Hellenic Telecommunications Organization SA
ATHEX:HTO
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Ladies and gentlemen, thank you for standing by. I am Gael, your Chorus Call operator. Welcome and thank you for joining the OTE conference call on the fourth quarter 2019 financial results under IFRS. We have us -- with us today, 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. [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. Mr. Michael Tsamaz, you may now proceed.
Good morning or good afternoon to all of you. I'm pleased to welcome you to our fourth quarter and full year 2019 earnings call. 2019 has been a successful year in every respect. The past few weeks have also been important in defining the way we are going to work in the future. We have reached a new Collective Labor Agreement, ensuring benefits for our staff, but also the flexibility we need to create a more agile organization and to serve evolving customer needs. We're defining new ways to operate, more flexible, more efficient. Digitization is really impacting the way we work and serve our customers, but also in the way we generate our revenues and manage our costs.
Alongside our traditional strengths, we are entering new fields. We launched the delivery service, our gaming platform expected to go live in the second half of the year, pending the granting of license. And our payment platform is planned towards year-end. And we are continuing to grow in ICT, taking advantage of the opportunities created, in particular, by the state's needs in this area. So 2020 is a critical year for OTE as we aim to continue improving our financials and set a new base for sustainable growth.
Our guidance reflects our confidence in our strategy, and 2020 is a challenging year, as we expect significant outflows for restructuring in Spectrum, salary raises and renewed competitive pressure. Yet, we are committing to a substantial increase in remuneration to our shareholders. This comes as a result of our improvements we expect across the board. In EBITDA, due to growth inefficiencies. In CapEx due to our planning, having completed the FTTC rollout and take into consideration our Fiber-to-the-Home expansion. In financial expenses, as we take advantage of declining interest rates to the financial debt. And in taxes, as rates have been reduced.
Let's look back at 2019 for a moment. We finished a very solid year with a very solid quarter, and we're pleased to see that the strategy is bearing fruit.
I'll let Babis to go over the details, but I would like to share with you some of the most important highlights of the full year. In Greece, Fixed Retail sales revenues were up more than 2% and Mobile Service revenues rose 3%. The number of OTE broadband subscribers increased almost 6% from the level at the end of 2018. And the number of fiber subscribers jumped 40% to 740,000, with nearly 90% of them on speeds of 50 mega bps or more.
Our strength in mobile data is also paying off. In 2019, data accounted for more than 1/3 of our Greek Mobile Service revenues. Mobile data traffic nearly doubled in the fourth quarter and was up 65% in full year. Our more-for-more offerings enable us to lower prices while better monetizing our investments. In terms of per user data consumption, we're getting closer and closer to our European averages, and our networks are responding smoothly to ever-increasing volumes. I could go on and on. Let me just add that we have seen in Q4, the inflection in postpaid numbers that we expected and that we flagged -- had flagged last quarter.
If you add to that picture a solid performance in ICT projects and a slowly but steadily improving economic environment, you'll understand that we are starting the year ready to face what we expect to be a highly competitive landscape in 2020.
In Romania, we had a sharp improvement in the final months of the year, showing that our initiatives to stabilize our operations are on the right track. The full year, total revenues from Romania rose 5%, boosted by significant ICT contributions in the fourth quarter. Adjusted EBITDA was up more than 5%, and the free cash flow of our Romanian activities improved significantly during the year after a difficult 2018.
On the financial side, we delivered robust profitability through the year. In full year 2019, our EBITDA margin was 34.9% for the group and 41.5% in Greece. Free cash flow generation was also strong, in line with our forecast, as we ended the year up nearly 42% to EUR 488 million. We delivered the reported free cash flow we need to support our shareholder remuneration policy.
But beyond all these positive numbers -- really on the success of our digitization transformation, I would like to insist to conclude my remarks. While we were gone -- we have gone a long way in our metamorphosis from a former state monopoly to a leading competitive technology company, there's still a lot to do. We can never afford to stop because technology and the markets don't stop. During the 10 years since the beginning of the crisis, we continued investing nearly EUR 5 billion in Greece alone. We strengthened our balance sheet and significantly reduced our cost base. This is why we're in good shape and as we start this new decade. We now need to define our vision for the next 10 years.
