prior year.
Now let's start the drivers of the top line, business by business. First, the Greek fixed line. Revenues returned to growth after this lower quarter. They were up 1.8% to EUR 410 million, with a positive performance from retail fixed services, up 1.2 points. Both broadband and TV revenues were up around 6% in the quarter, a very solid performance, whereas voice revenues were down 1.5 points, the smallest quarterly drop this year. Net additions of access lines in the fourth quarter at the market level totaled 17,000. The first positive quarterly performance of the year and we captured 10,000 lines of the total. Our good showing largely reflects the push we made with the student population offering solutions that meet their demands. It's an important market, and we hope this customer will recognize our product edge and stay with us as they move on to the next stage of their lives. It shows the part of targeted marketing and offerings, which can still add to our customer base. More generally, in the second half, we managed to turnaround the negative portability trends of the first 2 quarters of the year. Regarding broadband, we continue to make headways. We are now at the point where less than 1/3 of our fixed customer base is without a broadband connection. This remaining 1/3 also represents a unique pool of customers who can gradually upgrade. In the quarter, the total Greek market grew by 50,000 net broadband additions, and we captured 44,000, our highest quarter net additions tally since the fourth quarter of 2015. We also achieved record VDSL growth, up 43,000 subscribers in the quarter. In the full year, we added 175,000 net VDSL subscriptions, nearly twice as many as in 2016. As Michael pointed out earlier, our fiber offer for home and business offering speeds of 100 and 200 mega bps was rolled out late in the year. Takeup numbers are still modest, but it’s an important top of the line offer. In TV, we ended the year with 525,000 subscribers, an increase of 4.4% in the market that will stagnant at best. We are continuing to expect some moderate growth in Pay-TV subscriber numbers and revenues over the next year. We renewed our contract for the UEFA championships throughout 2020, 2021 season, and we are working on other championship games to strengthen our content offering and competitive position. We also have the resilient performance in our business-to-business activities in the quarter and full year, despite the lack of big government projects and delays in public tenders. We had a healthy pipeline from the previous year and won a number of model projects from both private and public players. ICT revenues were up double digits in the fourth quarter to EUR 49 million, and we ended the year up EUR 5 million at EUR 161 million, a very satisfactory performance under the circumstances. We are working hard to stabilize our customer base, offering solutions that meet the requirements of business customers in terms of pricing as well as technology. Domestic wholesale revenues were up 3% in the quarter and 1% in the full year. This was largely due to an increase in co-location of revenues, while conversely, the negative impact of the LLU target repricing, which had an effect in the past 2 quarters was attenuated in Q4. Let's now turn to Greek Mobile. Revenues were a little over EUR 313 million, up more than 2%, the best performance in quite a while. The growth in service revenues up close to 5% compared to the fourth quarter of last year was even more impressive and confirmed acceleration we have recorded all year long. If you recall, service revenues turned positive between Q1 and Q2 and have been growing at the faster and faster pace in Q3 and now in Q4.
In absolute terms, the increase in service revenues amounted to over EUR 10 million in the quarter. More than half of that increase is due to visitor roaming revenues. The balance was due to yet another double-digit increase in data revenues. The overall Greek market -- mobile market is clearly improving, with a return to total service revenue growth after several years of erosion. But we are also leveraging all the world of resources we have been putting into our networks, particularly when it comes to data. As a result, we are seeing improvements in related KPIs across the board, smartphone penetration is now reaching 2/3 of ARPU base. Several of the overall base are now active data users et cetera. Through our data bundles, which offered lower prices per megabyte, we are seeing a definite uplift in ARPU in the service revenue. We are confident that these trends are here to stay, and we will continue doing what we can to encourage them. It's worth noting, however, that at least on the visitor roaming side, we are going to start feeding traffic comparisons by the middle of this year.
