CONTENTS · OTE also owns 54% of RomTelecom, the telecom-munications incumbent in Romania,...

CONTENTS

OTE GROUP AT A GLANCEOTE Group at a glance................................................................................................................6Shareholder structure and share information.................................................................................................8OTE Group key financial and operational highlights...................................................................10OTE Group operations..............................................................................12OTE Group key developments...............................................................................................................14Message from the Chairman ...................................................................................................................16

OTE SA: THE PARENT COMPANY OF THE GROUPCorporate governance..................................................................................................................................20Corporate responsibility...........................................................................................................................30Investments in infrastructure...........................................................................................................................34Human resources...............................................................................................................39

OTE GROUP OPERATIONSFIXED-LINE

ΟΤΕ SABroadband services....................................................................................................................................48Voice services......................................................................................................................56Services for telecom operators...........................................................................................................................62Fixed – line regulatory framework.....................................................................................................................68International telephony, Internet & data (OTEGLOBE).........................................................................71ROMTELECOM...............................................................................................................................74

-2-OTE Annual Report 2010

MOBILE TELEPHONYCosmote Group.........................................................................................................................................82Greece (Cosmote)................................................................................................................................84Albania (AMC).........................................................................................................................................90Bulgaria (Globul)...............................................................................................................................93 Romania (Cosmote Romania).............................................................................................................96OTHER OPERATIONS IN GREECE AND ABROADOTEestate.........................................................................................................................................102Hellas-Sat.........................................................................................................................................105OTESat-Maritel.........................................................................................................................................107OTEplus.........................................................................................................................................109 OTEAcademy......................................................................................................................................111 Telekom Srbija.........................................................................................................................................114

ANNUAL FINANCIAL REPORTAnnual financial report...............................................................................120

OTE GROUP AT A GLANCE

-6-OTE Group at a glance

GREECEFixed-line, mobile telephony, and IPTV

Number of Subscribers:Fixed-line: 3,856,794

Mobile telephony: 7,993,492Fixed-line ADSL*: 1,149,162

IPTV Services: 50,038* Includes only those in operation, not the total number sold

ROMANIAFixed-line, mobile telephony, IPTV and satellite TV


Mobile telephony*: 6,849,468Fixed-line ADSL: 1,013,445

IPTV and satellite TV services: 1,053,627 *Including Zapp

BULGARIAMobile telephony

Number of Subscribers: 3,919,767

ALBANIAMobile telephony

Number of Subscribers: 2,022,541

SERBIAFixed-line, mobile telephony and Pay TV


Mobile telephony: 5,549,000Fixed-line ADSL: 543,000

IPTV Services: 59,000*OTE owns a 20% stake in Telekom Srbija


GGreece

SSerbia

AAlbania

BBulgaria

RRomania

OTE Group

SHAREHOLDER STRUCTURE ANDSHARE INFORMATION


SHARE INFORMATION OTE’s shares trade in the Athens and London Stock Exchanges (GDRs). As of September 2010, OTE’s shares ceased to trade in the New York Stock Exchange (NYSE). Following OTE’s delisting from the NYSE, OTE’s ADSs (American Depositary Shares) trade in the OTC (Over the Counter) market under the ticker HLTOY through the Level I ADSs program. OTE continues to report to the US Securities and Exchange Commission (SEC).

ASE

Symbol > OTEBloomberg symbol > HTO GA Reuters symbol > OTEr.AT

31.12.2010 Capitalization > € 3,004.6 mnAnnual-High > € 10.75Annual-Low > € 5.20Average Trading Volume > 1,098,932


30.3% 30.0% 20.0% 10.1% 9.6%

International institutional investors

DeutscheTelekom

HellenicState

Greekinstitutional

investors

Other

Shareholder structure March 31, 2011

Price relative performance chart for Jan. 10 – Mar. 11

100

120

80

60

0

Feb.10 Mar.10 Apr.10 Jun10 Jul.10 Aug.10 Sep.10 Oct.10 Nov.10 Dec.10 Jan.11 Feb.11 Mar.11May 10Jan.10

ΟΤΕ

SΧΚΕ*

ΧΑ

* Εuro Stoxx Telecommunications Index

ΟΤΕ GROUP KEY FINANCIAL ANDOPERATIONAL HIGHLIGHTS


2,356.4

15.1%

1.24

2,168.0

15.0%

0.84

1,919.4

13.7%

0.08

**2008

**2008

**2008

**2009

**2009

**2009

2010

2010

2010

Operating Income before Depreciation and Amortization* (€ mn)

CAPEX as % of Revenues Geographical distribution of revenues (2010)***

Earnings per Share (€)

* Excluding the effect of voluntary retirement plans** Adjusted amounts due to a change in accounting policy *** Before eliminations

28.1% 71.9%

Other countries Greece


959 20,027

651

1,113 22,309

824

1,149 20,785

1,013

2008 2008

2008

2009 2009

2009

2010 2010

2010

OTE ADSL subscribers (000) OTE Group mobile telephony subscribers (000)

RomTelecom ADSL subscribers (000)

OTE GROUP OPERATIONS

FIXED-LINE OPERATIONS IN GREECE AND ROMANIA

GreeceOTE offers fixed-line, broadband, IPTV, data and leased line services in Greece. Through its wholly-owned subsidiary OTE Globe, OTE also offers inter-national wholesale telephony and data services.

RomaniaOTE also owns 54% of RomTelecom, the telecom-munications incumbent in Romania, providing fixed-line, broadband, data, leased line, IPTV and satellite TV services to the local market.

MOBILE TELEPHONY IN GREECE AND ABROAD

(COSMOTE GROUP)Cosmote, OTE Group’s fully-owned subsidiary, is the leading provider of mobile telephony in Greece. The company also enjoys significant mobile telephony market shares in Albania and Bulgaria. Cosmote is the owner of Germanos SA, one of the largest distri-bution chains of technology products in SE Europe.

OTHER OPERATIONS IN GREECE AND ABROAD

In Greece, OTE Group is involved in real estate, sat-ellite and maritime communications, professional training, etc. It is also present in Serbia through its 20% stake in the country’s incumbent telecommuni-cations operator, Telekom Srbija.



45.6%

Segment revenue contribution (2010)*

35.4% 11.7% 7.3%

Cosmote OTE RomTelecom Other

50.7%

Segment OIBDA contribution (2010)**

34.4% 9.3% 5.6%

Cosmote OTE RomTelecom Other

* Before eliminations** Operating income, depreciation & amortization, excluding the effect

of voluntary retirement plans


OTE GROUPKEY DEVELOPMENTS

FEBRUARY 2010OTE proceeds with the launch of a series of pack-ages that combine talk time to fixed-line and mobile phones, as well as broadband and IPTV services, con-siderably enhancing thereby its portfolio of products and services. Throughout the year new packages were offered in order to meet the distinct needs of custom-ers.

AUGUST 2010Aiming to reduce its operational costs, the complexi-ty of its financial reporting and to focus on the trading of its shares in its key market, the Athens Stock Ex-change, OTE informs the New York Stock Exchange (NYSE) of its intention to delist. OTE’s American Depositary Receipts continue to be traded in the OTC (Over the counter) market through a “Level I” pro-gramme.

OCTOBER 2010OTE launches the development of an innovative New Generation Access (NGA) network, which will provide final users with ultra-high speed broadband services, with improved quality. The new fiber optic access network will initially be launched at a limited number of urban centers, covering the municipalities of Alexandroupoli, Komotini, Xanthi, Serres and Zo-grafou, aiming to gradually expand to further areas.