And we are once again examining every facet of our organization to figure out how to do things better, faster and in a more cost-efficient manner. The addition of Collective Labor Agreement is a positive starting point. To further enhance our agility, we're looking, in particular, at transforming our customer-facing functions into separate wholly owned entities within the OTE family. In the immediate future, we are confident in our ability to deliver a solid 2020 performance.
Thank you for your support and confidence in OTE. And now I will turn the call to -- over to Babis to review our results in the quarter and in 2019 as a whole. Babis?
Thank you, Michael. Good day to all of you, and thanks for being on the call with us today. Group revenues this quarter totaled EUR 1.041 billion, up about 7% compared to the fourth quarter of 2018. A sizable portion of the EUR 68 million increase in revenues this quarter came from Romania, but we also achieved solid growth in our domestic operations as well. Without the revenues in Greece -- total revenues in Greece grew by 2.6% or more than EUR 19 million to reach EUR 756 million, with both fixed and mobile posting higher sales. In Romania, completion of ICT projects was the main driver of revenue growth. As a result, revenues were up more than 19% or nearly EUR 47 million to a total of EUR 289 million. Revenues remained under pressure, though signs are pointing in the right direction, particularly in mobile.
A few words on adjusted EBITDA, starting with a reminder I need to give you one last time this quarter. We are commenting the EBITDA numbers before IFRS 16. Starting next quarter, our focus will shift to adjusted EBITDA after leases or AL. We have provided you with the full quarterly series during 2019, so that you have a clean base of comparison going forward. So before IFRS 16, the increase in group adjusted EBITDA this quarter was nearly EUR 31 million or 9.4% to EUR 356 million. Of this total, more than EUR 304 million came from Greece, up 1.3%. Adjusted EBITDA in Romania more than doubled to nearly EUR 52 million, reflecting the particularly depressed base of comparison in last year's quarter. The group's Q4 adjusted EBITDA margin was 34.2%, up 80 basis points compared to the same quarter of last year. In the full year, Group adjusted EBITDA margin was resilient, up 20 basis points, with Romania profitability roughly stable and a solid 60 basis points in Greece to 41.5%.
Let's focus on our performance now in Greece. Revenues from Greek Retail Fixed Services rose 1.4% in the quarter and 2.2% in the full year, a very satisfactory performance fueled by broadband, which posted growth of 8% in the last quarter. Growth in Mobile Service revenues was even more impressive, up 5.9% in the quarter and 3% in the full year. So our core customer business generated additional revenues of more than EUR 16 million in the fourth quarter and more than EUR 48 million in the full year compared to the levels achieved in 2018. With regards to Retail Fixed Services, the growth in broadband services was consistent throughout the year, around 7% to 8% in each quarter. Our reach, our liability and our technology enable us to monetize the high-speed infrastructure we have put in place. TV revenues for daypart contracted slightly this quarter.
TV revenues remained positive in the full year, and we are working on bundles and solutions to consolidate our positions. Voice finally, is relatively stable, both on the quarterly and full year basis. The total Greek market added 24,000 access lines in the quarter, and we were responsible for about 1/3 of these additions. Over the year, both the market and our subscriber base were roughly stable. We had a strong -- a very strong Q4 in terms of broadband additions, with another 37,000 new connections. Over the year, we added about 110,000 connections and crossed an important milestone, 2 million subscribers. OTE are now accounted for the bulk of the growth in the market.
Regarding our Greek fiber customer base, we are continuing to see solid growth. In Q4, we added another 47,000 connections, bringing total customers at year-end to 742,000. In the full year, net fiber additions totaled 211,000, an increase of 40%. As you know, we are nearing the completion of our capital deployment, and we added only a few dozen cabinets in the quarter for a total of nearly 15,800 across the country. Nearly 90% of our fiber customers now get speeds of 50 mega bps or more to be compared with only 52% at the end of 2018. Speeds in excess of 100 mega bps represents 7% of the base from almost 0 a year ago, and we now cover over 150,000 customers with Fiber-to-the-Home.