In Romania, combined revenues were virtually unchanged at EUR 266 million. Of the EUR 160 million revenue from Romania telecom fixed were down nearly 4% in the quarter. Revenue from retail fixed services declined roughly 8%, a drop commensurate with the prior quarter. We experienced negative trends in voice, broadband and TV similar to Q3. In Q4, unlike the first 3 quarters of the year Telekom Romania was not able to offset the drop in retail fixed services with improvements elsewhere. Revenues from its fixed-mobile conversion solutions did grow sharply, up 38% to over EUR 15 million. However, other revenues were down significantly due to the end of the RoNet project funded by the EU, which provides even coverage in rural areas. We have accounted for EUR 9 million in revenues in the same quarter last year. The fixed-mobile conversion service passed an important milestone, exceeding 500,000 customers at year-end, an increase of nearly 50,000 in the quarter alone and 170,000 in the full year. Wholesale revenues in Romania fixed, mainly from the international traffic were up 32% in the quarter and revenues from system solutions were double-digit down. At Telekom Romania Mobile, total service revenues experienced strong growth in the quarter, up 13% to EUR 84 million, reflecting the successful campaign of the new postpaid bundles under the netliberare offerings. As a result, they closed the year roughly unchanged. The underlying trends are still on the part of gradual improvement we have seen since the beginning of the year. In particular, we posted another strong increase in data and digital revenues. We are continuing to feel pressure in the low end of the market, and we are focusing our investments on higher ARPU segments where we are more able to monetize our 4G infrastructure. If our commercial offerings in these segments remain successful, this is where we'll focus our CapEx as well. In our mobile operations, in Albania, the signs of stabilization we have talked about are materializing. Service revenues, which were down double digits in the first half of 2017 were exactly flat in the fourth quarter, including a 44% increase in data revenues. Total revenues were also unchanged. Assuming no big regulatory changes, we expect that with the exit of the fourth operator in mid-quarter 4 of last year. Some rationality will return to this market.
Finally, rounding out our top line review. Other group revenues were down 32% or EUR 47 million. However, this more than offsets the improvements made in the rest of the group. As we stated, this drop is due to the end of the construction phase of the Greek Rural Broadband project and lower international traffic shows the impact of this revenue down from the profitability is very, very limited. Now let's move to the rest of the P&L. In the fourth quarter, group adjusted EBITDA was EUR 337 million, down EUR 6.5 million, or less than 2%, from the fourth quarter of last year. We have strong EBITDA growth in Greek fixed, up nearly EUR 11 million, but all other segments were flat or down slightly for reasons I will explain.
On a country basis, adjusted EBITDA in Greece was down 0.6% ending the year positive at EUR 1 billion -- EUR 1,135,000,000, up 0.5 points. Group adjusted EBITDA margin was at 33.8%, was up 30 basis points for the quarter. In Greece, despite the one-offs in mobile that I will explain in a minute, adjusted EBITDA margin rose 130 basis points to a strong 40.8%.
As a result, the full year EBITDA margin from Greece was 40.2%, it's best performance since 2013 when we started tracking our performance by country. In Greece, adjusted EBITDA from the fixed-line activities jumped to 6.4% to EUR 181 million, with an associated margin of 44.1%, up 200 basis points. Total Greek fixed operating expenses, excluding depreciation, amortization and one-offs, were down 1.6%, with a double-digit decline in personnel expenses reflecting the recent voluntary extra schemes and the sudden reduction in commercial and network maintenance. After a couple quarters of health increases, our adjusted EBITDA from Greek Mobile dropped in Q4 due to a number of one-offs that do not call into question the longer-term positive trends. This quarter, we suffered losses of EUR 7 million related to slow-moving inventory, while expenses were also affected negatively by increase in the connections and roaming as well as increased activity in call centers during the Christmas period. Total OpEx, excluding depreciation, amortization and one-offs, was up 6% this quarter. Consequently, the quarter's EBITDA margin for Greek Mobile was down 250 basis points to 30.1%, but over the full year, it was down just 10 basis points, at 33.6%. At Romania fixed, adjusted EBITDA dropped 7.8% to EUR 26 million and the margin was 16.3% in the quarter. The drop in retail revenue was only partly offset by lower rent and utilities. In Romania mobile, adjusted EBITDA and margin fell despite the high revenues, partially due to distribution expenses that were significantly higher as a result of the netliberare launch, the cost of goods sold and bad debt provisions.
