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On Wednesday, JPMorgan analysts adjusted their stance on Hellenic Telecommunications Organization (HTO:GA), downgrading the stock from ’Overweight’ to ’Neutral’. The firm maintains its price target for the company at €18.50, citing a potential upside of 16%.
The downgrade comes as OTE, the largest telecommunications provider in Greece, aggressively expands its fiber network across the country. Despite this expansion, current utilization of the network remains low at 26%. JPMorgan highlighted concerns over the potential competition from the Public Power Corporation (PPC), which has announced plans to develop a fiber optic network that could rival OTE’s by the end of the decade. The possibility that PPC might offer fiber services directly to consumers poses a risk to OTE’s ability to capitalize on its network investments.
The Greek telecommunications market has seen increased stability over the past year, particularly as competitor Nova has adopted a more measured approach. However, the lack of annual price increases in the market presents challenges for operators aiming to grow their average revenue per user (ARPU). JPMorgan forecasts a 1.3% year-over-year decline in OTE’s retail fixed revenues for the first half of 2025, followed by a modest recovery in the second half, with a projected growth of 0.3%. This anticipated rebound is expected to be supported by the government’s fiber coupon initiative and wholesale fiber deals with Vodafone (NASDAQ:VOD) and Nova.
Despite the downgrade, JPMorgan continues to recognize the long-term benefits of OTE’s fiber expansion and considers the company’s valuation attractive. Nevertheless, the analysts suggest that there are currently more compelling investment opportunities available within their coverage area.
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