In TV, we added another 6,000 subscribers in the quarter, 13,000 over the year, for a total of 555,000. TV revenues were down slightly year-on-year and sequentially, reflecting the intensification of competition in that area of the market. We have a series of ambitious projects for 2020 to strengthen our TV offering and further develop our customer base, including entry-level triple play bundles and possible add-ons. ICT revenues tend to be higher in the fourth quarter of the year, and 2019 was no exception, with a sharp increase even when compared to Q4 in the prior year. A highlight of the quarter was a delivery to the Greek state of the domestic portion of the European
112 emergency alert platform encompassing sophisticated geo-location services.
Now let's turn to Greek Mobile Service revenues, which posted -- they surpassed year-on-year increase in over a decade, in the fourth quarter, up 5.9% to EUR 236 million. Prepaid revenues were up double digits, once again, just under 11% this quarter. And prepaid ARPU remained robust, reflecting our strategic initiatives in this segment. Over the year, our prepaid ARPU was up almost 24%, reflecting our commercial development actions and the consolidation of multiple low-ARPU SIMs. But the salient feature in Greek Mobile this quarter is a return of postpaid in the positive territory, up 1.5%, the first quarter of year-on-year growth since half one 2018. This is due to the anniversary of regulatory measures in the prior year as well as our proactive base development moves. Growth in both pre and postpaid was fueled by our more-for-more data strategy. During the holiday season, we ran a very successful campaign, enabling subscribers to select a 10-day period of their choice during which they benefited from unlimited data. This promotion could only be activated through our mobile apps, now used by 2.9 million people. It had a huge impact on traffic in December, with an average of 4 gigabytes per user, twice the level in the same period the year before.
And it's important to note that our network performed beautifully during this high-usage period. We will continue working on initiatives to boost data usage and bring it in line with European averages. Year-on-year, total data traffic was up 89% in the quarter. The number of active data users continued to increase, up 9% over Q4 2018, and data revenues were up 32% in the quarter and 24% in the full year. All told, blended ARPU was up 12% in the quarter and 10% in the year driven by prepaid. While we expect the favorable trend in pre and postpaid to continue in 2020 as well as in Fixed Retail, we will be facing a tougher comparison base, notably in prepaid. In addition, the possible repercussions on summer tourism from the current coronavirus epidemic creates some question marks, while the potential activation of a new MVNO offer may cause some disruption.
On the Greek wholesale front, revenues were up nearly 4% in the quarter and over 2% in the full year, primarily due to fiber adoption by competitors' subscribers commanding higher rates. Increased operating expenses before IFRS 16, and excluding depreciation, amortization and one-offs, were EUR 454 million in the fourth quarter, up 2%. In the full year, they were roughly unchanged. Personnel expenses were down more than 3% in Q4. For the full year, they were up 1% in comparison, with an exceptionally low level in early 2018 due to an adjustment of staff retirement indemnity provision.
Excluding this one-off, full year personnel costs would be down more than 4%, in line with our expectations and reflecting the benefits from our continuous voluntary exit programs. Altogether, total adjusted EBITDA in Greece, before IFRS 16, amounted to EUR 304 million in the quarter, an increase of 1.3%. The Greek adjusted EBITDA margin was 40.3%, down 50 basis points, excluding, however, EUR 6 million in one-off litigation income, in Q4 2018, the EBITDA increase would have been in line with the first 9 months, and the EBITDA margin as well. In the full year, Greek adjusted EBITDA was up 3.4% and the margin up 60 basis points at a strong 41.5%.
Turning to Romania, where we are seeing now further signs of stabilization across our operations. The outlook is clearly more positive. Total revenues in the country stood at EUR 289 million, and we are up EUR 47 million or close to 20%, fueled by a sharp increase in ICT billings in the last quarter. But even if we exclude this factor, revenues were roughly in line, marking an inflection compared to earlier trends. Revenue from Retail Fixed services exceeded EUR 55 million, down a little over 5% as revenue erosion continues to narrow. Broadband revenues were up high-single digits and TV revenues were up marginally, but this was not enough to offset the drop in voice revenues.