NOVEMBER 2010Mr. Michael Tsamaz, Managing Director of Cosmote, is appointed Chairman and CEO of OTE, in replace-ment of Mr. Panagis Vourloumis, who held these posts from May 2004. Mr. Michalis Tsamaz joined the OTE Group in 2001, initially as the Executive Vice-Presi-dent of OTE International, CEO of OTE Investments and CEO of OTE Globe, while at the same time he was in charge of the major transformation program of OTE fixed-line. Before joining OTE, Mr. Tsamaz held senior executive positions in multinational com-panies, such as Vodafone and Philip Morris.


FEBRUARY 2011> OTE announces its decision to proceed with the

dissolution and liquidation of its real estate in-vestment company, OTE PROPERTIES REIC. In view of the current economic environment, the company’s listing in the Athens Stock Exchange would not constitute the optimal move, from a strategic point of view, to leverage on the Group’s substantial real estate assets

> OTE signs an agreement for a €900 million Re-volving Credit Facility (Bond Loan) with a con-sortium of 16 Greek and foreign banks. OTE ini-tially draws an amount of €600 million, while the remaining amount of €300 million remains avail-able to OTE Group as an undrawn backstop line. Following this, the company uses the aforemen-tioned €600 million, a credit line of €332 million and cash flow in order to repay the bond of €1.5 billion that matured in mid-February

> OTE announces a series of management changes that are aimed at improving the Group’s organi-zation and operation. Certain new positions are created, that of the OTE Group Chief Operating Officer, the OTE Group Chief Information Officer, the OTE Group International Affairs Chief Officer and that of the OTE Group Director of Customer Service, while several of OTE’s general directo-rates are reorganized and unified and the subsidi-aries’ report centres are unified.

OTE DISTINCTIONS

MARCH 2010OTE was presented with the award for Best Corpo-rate Governance in Greece during the 2010 Corporate Governance Awards, organized by World Finance Magazine.

APRIL 2010For a second year in a row, OTE received the “Silver” level distinction for 2009 by the CR Index in Greece, which reflects the company’s high performance with respect to Corporate Responsibility.

JUNE 2010OTE received the top two awards at the Annual In-vestor Relations Awards organized by Capital Link.

JULY 2010> OTE was voted “Best Company for Investor Rela-

tions” in Greece for 2010 by the annual Thomson Reuters Extel Survey.

> OTE was certified as Cisco Gold Partner. The Gold Partner certification acknowledges OTE’s technical expertise in specialized network tech-nologies and affirms OTE’s excellence and effi-ciency in planning, implementing and supporting specialized value-added solutions of guaranteed quality.

MESSAGE FROM THE CHAIRMAN


Athens, May 13, 2011

My appointment as CEO of OTE Group came at a critical economic juncture, the reverberations of which are being felt throughout Southeast Europe. The causes of the crisis, as well as its effects, are known to all. Over the past two years, all countries in the region have suffered from GDP contraction, which in turn has directly affected their ability to fi-nance state budgets. In Greece, the consequences have been dramatic. The world economic crisis revealed chronic flaws in the country’s structure and organization, and made apparent the Greek economy’s total lack of solid eco-nomic foundations. Needless to say, this environment has had a direct impact even on strong, healthy com-panies, in the form of shrinking consumer spending, higher interest rates, limited access to funding and investments, etc. At the time I assumed my duties, the solid condition of the OTE Group – its moderate leverage (two times EBITDA), its competitive subsidiaries, its cash posi-tion and reduced headcount – was the result of a long and arduous process of operational and structural changes initiated by my predecessor of the past six years, Mr. Panagis Vourloumis. These changes were necessary in order for OTE to evolve into a modern company, able to face competition. These initiatives proved most beneficial, especially in light of the fi-nancial crisis. Think of the consequences, had OTE and its subsidiaries, in Greece and abroad, been less healthy and had the Group higher refinancing needs.

In 2010, OTE Group sales dropped by 8%, its EBITDA fell by 11.5%, and its net profit dropped by 90.4%, due mainly to an impairment at RomTelecom, addition-al charges imposed on OTE by the State’s Pension Fund (IKA) in regard to the 2005-2006 Voluntary Retirement Program, an extraordinary tax levied by the Greek State on profitable businesses, and costs related to past years’ tax audit. Sales of the OTE S.A. parent company were reduced by 10.1%, its EBITDA fell by 9.6% and its net profit dropped by 78.5%, due mainly to the above-men-tioned additional IKA charges, which significantly affected its already high payroll costs. The Company’s negative performance is the result of the following factors: 1. the impact of the Greek economy2. unhealthy competition3. unfair and shortsighted regulation 4. the way the company operates, and5. our “corporate culture”We cannot influence the first three factors, but we can work on the last two. Within a very unfavorable environment, RomTele-com slashed its operating costs and reduced its per-sonnel, partly containing the drop in its operating profits. Cosmote Greece continued its impressive course, improving all its performance indicators vis-à-vis its competitors. However, the mobile telephony sector in Greece has suffered a serious blow, not only from


the effect of the crisis, but mainly from the price wars initiated by our competitors. Cosmote Romania improved its competitiveness and was less affected than its rivals by the shrinking mar-ket. In Bulgaria, Globul implemented effective measures towards operating cost containment and managed to generate satisfactory profits. AMC in Albania was up against an especially nega-tive, as well as unpredictable, competitive and regu-latory environment, which affected its profitability. OTE Group’s other subsidiaries, notably OTE-GLOBE and Hellas Sat, achieved satisfactory per-formances, reaching their targets. The conditions we are confronting today render the need for immediate measures and actions, impera-tive in order to safeguard the success of our strategy and enhance the value of our company, OTE Group. This value provides the foundation for all future in-vestments and, therefore, our company’s growth. In Greece, the transformation of OTE will have to proceed at an even brisker pace, in preparation of its merging, when conditions allow it, with Cosmote. We envision tomorrow’s OTE as a modern, versatile and efficient company; a company that is the con-sumers’ first choice, able to meet their needs more fully than any other company; a model corporation, which will lead Greece’s technological evolution with its investments. But in order to meet these objectives, we will have to work on the following: 1. Development of competitive products and servic-

es that will compensate for the reduced revenue from traditional services

2. Reduction of operating costs across all operations 3. Improvement of customer experience at all points

of contact with the company: customer service, customer service call centers, points of sale, etc.

4. Restructuring of policies and procedures that govern our operations

5. Change in our approach to and management of regulatory affairs

6. Leverage of the synergies with Deutsche Telekom 7. Investments in NGA networks and technology8. Changes in the management, appraisal and devel-

opment of human resources In Romania, synergies between RomTelecom and Cosmote will continue, with an aim to reduce the op-erating costs of both companies and to offer bundled service packages.In Greece, Cosmote will pursue its strategy, to main-tain its leading position, in terms of service revenues, and its profitability through operating cost control. This is the only way to protect the future of our com-panies and to secure the required capital for neces-sary investments. In Bulgaria we will continue with our strategy, to maintain profitability, while holding at the same time our market position. We are also contemplat-ing an expansion of our service portfolio into broad-band and TV services, to make our business more competitive through the offer of a complete range of products. In Albania, the new management team is focusing on reducing costs and on enhancing the company’s image through the creation of a limited number of company-owned shops and other relevant initiatives. In order to achieve all of the above, what is needed, first of all, is active participation, commitment and boldness on everyone’s part – not only by manage-ment, but also employees and, first and foremost, their union representatives. We must all acknowl-edge the situation in which we are, adapt accordingly and make courageous decisions. The measures taken at OTE so far are mild compared to those taken by other companies. It is imperative that everyone un-derstand that OTE is now a private-sector company with many shareholders, and financed according to the rules of international markets.


