S&P announced the upgrade of OTE’s credit rating to “A-” due to strong financial performance and an upgrade of its parent company. The outlook is stable.
The rating reflects the recent upgrade of OTE’s parent company, Deutsche Telekom, the improvement in Greece’s sovereign ratings, and a more favorable view of OTE’s standalone credit profile.
We expect OTE to maintain its leading position as the No. 1 telecommunications provider in Greece, including its leading positions in fixed broadband, mobile telephony, and pay-TV, the analysts write.
We estimate that the company will leverage its market leadership and continue to generate moderate organic revenue growth in mobile and fixed broadband operations, adjusted EBITDA margins in the range of 40%-42% and strong reported cash flow conversion (after leases). Finally, in our view, OTE’s operating performance will benefit from the improved economic environment in Greece.
We expect OTE to maintain its leading position in the Greek mobile market. The Greek mobile market is largely a three-player market, including Vodafone Greece and Nova, which is owned by United Group.
The market has become more competitive since Nova introduced aggressive pricing for its mobile services a few years ago in an effort to gain market share. Despite this level of competition, we expect OTE to defend its subscriber base and maintain its leading position with a market share of approximately 50%, leveraging its advanced mobile infrastructure to offer high-quality services and coverage.
We estimate that OTE will continue to convert subscribers to contract plans. This shift should translate into an increase in average revenue per user (ARPU) and higher revenues.
In the first quarter of 2026, contract subscriptions increased by 7.6% year-over-year, reaching 3.086 million. The share of contract plans stood at 44% in the same quarter, up from 40% in the first quarter of 2025. Given that this remains below the EU average, we foresee further growth potential in this segment during the 2026–2028 period.
Our business profile takes into account OTE’s significant market share in the Greek broadband market, despite the expected intensification of competition. In the Greek fixed broadband market, we estimate that OTE holds approximately a 53% market share, including approximately 70% in rural and semi-urban areas. OTE’s market share, particularly in urban areas, could come under pressure in the coming years, as PPCcontinuesto roll out fiber-optic networks in urban areas and offers broadband connections and fixed-line telephony to both households and businesses at a significant discount compared to OTE’s prices.
In 2025, PPC covered 1.7 million households and businesses (according to the 2025 full-year results conference call), with the goal of reaching 2.7 million connected customers by 2026 and 3.8 million by 2028.
Although we estimate that the company has connected only a small portion of these, we expect PPC to continue rapidly expanding its fiber-optic infrastructure and growing its fiber-optic subscriber base, thereby gaining market share at the expense of all providers, including OTE, Vodafone, and Nova.
Nevertheless, we believe that OTE will maintain its significant position in the broadband market. OTE bundles broadband services with mobile telephony, offering a certain discount; this, combined with superior connection and service quality, generally results in a lower churn rate for these offers.
Furthermore, we expect OTE to maintain its leading position in the Greek fixed wireless access (FWA) broadband market via 5G, with approximately 100,000 subscribers by the end of the first quarter of 2026.
We estimate that the company will use this technology as a transitional solution and will deploy FWA in areas where fiber-optic networks have not yet been built. In our view, this will allow OTE to retain customers who would otherwise switch to alternatives such as Starlink.
OTE’s revenue growth will slow in 2026 due to the decline in wholesale services and international wholesale revenue, but will recover to 1%-2% from 2027 onwards. We expect OTE’s wholesale service revenue to decline as its competitors roll out their own networks and no longer need to use OTE’s copper lines, while international wholesale revenue will be constrained due to the gradual phase-out of certain low-margin activities.
We expect growth to continue in mobile service revenues, driven by strong growth in contract revenues, which more than offsets the decline in prepaid mobile revenues as mobile customers migrate to higher ARPU contract plans.
We expect OTE’s prudent financial policy to support the company’s low leverage during the 2026–2028 period. Beyond shareholder returns, we expect the company to continue growing organically, with limited spending on mergers and acquisitions (M&A).
We expect OTE to participate in spectrum auctions in the future, including an upcoming auction in 2027 for 900 megahertz (MHz) and 1800 MHz frequencies. We believe that spectrum payments will be manageable for OTE and that the company will finance them from its generated cash flows. Therefore, we believe that OTE’s recent track record of financial discipline will support stable leverage of approximately 0.5x during the 2026–2028 period.
The stable outlook reflects our view that over the next 24 months, OTE will leverage its leading domestic positions in mobile telephony and fixed broadband, record moderate organic growth, and generate EBITDA margins above 40% and significant free operating cash flows. This will result in the adjusted debt-to-EBITDA ratio comfortably remaining below 1.0x and the FOCF-to-debt ratio remaining substantially above 40% over the next 24 months.
- We could downgrade OTE’s rating if its leverage were to rise to 1.5x and the FOCF-to-debt ratio were to fall below 40% on a standalone basis due to:
- Persistent competitive pressure leading to underperformance in operating results, including a sharp decline in the EBITDA margin; or
- A more aggressive financial policy, including increased returns to shareholders or debt-financed acquisitions.
- We could also downgrade the rating if we were to downgrade the issuer credit ratings of OTE’s parent company, Deutsche Telekom, or if we were to downgrade Greece’s sovereign credit rating by more than one notch.
We consider the likelihood of an upgrade to be remote. An upgrade would depend on our assessment of a substantial improvement in OTE’s credit quality on a standalone basis, a further upgrade of its parent company, and our perception that the economic environment in Greece remains strong or improves further.