At EUR 75 million in the quarter, Mobile Service revenues were down less than 1%, also showing a steady pattern of sequential quarterly improvements since the beginning of the year. While still highly competitive, the market environment in both fixed and mobile is gradually getting a bit rational, but we have been able to improve pricing in recent -- in certain segments in recent periods. In the key fixed-mobile convergent segment, the company continued to grow. The FMC service now serves 847,000 customers, up 17% year-on-year. FMC service revenues increased by 25% in the quarter as we extend our leadership in this segment. The fixed-mobile substitution product, or FMS, launched in September 2019, also proved highly popular and has already attracted 25,000 satisfied customers after just a few months in existence in areas where the copper network is not competitive. ICT revenues were up largely on public sector contracts, including a project to provide ethernet and Wi-Fi services to schools across the country.
Wholesale revenues in daypart were down 19% at EUR 32 million due to lower transit traffic. Total Romania operating expenses before IFRS 16, and excluding D&A, depreciation and amortization and one-offs, were up in the quarter, largely reflecting higher variable costs associated with ICT projects. Total adjusted EBITDA in Romania before IFRS 16 was EUR 52 million, more than double the $25 million achieved in the fourth quarter of 2018. The EBITDA margin was 17.9%, marking a continuous improvement quarter after quarter this year. We expect this trend to continue in 2020 as we reap the benefits from our cost transformation program named cash flow growth, which goes hand in hand with our operational transformation. Through outsourcing, automation and the redundancy programs, we were able to reduce our headcount by more than 20% last year to just over 5,000 people.
Now let's turn to the rest of the -- of our financials. The consolidated group adjusted EBITDA before IFRS 16 of EUR 356 million was 9.4% higher in the fourth quarter of 2019. As a result, full year group adjusted EBITDA of $1.364 billion was up a solid 3.6%. The adjusted EBITDA margin was up 80 and 20 basis points, respectively, in the quarter and full year. Total group operating expenses before IFRS 16 and excluding depreciation and amortization and one-offs, amounted to EUR 710 million, up 5% compared to the fourth quarter of 2018. In the full year, they totaled EUR 2.592 billion and were up just 1%, deflecting all the structural initiatives we have implemented to cut our fixed cost base and transform the entire organization.
Group depreciation and amortization was EUR 533 million in the fourth quarter, nearly double the prior year level, reflecting impairment of several Romanian assets. In the full year, depreciation and amortization was up 60% for the same reason. Interest expense was down 7% despite the implementation of IFRS 16. Excluding this effect, the decrease would be steeper, reflecting lower debt and refinancing of all the higher coupon bonds. Adjusted net debt before IFRS 16 totaled EUR 649 million at year-end, down more than 12% from 2018 year-end level. Adjusted net debt to trailing 12-month EBITDA was 0.5x at the end of December. Due to the impairment I mentioned, earnings before taxes were negative EUR 186 million this quarter versus positive earnings before taxes of EUR 94 million in the same quarter last year.
We are also showing the negative income tax of EUR 6 million, reflecting changes in the deductibility of past bad debt provisions in addition to lower corporate income tax rates in Greece. Adjusted net income was EUR 124 million in the quarter, more than double the level of the same quarter of 2018. For the full year, adjusted net income of EUR 410 million rose 46%.
Capex. Capex excluding Spectrum, was EUR 875 million in Q4, down 23%. Adjusted CapEx in the full year was down 6% at EUR 662 million, roughly in line with our EUR 650 million guidance. Adjusted free cash flow was EUR 159 million in the quarter, up 43% versus EUR 111 million in the last quarter of 2018. In the full year, adjusted free cash flow was up 42% to $488 million ahead of guidance. Reported free cash flow was EUR 152 million in the quarter and EUR 420 million in the full year. As we mentioned in last quarter's reporting, Spectrum payments of around EUR 50 million we initially expected to incur in 2019 have slipped to 2020. Leaving this factor aside, reported free cash flow was at 407 -- EUR 357 million, slightly ahead of our EUR 350 million guidance. So all in all, we have ended a solid year with a good quarter, and we are pleased with our progress in Greece, both operationally and financially.
On Romanian operations, they are responding well to the initiatives we are taking, and gradually we are getting them back on track.