Ahead of us lie two very difficult years. We cannot allow ourselves to be swept away by the economic developments. Management, employees and labor union members – we are all jointly responsible for creating a safe “life raft” which will carry us out of the crisis. This can only be achieved through earnest cooperation and the acknowledgement of the fact that we cannot continue being bound by vested rights from the past. Finally, the State and the Regulatory Authority must understand that the telecommunications market has become utterly competitive and that, at this moment, OTE is the only telecommunications company that can contribute to the country’s economic develop-ment through the necessary investments in new gen-eration networks and technologies. For these to take place, a healthy OTE is required.

Michael TsamazChairman of the Board of Directors& Chief Executive Officer of OTE SA

-19-OTE SA: The parent company of the Group

CORPORATE GOVERNANCE

CORPORATE GOVERNANCECorporate governance refers to a number of princi-ples and practices adopted by a company in order to uphold its performance and the interests of its share-holders and all stakeholders. ΟΤΕ implements best corporate governance practices across its operations, based on international and eu-ropean standards. By reinforcing its procedures and organizational structure, the company manages not only to comply with the regulatory framework, but also to develop a corporate culture founded on busi-ness ethics and committed to protecting the rights of its shareholders and the interests of all stakeholders. As a large capitalization company, listed on the Ath-ens Stock Exchange and with its shares also traded on the London Stock Exchange, OTE complies with applicable domestic and international corporate gov-ernance legislation. It should be noted that following OTE’s delisting from the New York Stock Exchange on August 2010, its American Depository Shares (ADSs) trade in the OTC (Over the Counter) market through the Level I ADSs program. OTE continues to report to the US Securities and Exchange Commis-sion (SEC).All relevant provisions and practices are incorporated in the company’s Articles of Incorporation, Bylaws, Internal Operations Regulation, Code of Ethics and Business Conduct, Personnel Regulation, and in all other company regulations or policies overriding its business functions.

OTE’s corporate governance systemIn September 2010, Law 3873/2010 was enacted. This law requires that all Greek listed companies must release, on an annual basis, information on the corporate governance principles and practices they have adopted. Specifically, Law 3873/2010 obliges companies to publish a Corporate Governance State-ment, which is included in the Annual Report of the Board of Directors and provides information on the Corporate Governance Code, which the company has decided to implement and on any additional (beyond and above applicable legislation) corpo-rate governance practices. In particular, the State-ment contains information concerning: the General Assembly of Shareholders, shareholders’ rights, the way in which the latter are exercised, the compo-sition and function of the Board of Directors (and any other administrative, managerial or supervisory bodies or committees) and the internal audit and risk management systems, related to the preparation of the company’s financial statements. Enforcing Law 3873/2010, ΟΤΕ complies with the special practices laid down by the Hellenic Federa-tion of Enterprises’ (SEV) Code for Listed Compa-nies, posted on: http://www.sev.org.gr/online/index.aspx and http://www.sev.org.gr/Uploads/pdf/KED_TELIKO_JAN2011.pdf. OTE’s Corporate Govern-ance Statement is included in its 2010 Annual Fi-nancial Report. OTE applies corporate governance principles and



practices on the basis of three key priorities, which include the role of the Board of Directors and the Management team, the protection of shareholders’ rights and the enhancement of transparency, control and information disclosure.

Corporate Governance at OTE

The role of the BoD and the Management team

Protection of shareholders’ rights

Transparency, control and disclosure of Information

members among them. From June 2009 to June 2010, the BoD comprised of three (3) executive members and seven (7) non-executive members, of whom four (4) were independent. From June 2010 to the present, the BoD comprises of two (2) executive members and eight (8) non-executive members, of whom four (4) are independent. According to the Sharehold-ers’ Agreement between the Greek Government and Deutsche Telekom, the BoD consists of members proposed by Deutsche Telekom and the Greek Gov-ernment.Pursuant to the provisions of the company’s Articles of Incorporation, the members of the BoD serve for a three (3) year term. This term commences on the date the members are elected by the General Assembly of Shareholders and is terminated upon the completion of the Ordinary General Assembly of Shareholders of the year in which the three (3) year term has ended.The table that follows depicts the members of the BoD and their capacities, with dates of commence-ment of office (election dates by the General Assem-bly of Shareholders- the most recent one) and dates of termination of office of each one. The changes to the Board of Directors that took place during the period 2010-2011 are as follows: > The BoD member Mr. Hamid Akhavan-Malayeri

submitted its resignation on 19/2/2010 and was replaced by Mr. Rainer Rathgeber

> Vice-Chairman, Mr. Haralambos Dimitriou and members Messrs. Iordanis Aivazis, Leonidas

4 out of 10 members of the Board of Directors are independent

1.BOARD OF DIRECTORS

1.1 Composition of the Board of DirectorsPursuant to the provisions of the Articles of Incorpo-ration, the Board of Directors (BoD) consists of nine (9) to eleven (11) members, who may or may not be shareholders in the company. From June 2009 until today, the BoD consists of ten members. The members of the BoD are either executive or non-executive members, of which at least two (2) are in-dependent. They are elected by the General Assembly of Shareholders, which also appoints the independent


Name Capacity Office Office Termination Commemcement (Most Recent )

Michael Tsamaz Chairman and Managing Director, 3/11/2010 2012 Executive member

Dimitrios Tzouganatos Vice-Chairman, Independent 23/6/2010 2012 non-executive member

Kevin Copp Executive member 24/6/2009 2012

Roland Mahler Νon-executive member 17/3/2011 2012

Rainer Rathgeber Νon-executive member 19/2/2010 2012

Efstathios Anestis Νon-executive member 23/6/2010 2012

Nikolaos Karamouzis Νon-executive member 23/6/2010 2012

Michael Bletsas Independent non-executive member 23/6/2010 2012

Panagiotis Tabourlos Independent non-executive member 24/6/2009 2012

Vassilios Fourlis Independent non-executive member 23/6/2010 2012

Guido Kerkhoff Νon-executive member 24/6/2009 17/3/2011

Panagis Vourloumis Chairman and Managing Director, 24/6/2009 3/11/2010 Executive member

Haralambos Dimitriou Vice-Chairman, 24/6/2009 18/6/2010 non-executive member (appointed Vice-Chairman by the BoD on 6/2/2009)

Hamid Akhavan-Malayeri Νon-executive member 24/6/2009 19/2/2010

Iordanis Aivazis Executive member 24/6/2009 18/6/2010

Leonidas Evangelidis Independent non-executive member 24/6/2009 18/6/2010

Konstantinos Michalos Independent non-executive member 24/6/2009 18/6/2010

Ioannis Benopoulos Independent non-executive member 24/6/2009 18/6/2010

ΟΤΕ’S BOARD OF DIRECTORS


Evangelidis, Konstantinos Michalos and Ioan-nis Benopoulos submitted their resignations on 18/6/2010 and were subsequently (on 23/6/2010) replaced by Messrs. Nikolaos Karamouzis, Ef-stathios Anestis, Dimitrios Tzouganatos (who was appointed Vice-Chairman), Vassilios Fourlis and Michael Bletsas respectively

> On 3/11/2010, the BoD revoked the appointment of Mr. Panagis Vourloumis as Chairman of the BoD and Managing Director of the company. Subsequently – on the same date – Mr. Panagis Vourloumis resigned as member of the BoD and was replaced by Mr. Michael Tsamaz

> The BoD member Mr. Guido Kerkhoff submitted his resignation on 17/3/2011 and was replaced by Mr. Roland Mahler.