Finally, reflecting the top line stabilization of the Albania mobile business, the adjusted EBITDA is marginally recovered somewhat in the quarter. All told, total group operated expenses excluding depreciation, amortization and one-offs amounted to EUR 677 million, down 5% in the quarter. At EUR 348 million, total Q4 depreciation, amortization was up over 30%. However, the EUR 80 million increase year-over-year is due to goodwill and asset impairment primarily in Albania. Net financial expenses totaled EUR 20 million in the quarter. In the full year, they were down slightly at EUR 131 million. Income taxes, at EUR 27 million were down nearly 39%. On a reported basis, due to the impairment I mentioned, we incurred a net loss of EUR 53 million. On an adjusted basis, group net income for the quarter dropped by 28% to EUR 37 million. In the 12 months of the year, group adjusted net income dropped by 4% to EUR 193 million. Adjusted net operating cash flow was EUR 308 million for the quarter, down about 27% from last year. As I have pointed out in prior calls, the main drag on operated cash flow comes from income taxes as in Greek fixed, we have to pay both for the taxes of the current year and an accrual for the following year, which will be offset in the coming periods. CapEx, excluding spectrum, amounted to EUR 213 million, up 52% from Q4 last year. On a full year basis, CapEx was up 27% to EUR 798 million in line with our most recent guidance. As you know, we have completed in the third quarter, ahead of schedule, our sale of the fiber to the cabinet infrastructure required by regulator for 2017.
We expect CapEx levels to gradually return to normalized levels, meaning that 2018 we still be higher than normal at about EUR 700 million, and we are still investing heavily in fiber to the cabinet this year. Adjusted free cash flow was EUR 95 million in the quarter and EUR 105 million in full year, also in line with our guidance. With CapEx slated to go down, going forward, we have indicated that we expect adjusted free cash flow of EUR 350 million and reported free cash flow at EUR 260 million for 2018. As you know, it's on the last number, the EUR 260 million that we have based our dividend payout of about EUR 170 million or EUR 0.35 per outstanding share, with a balance of about EUR 90 million going to our share buyback program. And with this, we are now ready Michael, Kostas and myself, and other colleagues are on the table to take your questions.
Operator?
[Operator Instructions]
Operator, do you want to lead the questions?
Luis. Hello?
Can you hear me?
Who is this?
This is Luis Prota from Morgan Stanley. I'm sorry, I couldn't hear the operator giving me access to the Q&A, sorry. I have 2 questions. First is, on Romanian mobile and a very strong turnaround in revenues sequentially from being down the previous quarter to up 14% this quarter, 13% in service revenues. You were mentioning the launch of new bundles, postpaid bundles, but if you could help us to understand why the turnaround has happened now when these bundles were launched? What are the implications in terms of takeup ARPU? How sustainable this is? So any information you could provide to help us to look into what might happen in 2018 would be very useful. And the second question is also on mobile, but now in Greece, where the fourth quarter margins have been weaker than what I was expecting and I guess, consensus as well. What's the reason behind that? Anymore commercial spending, mobile subscribers were coming down, so I'm not sure whether that was the reason, but what should we expect in terms of margins in the Greek Mobile space as well?
Okay. For Romania, what we saw in Q4 is a kind of first signs of recovery -- stabilization recovery, which mainly comes from the launch of the so-called netliberare Phase II programs, which capitalize on the 4G offerings. Now that we have completed our rollout of the 4G, own rollout of the home network, and we launched the series of the postpaid bundles in -- right after summer. There was a lot of marketing campaign, which took its toll in the commercial costs in the quarter. However, we posted very high number of gross additions for the quarter, close to 60,000 gross additions, while a normal quarter -- previous quarter were equaling in the area of 40 -- 75 to 40,000 customers. The difference in the new programs are that they are much more competitive in terms of value for money, meaning the multiaccess fee and buckets of data offered. Profitability wise, they are not very far away from the previous set of bundles. Difference is that they give much more flexibility to the consumers to utilize the 4G network. So the initial reception of this big campaign on which we spent, as I said, a sizable amount of commercial cost, which are -- if I take in the install in the margins for the quarter, the reception was very good from the market, and we hope that this will also continue in 2018. It's not the end of the game because as you know we have been fighting to find the right mix and balance of commercial offerings for most of 2017. But the Q4 performance, also supported by higher roaming revenues, but that was only a small part of the increase that we posted, promise that we can shape the 2018 quarters at a much more optimistic way. The other thing I have to say is that Q4 2017 is compared with Q4 2016 and if you recall, in our previous discussion, Q4 2016 was a really weak quarter. So the comparison also is supported by the fact that we compared ourselves with probably the weakest quarter of the mobile business in the past couple of years. Now for Greece, I will invite Kostas to give us a nature of the performance on the service revenues.
Yes. As far as the mobile performance is concerned in Greece, overall, we are fairly pleased with the market development. We see the market turning positive in 2017. We estimated around 2 percentage point versus contraction for quite a lot of years. As far as we are concerned, we had a strong finish in the year. Q4 closing at roughly 5%, taking out the one-off roaming positive effect, this is down to 2%. And we believe that this positive momentum will be observed during 2018 as well. As far as the margin is concerned, this has to do with the one-off provisioning of some slow-moving inventories that we realized in 2017.