A few words about our guidance for 2020. We expect to observe about EUR 260 million in one-off payments encompassing Spectrum acquisitions as well as restructuring charges. Adjusted CapEx should be down by approximately 10% to roughly about EUR 600 million, somewhat below our normal run rate. We expect adjusted free cash flow to increase by about 25% during the year to a total of EUR 610 million. And therefore, reported free cash flow should be about EUR 350 million. With EUR 50 million of planned Spectrum payments slipping from '19 to '20, we are planning to distribute EUR 400 million to OTE shareholders in 2020. As you have seen, we have proposed to raise the dividend to EUR 0.55 per share, with the balance of the distribution, about EUR 141 million, in the form of share buybacks, in line -- in fully line with our stated 2/3, 1/3 shareholder remuneration policy.
This concludes my remarks. Michael, myself, Panayiotis and all our colleagues are on the table, are now ready to take your questions. Operator?
[Operator Instructions] The first question is from the line of Draziotis, Stamatios with Eurobank Equities.
May I start with one on Romania? We saw a very strong quarterly performance there, as you said, we actually saw quarterly EBITDA effectively returning to a level not seen since, well, ages ago. Just wondering, to what extent do you think that this performance, obviously, taking into account seasonality, is sustainable? And the other obvious question here is, if you can share any thoughts as to your strategic options in the country, there were some press reports a few weeks ago, referring to a meeting between Telekom Romania and Romanian government officials. Is the -- effectively, I'm just wondering whether the crystallization of value from Romania is a theme for 2020, taking into account the political landscape there? So that was my first question. A rather long one.
And secondly, on free cash flow. You mentioned this guidance for 2020 adjusted in excess of EUR 600 million, you talked about EUR 260 million one-offs. Just wondering if we were to assume that indeed the dilution will be EUR 206 million this year, incorporating both voluntary exit scheme payments and Spectrum license costs. Assuming you are done with Spectrum, what would be the gap between adjusted and reported free cash flow, which you would consider normal, going forward, please?
Thank you for the question. So let's start with Romania. I think what we experienced in Q4, setting aside the various one-offs which I think they were very clearly described both in our press releases and the -- in the speech today. It's the continuation of the effort to restructure, on the one hand, the cost base of the company; and b, to become as competitive as possible in the market. And this -- the first one, the restructuring efforts are ongoing, and they were, as we said, a big chunk of that was completed in the second half of the previous year. And we will see the results coming -- going forward. And that was more on our control. The competitiveness of the company in the market is an ongoing process. And for the time being, it's reflected, as we show in the numbers, through a decelerated decline or stabilization in certain key areas.
To make it more transparent, we've seen -- we're still losing ground on the Fixed Retail Service revenues due to the attrition we have in voice, which is not yet fully replaced by the growth of broadband in the FMC customers. But if one notices the decline in rates quarter-by-quarter, there is an obvious and pronounced improvement. Yet still -- we still have room to go there. And the driver towards stabilization is the continuation of growing FMC customers, the fixed-mobile convergent customers.
On the mobile part, leaving behind the issue we faced in the previous years, which led to additional bad debt at the end of 2018, now this year we didn't have such event. Therefore, there is a technical improvement in the profitability base, which is fully reflected in the results. However, the balance sheet [ because of ] the tariffs and the launching of more competitive offerings in the market have led us, it is also shown in our numbers, in a deceleration of the decline of the Mobile Service revenues. And in the last quarter, in Q4, if you compare the Mobile Service revenues of Q4 '19 versus Q4 '18, we were down almost less than 1%, while in the beginning of 2019, that deceleration was high single-digit numbers. So there is also an improvement there. Yet, we are not where we want and the competition -- the competitive environment has not changed dramatically. We have seen some rational moves. But still, it's a fight that requires frequent relaunch of our offerings with different propositions in order to become competitive.
This long explanation to your first question is also a good explanation for the second question. So while we are stabilizing the performance of the company, we continue to explore the strategic options. At which point, I'm afraid I cannot go into further disclosures because there's nothing -- we don't have anything to announce as kind of agreement or contract. The only thing I can say now is that the efforts are continuing intensively to explore all possible routes of a strategic solution, while at the same time, we managed to improve the operating performance of the company in order to support our discussions on the strategic front. That's for Romania.