1.2 Committees of the Board of DirectorsAudit CommitteeIn April 1999, OTE’s management established an Audit Committee. According to article 37 of Law 3693/2008, the members of the Audit Committee are nominated by the General Assembly of Shareholders and at least one must have proven experience in financial matters. The Audit Committee consists of three independent non-executive members of the Board of Directors, one of whom is appointed Chairman. The role of the Com-mittee is to supervise the company’s Internal Auditors and to assist the Board of Directors in the latter’s su-pervisory responsibilities (monitoring the financial in-formation published by the company, evaluating and controlling the internal audit systems, and assessing and coordinating the auditing process and control pro-cedures, in accordance with applicable laws). From June 2009 to June 2010, the members of the Audit Committee were Messrs. Panagiotis Tabourlos (Chairman – Expert on Financial Matters), Leonidas Evangelidis and Ioannis Benopoulos. From July 2010 to date, its members are Messrs. Mr. Panagiotis Ta-bourlos (Chairman – Expert on Financial Matters), Dimitrios Tzouganatos and Vassilios Fourlis.

Compensation and Human Resources CommitteeOTE’s BoD established the Compensation and Hu-man Resources Committee in 2004. This Committee is appointed by the company’s BoD and consists of a minimum of three members, at least two of whom are non-executive. The Chairman of the Committee is also appointed by the BoD. The Committee’s main duties, as set out in its Regulation, are the following:> Setting the principles of the company’s human re-

sources policy, which will influence the Manage-ment’s relevant decisions and practices

> Selecting the company’s compensation and remu-neration policy

> Approving the plans concerning compensation, benefits, stock options and bonuses

> Proposing to the BoD the compensation and ben-efits of the Managing Director

> Studying and processing issues related to the com-pany’s human resources

> Setting the principles of Corporate Responsibility policies

The Compensation and Human Resources Commit-tee submits proposals to the BoD on matters related to the responsibilities of the Committee, which the BoD either approves or refers to the General Assembly of Shareholders, in the event that these matters must be resolved by the General Assembly of Shareholders. From February 2009 to February 2010 the Commit-tee members were Messrs. Haralambos Dimitriou (Chairman), Hamid Akhavan-Malayeri and Ioannis Benopoulos. From February 2010, following Mr. Ha-mid Akhavan-Malayeri’s resignation, until June 2010, the Committee members were Messrs. Haralambos Dimitriou (Chairman), Ioannis Benopoulos and Gui-do Kerkhoff. From June 2010 until March 2011 the Committee members were Messrs. Nikolaos Kara-mouzis (Chairman), Kevin Copp and Guido Kerkhoff. Form April 2011 to date, the Committee members are Messrs. Nikolaos Karamouzis (Chairman), Kevin Copp and Roland Mahler.


Name Capacity

Michael Tsamaz Chairman and Managing Director

Zacharias Piperidis OTE Group Chief Operating Officer Chief Commercial Officer for Enterprise and Business Services Chief Commercial Officer for Residential Customers (As of 17/2/2011)

Kevin Copp ΟΤΕ Group Chief Financial Officer

Georgios Athanasopoulos OTE Group Chief Information Technology Officer OTE Chief Information Technology Officer (As of 17/2/2011)

Aristodimos Dimitriadis OTE Group Chief Compliance Officer

Eirini Nikolaidi Executive Director of Legal and & Regulatory Affairs of OTE Group ΟΤΕ and OTE Group Legal Counsel General Director of Legal Affairs of ΟΤΕ (As of 19/01/2011)

Elias Drakopoulos Chief Technology and Operating Officer Chief Technology Officer Chief Regional Operations Officer (As of 17/2/2011) Chief Commercial Officer for Corporate and Business Customers (Until 16/2/2011)

Panos Sarantopoulos Chief Officer of National Wholesale Services

George Mavrakis Chief Financial Officer

Loizos Kyzas Chief Human Resources Officer

Konstantinos Ploumbis Chief Regulatory Affairs Officer

Maria Rontogianni Chief Internal Audit Officer

Iordanis Aivazis Chief Operating Officer (Until 31/12/2010)

Paraskevas Passias General Legal Counsel of OTE (Until 19/01/2011)

Christos Katsaounis Chief Commercial Officer for Residential Customers (Until 16/2/2011)

Maria Efthimerou Chief Technology Officer Until (16/2/2011)

Andreas Karageorgos Chief Regional Officer Until (16/2/2011)

Konstantinos Kappos Chief Information Technology OfficerUntil (16/2/2011)

MEMBERS OF THE MANAGEMENT TEAM


2. MANAGEMENT TEAMThe members of OTE’s management team, during 2010-2011, are presented in the table on page 24.

3. SHAREHOLDERS

3.1 General Assembly of ShareholdersIn accordance with Corporate Law 2190/1920, as cur-rently in force, and OTE’s Articles of Incorporation, the General Assembly of Shareholders is the compa-ny’s highest, in rank, body and may resolve upon all matters of the company, unless otherwise stipulated by the company’s Articles of Incorporation. The Gen-eral Assembly of Shareholders is convoked by the Board of Directors in an ordinary session once a year, within six months after the end of the previous fis-cal year, whereby the annual financial statements are approved, and certified auditors and members of the Board of Directors are absolved from any potential indemnity. The Board of Directors may also convene extraordinary General Assemblies of Shareholders whenever necessary. Law 3884/2010, which incorporates into Greek na-tional law, Directive 2007/36/ΕC of the European Parliament and the Council of July 11, 2007, on the exercise of certain rights of shareholders in listed companies, brought about changes in the content of the invitation for a General Assembly, in the informa-tion which is posted on the company’s webpage, as well as in the participation process of the company’s shareholders in the General Assembly.

Specifically, this new Law: > Provides for a wider invitation content which re-

fers to the rights of the shareholders, the right to participate as a shareholder (definition of record date), the participation process (the process of ex-ercising proxy voting, voting by correspondence or electronically) and to the relevant printed ma-terial and documents

> Facilitates shareholders in exercising their voting right through:

— The abolishment of shares’ blocking as a re-quirement for shareholders to exercise their voting right in the General Assembly

— The possibility to participate from a distance (electronically or by correspondence)

— The possibility to authorize/revoke proxies by electronic means

> Enhaunces transparency and the information pro-vided to shareholders before and after the General Assembly, increasing the information provided on the General Assembly on the company’s webpage through:

— Detailed information and clarifications con-cerning General Assembly items

— Participation forms (forms for authorizing or revoking a representative)

— Number of Shares — General Assembly voting results The General Assembly of Shareholders is in quorum and convenes validly when 1/5 of its share capital is

Law 3884/2010 highlights transparency and increases information dis-semination to shareholders for the exercise of their voting rights at General Assemblies


present or represented, except for issues specified ex-plicitly in the Law and the company’s Articles of In-corporation, when a special quorum is required, i.e., 2/3 of the company’s share capital. In this case, ac-cording to Article 20 of the company’s Articles of In-corporation, the General Assembly is in quorum and may validly convene to discuss the agenda if 2/3 of the company’s share capital is represented. In absence of a quorum, the 1st Repeated General As-sembly of Shareholders convenes. On issues that may be resolved by simple quorum, the Repeated General Assembly of Shareholders convenes validly, irrespec-tive of the present or represented capital. For issues that require a special quorum, at least 1/2 of the com-pany’s share capital must be present or represented, otherwise the General Assembly of Shareholders is adjourned again, in which case 1/5 of the company’s share capital must be present or represented. Reso-lutions on issues that call for a simple quorum are passed by absolute majority. Resolutions on issues that call for a special quorum are passed by a major-ity of 2/3 of those present or represented.