Next question comes from the line of Jonathan Dann, RBC.
I've got 3 if that's okay. One is on fixed-mobile convergence in Romania. Could you just remind us roughly, how many mobile sims are attached to each of the -- on average, to the 500,000 FMC customers? And then do you have a similar sort of figure relevant to the Greek market? And then my second question, again on Romania, with Vodafone and Liberty potentially pursuing a merger, do you see that opening up any possibilities or any risks in Romania?
Okay. Regarding your first question, I can say that the ratio between fixed-mobile convergence and mobile, let's say, customers is roughly 1:1. So we have one sim for each player -- FMC player. Regarding your second question, which is the possibility for Liberty and Vodafone. This is something that is in the market where consolidation is -- this has been around for a long time. We don't particularly view different change in the game if there is such a part of consolidation. We are already in the game of FMC as we -- as -- comes out from your previous question and our focus wouldn't change after such merger. On the contrary, we believe that it would further boost the FMC perception as a very nice service to have if more than one player focus on this area as well. Regarding the Greek fixed.
Yes. As far as the equivalent number for Greece, more than 40% of the contract sims are part of FMC propositions.
And the next question comes from the line of Georgios Ierodiaconou.
Just have a question around the pricing moves you had in Greece in the fourth quarter. I believe you mentioned in the last call some of the changes that were going on at the time in terms of I think there was some shifts in the mobile tariff plans in November and I believe there was a change in the monthly line rental as of the 1st of December, if I'm not mistaken. Do you mind just running us through just to give an understanding of what benefits you had from pricing in the fourth quarter and what to expect going into 2018? And maybe a question around content. Do you mind just reminding us a bill versus ratio around the Greek content rights beyond 2018 in terms of the timing and any background of the things that has been discussed recently?
Okay. With regard to the first question on pricing, this is normal business for us. We're constantly reviewing and adjusting our propositions as well as price plans, taking into consideration the competitive dynamics, the regulatory framework as well as the growing customer needs for more time, data and higher speeds across the fixed and mobile segment. In parallel, we are driving a lot of value-creation initiatives to ensure a better pre and postpaid balance in the mobile side and trying to accelerate the monetization of our 4G, 4G+ networks under the scope of a more-for-more data strategy and base development.
And regarding the content rights of Greek sports, I'm afraid there is not much to say right now. Of course, we are evaluating the developments in the market and if more of the rumors are coming into the -- on our table, we will evaluate and we will act accordingly. For time being, there's nothing else we can say because the situation is still premature.
[Operator Instructions] Next question comes from the line of Luis Prota of Morgan Stanley.
I have one more question. It's on the difference between the adjusted free cash flow of EUR 350 million for 2018 and the reported one of EUR 260 million. That -- those EUR 90 million difference, could you give us some light on what's the difference coming from?
Usually, the items in this difference are expected payments and the other big item there usually, is one-off restructuring cost in terms of voluntary exit schemes or similar programs, which -- for this year, we forecast the 2 of them to be roughly EUR 90 million.
It is -- what spending regarding the spectrum? What are you expecting in terms of the spectrum in 2018, if I can ask?
The payments -- the anticipated payments are about half of this size, half of the difference.
Stam Draziotis.
Stam, do you want to go ahead?
A few questions for my side. Firstly, just on the outlook for 2018. Based on the comments in the press release, do I understand correctly that you are basically looking for EBITDA growth at group level this year for the first time after basically, a decade? And related to that, how confident are you that Romania will finally stabilize in 2018 in terms of profitability? So that's the first question. And second question, could you maybe help us understand a bit the degree of the capital intensity of your business in the future i.e. what sort of CapEx level should we anticipate from 2019 onwards? Because you will be effectively -- you would have effectively be done with the bulk of the fiber to the cabinet rollout, so just wondering is there any reason why CapEx will be higher than I don't know EUR 600 million, EUR 650 million, for example. Do you expect pressure in the future by the Greek regulator regarding Fiber-to-the-Home?