On the free cash flow, I think it's clear that the difference between admittedly high number -- the difference between the adjusted free cash flow and the reported free cash flow contains -- reflects actually, 2 important parameters. One is the expected frequency auctions towards the end of the year, and also the continuation of our, known to the market, voluntary retirement schemes, which is going to take another turn this year. So in total, these 2 activities bear a kind of dilution in our 2020 adjusted free cash flow. I wouldn't use the word dilution for us, since it's investment. Investing to the rationalization of the company and to getting more resources through frequencies to compete in the future is not a dilution, but it's an investment.
Despite that one, the other parameters of our operating performance have also moved to the right direction. And therefore, what I think you should be noted is that despite this big investment in the 2 areas I mentioned before, we are increasing our distribution substantially on the dividend front from EUR 0.46 last year to EUR 0.55 this year. This is an increase of almost 15%, which is quite important -- more than 15%, actually. While at the same time, we continue our strong share buyback program. And what I think the market should notice is the adjusted free cash flow, which stands at EUR 610 million which paves the way, although this is supported also by a lower-than-usual CapEx because we have guided the market that our growing CapEx level is around EUR 650 million, but because of timing issues and the phases of different projects, for 2020, we see EUR 50 million less there. So all in all, the EUR 610 million reflects the operating performance of the company, which is what we should keep from this announcement and the investments that we require to do next year is for the sustainability of the competitiveness of the company in the coming years.
Could I just follow-up on Romania? Would you say that, overall, do you think that a margin in the -- let's say, in the high teens are similar to the one that you delivered in Q4, is like sustainable or realistic for the coming quarters?
Yes, I will leave you to do the math. But what I can say is that let's pay attention to the one-offs we had in Q4 of 2019. But the efforts we are doing is towards -- getting towards high-teens numbers. Now whether this will come next quarter or not, it's not a linear equation here. But it's something that we -- it is our ambition and our target because this also supports the strategic discussions.
Okay. So that's good. And just a final question, if I may, please? You referred to competition at some point in your speech. Just wondering about the situation in Greece. Recently, we saw operators proceeding to a doubling of out-of-bundle data allowances following some pressure, I would say, by the government. And besides that, in general, we have seen a sort of widening of data bucket, in some cases, for the same price. I was just wondering, have there been any notable shifts in the competitive landscape in recent weeks? Any signs of price deflation in headline prices that might risk eroding away the upside from the rising data usage?
Yes. What we have done recently and in -- actually, in half 2 of 2019, is that we have increased all the data allowances -- actually twice doubled, and -- for the GIGA Max options, which are the options for high users of data, at the same price. So in half a year, we have almost quadrupled the debt allowances. Okay. The impact of this is very, very positive because we see people willing to pay more to get these options. So our more-for-more strategy is actually implemented the way we want there. We have a significant growth in data traffic and data revenue as well, as Babis mentioned before. So this is not worrying us, on the contrary, I would say, it seems like an opportunity for us to create extra revenue with data more-for-more activities.
The next question is from the line of Arbuzov, Roman with JPMorgan.
I just wanted to follow up on the themes you've just discussed. So on the EUR 260 million one-off charges in 2020, can you give us a rough breakdown how much is Spectrum and how much is restructuring? You've mentioned that the EUR 50 million of Spectrum spend from 2019 slips into 2020. But if we assume that it's only EUR 50 million, then that leaves EUR 210 million for restructuring. Is that what you're planning? And EUR 200 million obviously feels very high because if you look at restructuring charges over the last 4 years, they've been in the region of EUR 50 million to maybe EUR 70 million. So this implies 3 to 4x more than what you've done historically. Is that right?
And then just on your CapEx, just wanted to double check that CapEx is set to return to EUR 650 million from 2021 onwards and you expect it to stay there? And then just a question on your comments that you just made on the mobile data usage, it is a challenge for OTE rates to increase. If you want to get average data usage to average European levels, how much do you think you need to boost data usage by and -- to get there? And do you think the measures that you've implemented in Q4, do you think that, that's enough? Or do you think you'll need to go through kind of a major tariff overhaul exercise where you significantly increase the data allowances, as we've seen in some European countries. And would that -- if you do need to do that, would that create any spin-down risks in your view?