3.2 Payment of dividendShareholders are eligible to receive dividends after the General Assembly of Shareholders approves the annual financial statements. Dividends, as approved by the General Assembly of Shareholders, are paid to shareholders in accordance with the New Law 2190/1920, the Athens Stock Exchange Regulation, as in force at the time, and the company’s Articles of Incorporation.

4. CONTROL MECHANISMS

4.1 Internal AuditThe Internal Audit, as an independent, objective and advisory Unit, improves and ensures the company’s smooth operation. Specifically, as part of its responsi-bilities, the Internal Audit Unit:

> Examines and evaluates the company’s auditing systems and procedures

> Proceeds with compliance audits > Identifies risks and proposes solutions to the Man-

agement> Monitors the consistent application and progress

of Internal Audit operations across the OTE Group of companies

> Examines and evaluates the suitability, perfor-mance and efficiency of security measures in OTE’s ICT systems

The correct and efficient operation of the Internal Au-dit Unit is ensured by the fact that it is an independ-ent business unit, reporting directly to the company’s BoD, is supervised by the Audit Committee, and op-erates under a strict code of conduct.

4.2 External AuditThe company’s regular audit is carried out by certi-fied auditors. To this end, every year, the General As-sembly of Shareholders approves the appointment of an auditing firm or a consortium of auditors to audit the company’s financial statements and business op-erations over a specific period.In June 2010, OTE’s Ordinary General Assembly of Shareholders assigned the regular audit of the 2010 financial statements to the firm Ernst & Young (Hel-las) Certified Auditors–Accountants SA. The fee for the audit of the stand-alone and consolidated financial statements was set at €478,460.

4.3 Risk management The company implements risk management practices across all its operations and activities. The operation-al risks the company faces, concern mainly: > Credit risks> Liquidity risks> Risks that derive from the regulatory and compli-

ance environment > Risks related to competition


In late 2010, the company launched a risk manage-ment project that aimed to: a) identify b) quantita-tively assess and c) evaluate the risks handled by the company’s various operations and services. This pro-ject is monitored by the Internal Audit team. A sig-nificant aspect of this project is the implementation of an annual risk-based Planning, which is approved by the Audit Committee and provides a risk analysis methodology. The Board of Directors monitors and examines risk management, through the Audit Committee and the Internal Audit team.

5. TRANSPARENCY AND INFORMATION DISSEMINATION

5.1. Established procedures Placing particular emphasis on the increase of trans-parency, OTE implements relevant procedures, which stem from the legislative framework in force:

> A regulated-information disclosure process, on the grounds of Law 3556/2007, Decision 1/434/3.7.2007 and Circular No.33 of the Hellenic Capital Market Commission concerning informa-tion disclosure and transparency requirements for companies which are publicly traded on stock ex-changes.

The aim of this disclosure process is to inform the investment community and all interested parties of any significant changes in the company’s par-

The company implements an annual, risk-based planning, which is approved by the Audit Committee and provides a risk analysis methodology

ticipations (acquisitions or disposals) in a timely and accurate manner, under Law 3556/2007 and to ensure OTE’s compliance with applicable laws

> Procedures within the framework of Law 3340/2005 (for the protection of the capital market from actions of inside information abuse and mar-ket manipulation) and of Corporate Governance Law 3016/2002. In enforcing the above Laws, the company has adopted:

— A transactions disclosure procedure for all individuals that are considered liable under applicable law: the persons that carry out managerial duties in the company and per-sons closely affiliated with those persons should notify the company of transactions conducted for their own account relating to shares issued by OTE, derivatives or other financial instruments linked to them;

— A procedure that deters the improper use of inside information: persons who possess in-side information on company operations are forbidden to use this information in order to acquire or dispose, either directly or indi-rectly, financial instruments of the company to which the information relates;

— A procedure that monitors any financial activ-ity carried out by OTE’s managers/directors with the company’s major suppliers/clients: the persons that carry out managerial duties in the company should notify the company of


financial transactions conducted with major clients or suppliers of the company.

5.2 Regulatory complianceOTE Group has adopted a Compliance Management System (CMS), regarding the company’s compliance with the legislation in force as well as internal poli-cies, with an aim to avoid risks and other legal con-sequences for the company and its employees. Key elements of the CMS incude the following:> Prevention of misconduct together with the com-

pliance with the policies, in order for the company and its employees to be protected from any legal consequences due to any misconduct; the CMS contributes in reducing the reputational risks of the Group;

> Detection of compliance violations and the re-sponse to them. The company has established a whistleblowing policy and relevant communica-tion channels facilitating the report of illegal ac-tivities or behavior;

> Monitoring of the CMS through statistical data collection and processing

The operational unit responsible for the planning and adoption of the CMS comes directly under the company’s Board of Directors. Moreover, Regulatory Compliance Committees have been set up and are operating in OTE Group companies (Cosmote and RomTelecom).

5.3 Communication with shareholdersApart from established procedures that ensure trans-parency, OTE has adopted a number of other prac-tices that enhance transparency and the dissemination of information to all interested parties, such as:> Posting of company-related information on OTE’s

website so that all interested parties can have equal and timely access to that information

> Release of corporate publications (Annual Report, Form 20-F, Corporate Responsibility Report) which enhance the continuous flow of information on issues that relate to the company’s strategy, tar-gets, operation and performance

> Establishment of a two-way communication chan-nel between company representatives and the in-vestment community through the organization of conferences, corporate presentations, investor days, road shows (in Greece and abroad) and con-ference calls

All activities related to OTE’s listing on the Athens Stock Exchange (ATHEX) and the London Stock Ex-change (LSE) and to the company’s obligations under the relevant US Securities and Exchange Commis-sion rules, are the responsibility of OTE’s Investor Relations Department. These activities include:> Responding to shareholder requests (both indi-

vidual and institutional, in Greece and abroad) and providing information related to the exercise of their rights and the payment of dividends

> The release of the company’s financial results and

By virtue of the corporate compliance system, the company and its em-ployees are protected from any legal consequences due to misconduct


the timely and fair dissemination of information related to the company’s financial performance to all shareholders, through presentations, confer-ence calls, road shows, conferences and meetings

> The presentation of activities and communication with shareholders through various communica-tion channels (Investor Relations website, corpo-rate presentations, etc.)

> The preparation of the company’s Annual Report, the Corporate Governance Report, and the Form 20-F for the US Securities and Exchange Commis-sion

> Relationship building with the Stock Exchanges and Capital Market Commissions in the countries where OTE is listed

> Ensuring the company’s compliance with the reg-ulatory framework of the capital markets in which OTE is listed

> Supporting the company’s credit rating process (rating review)

> The organization and hosting of the company’s General Assemblies of Shareholders and the dis-semination of information to shareholders

The Investor Relations Department is headed by Mr. Dimitris Tzelepis. His contact details are as follows:Tel: +30 210 611 1574Fax: +30 210 611 1030E-mail: [email protected]: 99 Kifisias Ave., Maroussi, AthensCall center: +30 210 611 1000Investor Relations webpage:http://www.ote.gr/portal/page/portal/InvestorRela-tionMore information on Corporate Governance at OTE is available in the company’s Corporate Governance Report 2010 and at: http://www.ote.gr/portal/page/portal/InvestorRelation/CorporateGovernance/Our-Principles.

CORPORATE RESPONSIBILITY


In the past five years, Corporate Responsibility has become an important part of OTE’s business strat-egy, policy and operations. Through its CR program “Building Ties” introduced in 2005, OTE takes a comprehensive approach to responsible behavior in the marketplace, its’ employees, society and the en-vironment. OTE’s CR strategy and initiatives focus on issues that are important to the company’s success and to its stakeholders, in close alignment with Euro-pean and international CR standards.