Regarding to your first question, in terms of outlook, our outlook doesn't say anything else but the fact that the way we ended up the 2017 i.e. with the good performance in Greece and the first signs of stabilization in the international markets continues to be our outlook for the coming quarters, shouldn't, of course, do have any major disruption from external factors. So whether this translate into positive or higher EBITDA, this will also depend on how well this numbers are executed throughout the year. But we are positive that -- and we are optimistic that what we have seen in the last months of 2017 prescribe for what also we will see in most of 2018. Romania remains challenging. I think it was clear from our release today that we had a good reaction on the new initiatives on mobile. In fixed -- in the fixed segment, we continued to post the FMC propositions in order to be able to offset the loss from that additional revenue sources. This balance for the time being is not squared, and we need to wait for the next quarter as FMC is growing to square this difference as well. So we have the gradients for the outlook for 2018. Now the success of most of what we have seen especially in Greece comes out of the intense capital expenditure investment, which peaked in 2017 is also higher-than-normal EBITDA in 2018 at EUR 700 million. Before returning to normal levels, which is in the area of EUR 630 million to EUR 650 million, depending on the year. We think those CapEx envelopes, we have the necessary, I would say, money in order to continue investing in the next generation access networks both in fixed and mobile. At least for the time being this is -- for the fiber, it's high-speed fiber in terms of VDSL vectoring, and we're also testing the situation where if it makes sense to deploy for commercial reasons Fiber-to-the-Home in certain areas, but dominantly for time being on the B2B, business to business, but also on the B2C, on the business to customer. So it's a mix. The CapEx investments are monetized as we can see also from the margins and that would be the mixture of the recipe that we are going to follow also for 2018.
That's very clear. And just a quick follow-up if I may on the Greek TV. I guess you probably cannot answer this, but I'm just trying. So from your understanding will other operators including you be able to negotiate separate bilateral agreements with the football clubs after the termination of the agreement that your Pay-TV competitor had with the Greek Super League?
As I said, we're waiting to see what will be the situation in the market. I cannot answer your question simply because I don't know whether -- what will be the circumstances. We're waiting to clear the landscape in order for us to be able to assess if it makes sense to convince to any discussions.
If you want a hypothesis, our hypothesis is that probably -- no one will probably sign up with the 4 major teams. But this is a hypothesis. This is a guestimate.
The next question comes from the line of Jonathan Dann.
Please go ahead with the question.
How did you come at -- how did you arrive at the 2/3, 1/3 split of dividends versus buyback?
Well, I guess, it would have be a number, right, so it had to be a number.
We wanted to have happy shareholders.
Okay. And is there a possibility to use leverage in future years to accelerate shareholder returns? I know you've already gone from a fractional payment to 100% to then ask for 200% is sort of childish, but I am...
Jonathan, this is Michael speaking. You know that -- as we said for quite a few years, we're very, very prudent in the remuneration and the dividend, let's say, payout and the reason for this was because of all the circumstances and the crisis that we had got in Greece, plus the investments and the transformation of the operation. We continue to be prudent. We don't want to leverage -- to increase leverage of the company. We feel that the remuneration policy that we, for which we have got approval, and we announced is a very good remuneration policy for our shareholders, given the circumstances that exist. And although we see definite recoveries of the Greek economy, we're very confident and optimistic about it, we wouldn't consider increasing significantly the leverage of the company because we believe that with the current cash flows, we can satisfy the conditions because -- number one condition is to continue investing in capital expenditures and infrastructure in order to stay competitive and advance -- and particularly, advancement of -- technological advancement of the country plus this investments ensure our future, let's say, competitiveness and the same time, while maintaining a low leverage, have a very positive -- a good average, a good yield policy for our shareholders. And we believe that with the combination that we have announced the 2/3 and 1/3, this satisfies all the aspects and the conditions we have set. So for the next, let's say, 2 or 3 years, what I can say to you is that we will be very hesitant to increase the significant leverage of the company. So you have to look into the same leverage as we have.
And a slightly tongue-in-cheek question. Would you look at going back into Bulgaria, if Telenor's selling Globul?
Sorry?
Would you -- I understand Telenor might be selling Globul in Bulgaria. I know you sold it to them?
Actually, what we have heard is that Telenor is selling all the operations in the Balkans. So we don't really know what are the reasons why they have decided to do this. We observe it, but honestly, we don't have any opinion to say on this.
And there are currently no further questions.
So gentlemen and ladies, thank you very much for your attention and your interest in OTE. We look forward to talking to you on the occasion of our first quarter results, next time. And in the meantime, Evrikos and Yiannis are available to answer your questions. So again, thank you, everyone.
That does conclude the conference for today. Thank you for participating. You may all disconnect.