Okay. I'll start with the first one and then Panayiotis will complement on the commercial question. EUR 260 million is EUR 260 million and I'm afraid that cannot get down because -- the breakdown because that would reveal strategy for Spectrum, which is something that, obviously, no one wants to do at this point of time. But it reflects the expected, let's say, frequency auction that is going to happen towards the end of the year, and voluntary time schemes that is not excessive is not something that we haven't seen in the past.
Regarding the EUR 650 million and the EUR 600 million -- thank you for the question because it's a good opportunity to make it, once more, very transparent. Our going assumption for CapEx -- on a going concern is EUR 650 million. For 2020, it's EUR 600 million because we have the kind of coincidence that we have completed most of our Fiber To The Cabinet program. The 4G investment is always an ongoing process, but significant investments were made in the previous couple of years to accommodate the expected, as we have seen, data boost. And thereafter, in -- as of 2021 and onwards, we see gradually returning to EUR 650 million. Now when it will be exact point of EUR 650 million in 2021? This is something that we need to come across. But on the modeling part, it should be expectation that we will get back to EUR 650 million on a gradual basis in the next couple of years. Panayiotis, for the other question?
Okay. Regarding the data -- the mobile data question. Yes, we'll be very closely monitoring all the moves that we've made in 2019. And as long as we see positive elasticity on this, which is our prediction as well because there is lots of demand for data, we will still do more moves on that direction and building on the more-for-more strategy.
Okay. Can I ask just one more on the Greek EBITDA in the quarter? You make the point that there was a one-off in Q4 2018, and without it the margins would have been fine. But actually, if I look at the year-on-year growth that you delivered in 4Q '18, in 4Q '18, even with the one-off, even with the positive one-off experienced in that quarter, it was still a relatively weak quarter, right? Because year-on-year growth in 4Q '18 was only 1%. So comparisons were actually easy, even taking this one-off into account. So in that context, your growth this quarter -- your EBITDA growth increase this quarter still feels a little bit weak. Can you provide any more color? Was there anything else in particular that slowed you down?
We think that if we go to Q4 2018 EBITDA, and we get out almost EUR 6.5 million, which were the one-offs, then the growth in 2019 versus 2018 is 25 percentage points higher. That's what we said. And this reflects the dynamic between Q4 '18 and Q4 '19. All the -- if we take out this one-off that benefited Q4 '18, then all the rest is the performance of the country, of the big operations which is something that goes along with the revenue growth, if that was the point you made.
The next question is from the line of Ierodiaconou, Georgios with Citi.
I have a couple on cost savings. I was just wondering, I know you can't disclose the amount of the provision, but if you can give us an idea of how much we should expect due to save increase from these restructuring charges you are taking and whether we'll see impact more towards the second half of the year or whether it's evenly split. I'm asking this because I realize, partly what you are doing is changing the structure of the restructuring in that you are replacing with some younger employees. So I was just wondering is it as effective as in the past?
The second question is on the free cash flow bridge. The guidance you gave for adjusted EBITDA -- sorry, adjusted for cash flow is around EUR 120 million, let's say, higher than the year before, of which EUR 60 million is CapEx. I was wondering, is EUR 60 million mainly EBITDA? If there are some other lines like interest or taxes, where you have more visibility will be great if you can give us an idea of what's driving the rest?
And then just very quickly on Romanian fourth quarter performance. I've noticed the other revenues were up a lot. I was wondering if we should assume that there is any margin in those. Just want to -- I'm interested to understand how much of the margin improvement is down to the cost-saving measures you've taken? And how much of it could be down to these other revenues?
Start from the -- backwards. Romania, the -- in the other revenues, we report the ICT -- also the ICT revenues. And we flagged out that in Q4, we had the maturity and the billing of roughly EUR 47 million of ICT programs that were completed in Romania. So that has inflated the revenues there. Usually, ICT, these type of ICT programs come with a margin of 10% to 15%, depending on the size. So this is what we have seen in that one close to the area of 10%. And these were projects with significant impact in the Romanian society, since we rolled out the Wi-Fi in old schools in the country, which was a landmark project for the country. The cost savings, as I said, we -- it was completed towards -- in the second half of the quarter. And therefore, 2019 hasn't seen much out of it. So there will be -- most of the savings will be reflected in -- at least the 3/4 of the savings will be reflected in 2020.