OTE’S CORPORATE RESPONSIBILITY CERTIFICATIONS

In 2006, OTE was one of the first Greek companies to apply the Global Reporting Initiative “G3” Sustaina-bility Reporting Guidelines, achieving an application level “C” and in 2007 and 2008 the company upgrad-ed to the GRI G3 level “B”, while in 2010, OTE was also one of the first Greek companies to undertake independent external assurance of its CR reporting in accordance with the AA1000 AccountAbility Prin-ciples Standard. As a result, OTE’s 2009 CR Report received the GRI G3 application level “B+”. Since 2008, OTE has been continuously listed in the FTSE4Good, the International Index of companies that meet internationally recognized standards for corporate responsibility, transparency and account-ability.

OTE also participates in Greece’s Corporate Respon-sibility Index (CRI), produced in association with “Business in the Community”, and was ranked “Sil-ver” in 2008 and 2009, and “Gold” in 2010.

SYSTEMATIC APPROACH TO CORPORATE

RESPONSIBILITY GOALSOTE sets and reviews CR goals annually, and reports the results in the OTE CR Report each year. (The rel-evant table is available on page 31)

CORPORATE RESPONSIBILITY ACTIVITIES

Building Ties in the marketplaceOTE makes a significant contribution to the market-place and to the Greek economy through its strong focus on broadband technology development (and availability) in Greece. Broadband services are avail-able in remote areas of the country and accessible to all social groups. The company also develops pro-grams for vulnerable social groups and students. Be-tween 2006 and 2010, OTE has invested over €1.3 billion in broadband infrastructure development and services, whilst the broadband penetration in Greece has increased from 4.7% of the population, in 2006, to 20.3% in 2010. The most important CR activities in the marketplace for 2010 were:


CR strategy

Marketplace

Workplace

Environment

Society

> Incorporate CR principles into OTE’s Business Plan

> Conduct dialogue with stakeholders > Maintain and expand CR certifications by inter-

national organizations

> Strengthen efforts to bridge the broadband gap nationwide, with targeted actions

> Expand the PC deployment program nationwide> Expand safer internet initiatives> Implement a new procurement policy

> Establish a new Human Resources Helpdesk> Strengthen dialogue with its’ employees through

the intranet (U-Link)> Continue OTE Employee Volunteer Programs

> Record in detail the nationwide ecological foot-print of OTE

> Systemize and expand recycling programs nation-wide

> Stabilization of energy consumption in OTE buildings

> Continue the blood donation program of OTE employees

> Maintain the company’s strong profile by enhanc-ing the cooperation with NGO’s and bodies from the local community

OTE CORPORATE RESPONSIBILITY GOALS


> The continuation of its long-standing offering of products and services for vulnerable social groups, such as:

— Conn-x for students — Tele-assistance — Teleworking — Tele-medicine through Video-Conferencing — Call Centre for people with hearing dissabili-

ties> The offer, for the 6 year in a row, of free broad-

band connections to graduate and postgraduate students who achieved academic excellence

> The launching of a campaign on internet safety, in order to promote and inform the public, in part-nership with the Adolescent Health Unit (AHU) of the 2nd Paediatric Clinic of the University of Athens at the ‘Pedon P. & A. KIRIAKOU’ Hospi-tal, as well as the publication of a special leaflet distributed in all OTESHOP stores, to inform the public on the matter.

Building Ties with employeesOTE believes in the professional development and motivation of employees, and aims to realize these key principles through policies and practices related to health and safety in the workplace, equal oppor-tunities, professional training programs, evaluation, and internal communication. For 2010, key corporate responsibility activities, related to the employees, in-clude:

> OTEAcademy professional training seminars > OTE continued with its support of 54 Employee

Cultural Centers across Greece (with approxi-mately 20,000 members)

> Through the company’s Volunteer Blood Dona-tion programs, OTE employees gathered, in 2010, 3,214 units of blood, 2,200 of which were offered outside the company.

Building Ties with the environmentOTE is committed to its sustainable development, financially and environmentally. In 2007, OTE com-menced the systematic recording of its environmental footprint for energy, water and waste management, applying international regulations and guidelines for measurement. For 2010, most important CR activities for the environment include: > The continuation of the measurement of the com-

pany’s environmental footprint > The expansion of the environmental footprint in

3 additional buildings, in South Western Greece Telecommunication Region of 92 employees and 3,210.85 sq. feet , in total

> Recycling of 137,637 kg of electrical and electron-ic equipment

> The recycling of 396 tones of paper and card-boards (an increase of 7% in comparison to 2009).

Building Ties with societyOTE is a committed partner to society. The company is focused on helping children, people with disabili-

Through the program “Building Ties”, OTE, since 2005, has adopted an integral approach towards responsible corporate behavior, with respect to the market place, its employees, society and the environment


ties and other vulnerable social groups, through its unrelenting support to NGO’s. OTE also supports organizations that promote or uphold the Greek cul-tural heritage and endorses a corporate culture of volunteerism. In 2010, OTE contributed €1,560,675 in sponsorships, donations and fundraising. Specifi-cally:> OTE continued to offer it’s support to NGO’s and

other social groups and children, such as: — A Child’s Smile — “Together for Children” Union — MDA HELLAS — The Food Bank — The Association for the Psycho-social Health

of Children and Adolescents (EPSYPE)> The company supported insitutions and actions

that uphold the preservation of Greece’s cultural heritage, such as:

— The Benaki Museum — The Thessaloniki Photography Museum.Further information on OTE’s Corporate Responsi-bility practices is available in OTE’s 2010 Corporate Responsibility Report.


INVESTMENTSIN INFRASTRUCTURE

TECHNOLOGY CONVERGENCE FOR THE PROVISION OF BUNDLED

PRODUCTSThe increased demand for bundled products, and es-pecially products that include broadband services, calls for a single broadband platform which will sup-port the convergence of various technologies. One of the most significant challenges for telecom operators today, therefore, is the upgrade and transformation of their networks and infrastructure. In recent years, OTE has been investing in the trans-formation of its existing fixed-line TDM network into a Next Generation Network (NGN). The architecture of this network, based on IP technologies, offers au-tomated control from a central location and can sup-port existing and new infrastructure. The TISPAN IMS network architecture, on which New Generation Networks are based, allows for the convergence of fixed-line and mobile telephony. As part of its network upgrade, OTE: > Expanded the ADSL network (installation of about

150,000 new ports in 2010)> Installed ETHERNET DSLAMs at new points of

presence so as to offer ADSL service in smaller urban centers

> Proceeded with the development of an NGA net-work in various regions throughout Greece

> Developed the IPTV infrastructure and provided

IPTV services and Video on Demand (VoD) to a total of 400 towns and villages

> Reinforced the DWDM transmission network, through the upgrade of the existing rings, the de-velopment of two new DWDM rings in Crete and the installation of two new metropolitan rings in Thessaloniki and Patras

> Upgraded the IP network by increasing the capac-ity of the links between the nodes

> Installed an IMS system (to introduce VoIP ser-vices)

> Received the new Voice Mail platform, which is expected to be completed in the first half of 2011

> Completed Phases 1 and 2 of the new Intelligent Network (IN) platform and expects to complete Phase 3 in the first half of 2011.

OTE’S CUTTING EDGE NETWORKS

Apart from OTE’s advanced network, which are pre-sented on page 35, the company has also developed IPTV, ADSL and FTTx networks.

