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One swallow does not a Summer Make ..

11 August 2016 by pdonnat

But Hellenic Telecom’s (OTE) latest earnings are encouraging for the Greek economy. OTE is seeing some stabilization in Greece with improvements in high speed broadband services and pay-tv. Mobile revenues are sliding but at a moderate pace. In the second quarter, OTE is making a net profit and will pay taxes to its second largest shareholder, the Greek government which owns 10% of the company. Deutsche Telekom is its biggest shareholder with 40% of the shares. However, paying corporate taxes is not enough. The Greek government views Telecommunications as a cash cow. An increased levy on mobile services and imposing a tax on pay-TV will weigh on sentiment and could send the swallow back to warmer countries. The CDS has rallied a lot since the July 2015 Greece crisis as can be seen on the attached grapple. Trading at 250, the market keeps seeing OTE as a recovery story.