On the equivalent savings in Greece, these programs that we are envisaging are -- we have most of their impact in 2021, as they are completed throughout the year. And therefore, in 2020 there is only a portion of that depending on the timing, which will be crystallized in the coming couple of months.
And on the free cash flow -- on the operating free cash flow, the improvement is an amalgamation of various things. One is the EBITDA growth that we expect, it's also the CapEx reduction that we discussed before for the year. Also comes from the interest expenses even after the IFRS 16 impact, the fact that we are refinancing our debt with much lower interest rates will have an impact in 2020 towards the second half because we have a big bond maturity at -- right in the middle of the year. And also the benefits from the tax rate decrease that went from 28% to 24%. So it's a kind of contribution from all these kind of parameters that feed the increase in the operating free cash flow.
And if I could ask a follow-up on the cost savings? I understand you don't want to disclose the phasing in '20 versus '21, but over the 2 years, what kind of savings are you more or less targeting?
Yes. Well, they are not going to be much different than previous years. So the range would be between EUR 30 million and EUR 35 million.
The next question is from the line of Chatzidakis, Manos with Beta Securities.
It is regards to the Collective Agreement, and what would be the impact in the sales and especially in the OpEx? We have an estimate regarding 2020? And about the effective tax rate for the parent company, if my calculations are correct, we have an effective tax rate of 11%. Should we expect this rate to normalize and go to the -- I mean, the levels that are defined of 24%?
I apologize. Can management hear us?
Apologies, there was a kind of a problem with my microphone. So just to start with the tax rate. 11% would look excellent to have it as a going tax rate, but obviously, that one is not the statutory one. So it's been impacted by the fact that we had -- also this -- in this quarter, we had the benefit from taking out the deductible our bad debt provisions, which were not in the previous legislation. So now the legislation allow us to take it. So in this quarter, we had the benefit from that one. And also, there was also a benefit from the dividend that we received from the Albanian operations just before we sold them. So these were technical and one-off items that will not be repeated, and therefore, gradually, we should expect in the coming quarters to see that the Greek effective tax rate will be hovering around 24%, as it is the statutory tax rate.
On the CLA, on the Corporate Labor Agreement (sic) [ Collective Labor Agreement ]. The one that we have signed and thus Mr. Tsamaz said, is a landmark in our effort to have the transformation boosted -- the transformation efforts to be boosted. The cost of that one is expected to be absorbed through the overall savings that the company is producing, even for 2021, not necessarily from the cost of production made but in the total P&L, there are other items that we are optimizing as well. And therefore, there will be no effect in our P&L from this CLA agreement.
[Operator Instructions] Our next question is from the line of -- is from our webcast participant, it is Mr. Halberstadt, Shavar with New Street Research. And I quote, "Do you have firm numbers, headcount and EBITDA benefit on the VRS plan for 2020? Update, please, on Greek landscape, Forthnet MVNO, starting is Forthnet sale complete, any chance of reserved Spectrum, like in Portugal?"
Okay. Regarding the estimates of the benefit we have from cost savings, let's say, from the VRS, or the cost that will -- this will incur from the voluntary exit scheme, this is too early to say anything yet. We are planning it. And when we have solid figures to the program launch, we will inform you about it.
Now regarding Forthnet MVNO. Okay, Forthnet is a competitor. We have the MVNO agreement. This is not -- an MVNO operator is not something new in Greece, we've had it in the past. And every healthy competitor is welcome. We're not intimidated, okay? We're preparing our action and commercial actions in order to be able to respond to any competitive moves. But other than that, everyone is welcome.
And regarding Spectrum, we cannot reveal anything about Spectrum yet. As Babis said earlier, it's not wise to say -- to talk or to say anything to reveal anything about the strategy we have regarding Spectrum on how we leverage it. But what we can tell you is that look at the past, we have always had successful outcomes following Spectrum auctions.
[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 very much for your attention, questions and interest in OTE. We're looking forward to the challenges and opportunities of 2020. We are confident we can manage as well as we did in the past, and we will be talking to you in May for our first quarter results. Have a nice day.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.