IPTVIn 2010, OTE’s IPTV services were expanded to 508 points throughout Greece, from which a 10Gbps or 2.5Gbps NG-SDH ring passes, and there also in-stalled Ethernet DSLAMs. The expansion of IPTV services availability, through the use of the NG-SDH ring network, will continue in 2011.


ΙΡ Access Network

IP distribution and core network

Ethernet Network

NGN/IMS Network

WiMax wireless broadband networks

> Consists of 108 points of presence throughout Greece > The services offered through the network are: IP VPN, VoIP VPNs, Direct

Internet Access (DIA) and Dial-Up Internet access

> Supports all the broadband and IP services provided by OTE> The number of BRAS systems of the distribution network increased in 2010, to

56, at 15 points of presence > The IP Core network consists of 7 points of presence throughout Greece > The network’s node connections are carried out exclusively through nX10Gbps

circuits

> Supports broadband Internet and leased-line services> By the end of 2010 there were over 1000 Metro Ethernet points of presence

throughout Greece, compared to 700 at the end of 2009> Products and services based on IP and Ethernet networks include: —IP VPNs —DIA (Direct Internet Access) —VoIP VPNs —E-Line (Layer 2 VPNs) —Wide Area Ethernet (Layer 2 VPNs among cities) —Integrated Central ADSL Connection —Dial-Up Internet access

> The NGN facilitates the provision of VoIP services as part of the state-spon-sored SYZEFXIS project

> A total of 43 points of presence throughout Greece are equipped with the SUR-PASS type of NGN infrastructure with Media Gateways, 1 Softswitch, 10 SIP Servers, 1 Centralized IP PBX and 4 SBCs

> In 2010 an IMS system was installed which will gradually replace the existing NGN system and will serve both the SYZEFXIS network as well as OTE’s VοIP services

> These are operating in the following regions in Greece: — Thessaloniki, where it serves a large part of the city, as well as the Sindos-

Kalohori Industrial Area, meeting the needs, mostly, of business users — Mount Athos — The Attica region — Samos — Region of Zagorohoria

OTE’S NETWORKS


OTE’s fixed-line network, in 2010:> 224 digital centers > 2,462 remote subscriber units > The installed capacity of OTE’s exchanges on December 31, 2010 stood at: — 5,9 million PSTN lines — 661,000 ISDN BRA lines — 9,500 installed PRA lines

ADSLIn 2010, OTE continued to reinforce its presence in the ADSL market, increasing the number of installed ADSL ports from about 1.6 million by the end of 2009, to over 1.7 million in 2010. By late 2010, the service was available at a total of 1,933 points (OTE buildings, booths or spaces owned by third parties), with over 4,470 DSLAMs, which corresponded to 97.5% of telephone connections, compared to 1,501 PoPs at the end of 2009 and 95.7% coverage.Wishing to offer connection speeds greater than 2Mbps, the company has turned to Ethernet technol-ogy (ETH DSLAM), while at the same time begin-ning to restrict the use of ATM technology.

Local LoopBy the end of 2010, there were 1,376,000 local loops with shared and fully unbundled local loop access, compared to 984,000 in 2009. Also, by the end of 2010, the number of local exchanges with active Physical Collocation, only, was 112, the number with active Distant Collocation, only, was 686, while the number of local exchanges with both active Distant and Physical Collocation was 64.

FTTxOTE has been developing a new generation access network with fiber optic close to the user (FTTH/FTTB/FTTC) in order to offer broadband services at higher speeds, up to 50Mbps per subscriber. The new fiber optic access network is being devel-

oped, initially, in a limited number of urban cent-ers, covering the municipalities of Alexandroupolis, Komotini, Xanthi, Serres, Zografou and the area of Kareas. At the same time, the project is underway in the area of Voula-Vouliagmeni and licenses have been granted for the engineering of the network in Efkarpia, Thessaloniki and the Pylaia area of Thes-saloniki, which will begin in 2011.

SPECIAL NETWORKS

TETRAIn 2010, OTE, the sole provider of the TETRA com-mercial services in Greece, enriched the “OTE TET-RA SERVICES” network with 11 new base stations, thus significantly expanding its radio coverage. The network covers Athens and the greater Attica region, Thessaloniki and its greater area, as well as other large cities and regions throughout Greece, al-lowing for individual and group calls, calls to other networks, and data transmission (Short Data Services & Packed Data Services) safely, through encryption. The “OTE TETRA SERVICES” network consists of a Network Transfer and Management Center and 105 base stations, 45 of which are installed in Athens.

SATELLITE COMMUNICATIONSOTE has two Satellite Communication Centers in Thermopylae and Nemea with a total of 42 transmis-sion-reception satellite antennas, while its two Head-


Ends (satellite and IPTV) cover the geographical area of Europe, North America, Australia, North Africa, the Middle East and Western Asia, through European, American, African and Asian satellites, including the Greek satellite HELLAS-SAT-2.In 2010, OTE provided via the Eutelsat, Intelsat, In-marsat, Hellas-Sat, Amos, Thaicom, NSS, Apstar, Af-ricaSat and Arabsat satellites, the following services:> Satellite transmission of image, voice and data

services at a total transmission rate of 450Mbps (permanent and occasional radio and television transmissions, distribution of radio and TV con-tent, reception/transmission of radio and TV sig-nals to another satellite [turnaround services], and data transfer)

> Inmarsat services to parts of the Atlantic and In-dian Ocean (telephony, Internet, data, Telex, e-mail and GMDSS navigation security)

> Satellite control services (telemetry and orbital position control and change)

OTE’s satellite services are supported by a high ca-pacity interconnection (SDH and Ethernet services) with OTE’s core network and the OTEGLOBE inter-national center. During 2010, OTE also invested in satellite pay TV infrastructure, transmission antenna systems and the upgrade of the Inmarsat base station.

RADIO-MARITIME COMMUNICATION SERVICES

Through its Radio-maritime Communications Net-

work (MF - HF – VHF- NAVTEX), OTE offers: > Navigation safety Services – the Global Maritime

Distress Safety Systems (GMDSS) > Special programs for seamen (weather reports,

medical instructions, gale warnings, update re-ports, service messages, and Mediterranean weath-er map transmission)

> Commercial radio communications (radio-calls and radio-teletype communications, maritime sat-ellite communications, FAX, e-mail, and TELEX).

NETWORKS’ EXPANSION IN 2011

During 2011, the company will proceed to:> Develop and expand the NGA network (FTTH/

FTTB/FTTC) in various regions across Greece > Expand the ADSL network (increase the existing

points of presence and install DSLAMs at new points of presence)

> Expand the commercial availability of IPTV in more regions throughout Greece

> Expand the Metro Ethernet network (install new Ethernet switches) and upgrade the existing Met-ro Ethernet nodes

> Receive the new Interactive Voice Response (IVR) platform

> Expand the Service Assurance platform in OTE’s IP network and develop test and diagnostics tools for ADSL

OTE’s satellite communications infrastructure covers the geographical area of Europe, North America, Australia, North Africa, the Middle East and Western Asia, via European, American, African and Asian satellites, including the Greek satellite HELLAS-SAT-2


HUMAN RESOURCES

In 2010, due to the economic crisis and the espe-cially demanding and competitive environment, the company focused on two key issues: the develop-ment of its personnel and the control of operational costs, through increased productivity and efficiency. Significant progress was made in both of these areas through specific projects and initiatives.

DEVELOPMENT OF HUMAN RESOURCES

In 2010, ΟΤΕ implemented a Job Family Model. This model, which facilitates personnel’s develop-ment via up-to-date tools and applications, entails: a) the charting of all the job roles within the company, b) their detailed description, and c) their grouping into families of similar roles. The model is the base upon which human resources development systems will be founded. These systems will ensure: > Growth and development> Compensation, benefits and incentives> Education, specialization and the optimum man-

agement of skillsSo far, all roles have been recorded, described in detail and classified into groups. The project’s final stage, which involves matching employees to the roles listed, began in 2010 and is expected to be com-pleted sometime during 2011. Moreover, OTE is beginning to set up a modern, in-tegrated Human Capital Management (HCM) sys-

tem. This system will replace all the existing relevant systems and will effectively support the company’s Management in its work.

FOCUSED ON REDUCING OPERATING COSTS AND ENHANCING PERSONNEL

EFFICIENCYAiming to reduce operating costs and to enhance per-sonnel’s efficiency, in 2010, the company introduced the HR Efficiency program. This program, which has been handled with the utmost priority, will focus on the monitoring and review of existing policies, prac-tices and the company’s organizational structures. Emphasis will be placed on the identification of measures which will be contributing to the reduction of costs in a systematic way. The first results of this program are expected to emerge in the first months of 2011.

FOCUS ON THE PROFESSIONAL

DEVELOPMENT OF EMPLOYEES

The company is committed to providing its employ-ees with opportunities for professional development and also to accumulate the skills required for OTE to remain competitive.


To accommodate this need, the OTE Group, and par-ticularly OTEAcademy, which is OTE’s training and professional development agent, organizes seminars and training programs. In 2010, about 5,900 OTE employees participated in educational programs. ΟΤΕAcademy, develops spe-cific programs or adapts some educational programs in order for them to meet OTE’s specific educational needs. OTEAcademy’s educational programs cover the fol-lowing areas:> Technology and Telecommunication > Information Technology > Management> Customer Services> Sales> Financial Issues> Human Resources > Health and Safety> Technical Issues.

EVALUATION SYSTEMS FOR ALL COMPANY EXECUTIVES

In 2010, members of the company’s senior manage-ment were evaluated through the new PPR (Perfor-mance & Potential Review) evaluation system, en-hancing, thereby, transparency with respect to their skills and performance. In detail, this new system fo-cuses on the evaluation of their performance as well as on their potential progress within the company.

Τhe company aims to enhance personnel efficiency

At the same time, existing evaluation processes re-corded the performance of company employees vis-à-vis the successful completion of their tasks. OTE’s performance evaluation system aims at motivating, rewarding and encouraging the professional devel-opment of its employees, and ensuring transparency and objectivity throughout the evaluation process. The current evaluation system also facilitates job ro-tation practices within the company, preparing em-ployees for a change in either tasks or position.

COMPENSATION AND REWARD POLICIES AS PART OF OTE’S

TARGET-SETTING AND EVALUATION SYSTEM

Although OTE’s compensation policy, which has been established through Collective Labour Agree-ments, determines salaries based on the years of service and education, a compensation and reward policy is also in force, as part of the human resources target-setting, evaluation and reward system. This system is defined by specific rules and regulations and is based on the principle of fair allocation of re-wards. In cases when performance exceeds preset targets, the Management may grant rewards in the form of bonuses. In special cases of extraordinary nature, the company may reward its employees by other means (commendation, extraordinary bonuses, etc.).


In 2010, OTE implemented the PPR (Performance & Potential Review) evaluation system for senior management, aiming to evaluate their skills and performance

All OTE employees, including those seconded from subsidiaries, are subject to the same performance evaluation and reward systems and under the same regulations relating to working hours, job rotation and promotions, irrespective of their years of em-ployment within the company.

KEY DEVELOPMENTS IN 2010

At the end of 2010, the company had 10,925 employ-ees compared to 11,369 in 2009. The average age of OTE’s employees stood at 45 years. During 2010, 98 employees were hired by ΟΤΕ, 542 were no longer working for the company and 461 employees left the company as part of an early retirement scheme.

Projects and developments in 2010 related to quality and organization:> Participation in the EFQM’s “Committed to Ex-

cellence’’ Business Excellence Model for the Eu-ropean certification of OTE’s departments

> Planning and implementation of an information program, throughout Greece, for the develop-ment, application and certification of integrated Quality Management Systems, ISO 9001:2004, Environmental Management Systems, ISO 14001:2004 and Health and Safety in the Work-place Management Systems, ΕLΟΤ 1801:2008

> Development of an annual, pan-Hellenic pro-gram for the measuring of Electromagnetic Ra-

diation (EMR) levels in OTE Group buildings, as part of the Environmental Management Systems, ISO 14001:2004

> Digitalization of the physical archive of decisions issued by OTE’s management since 2000, and creation of an electronic filing and indexing sys-tem

> Recording (through the ARIS system of recorded processes) of all the primary and supportive pro-cesses implemented by the company across its various operations.

Projects and developments, in 2010, as part of the company’s organizational structure: > Documentation of all internal processes up to a

Sub-Division level according to the ΟΤΕ PDM model and methodology (annulment or estab-lishment of a process, change in the description/ name of an Operational Unit etc.)

> Documentation, control and encoding of Opera-tional Units’ projects

> Collaboration with OTE’s IT Operational Unit on the Peoplesoft HCM project, regarding:

— Filing descriptions of Operational Units’ pro-jects; and

— Linking Operational Units’ data about their structure with the ARIS Information system through HR LINK.


OTE employees’ age mix (2010)

47.5% 34.9% 16.7% 0.9%

35-49 50-59 20-34 60+

OTE employees per function (2010)

55.7% 28.5% 5.3% 1.0%

3.0%6.6%

Technical OtherCommercial Finance

Support Specialized


2011 OUTLOOKThe company’s key objectives for 2011 involve the reduction of operating costs and the increase of per-sonnel efficiency. The company will leverage on the potential of its existing personnel. Human Resources Division’s objectives include the following: > Completion of the Job Family Model> Completion of the HR Efficiency program > Planning, development and certification of the

Quality Management Systems according to ISO9001, ISO14001, and ISO27001 OHSAS (ΕLΟΤ1801), as well as the European Certifica-tion of Business Excellence (EFQM)

> Review and designation of Key Performance In-dicators (ΚΡΙs) related to the company’s organi-zational structure.

-44-OTE Group operations


OTE GROUP OPERATIONS

OTE Group’s structure

Mobile TelephonyFixed-line Telephony Other Operations

GermanosSE Europe

(100%)

GlobulBulgaria

(100%)

ZappRomania

(100%)

CosmoteGreece(100%)

ΟΤΕ GLOBEGreece(100%)

ΟΤΕ Α.Ε.Greece

Hellas SatGreece(99%)

OTESat-MaritelGreece(94%)

Other companies

of the Group

RomTelecomRomania

(54%)

(30%)

ΟΤΕ Investment

ServicesGreece(100%)

ΟΤΕestateGreece(100%)

ΟΤΕAcademyGreece(100%)

OTEPlusGreece(100%)

AMCAlbania

(97%)

Cosmote Romania

(70%)


FIXED-LINE

OTE SABROADBAND SERVICES

Reduced growth rate of broadband services in GreeceThe growth rate of broadband services in Greece posted a drop, compared to previous years. This drop is due both to the maturity of the market and the eco-nomic crisis, which seem to have affected demand. The Greek Regulator (EETT) estimates that about 20% of unbundled local loop access subscribers are voice customers. In recent years, one of the main strategic and busi-ness objectives of OTE’s Management has been to increase broadband services penetration in Greece (which is approaching EU-average levels). Through the investment of billions of euros in infrastructure and the implementation of radical changes in its structure (in order for it to meet the demands that broadband development entailed on a technological, technical, regulatory and commercial level), in recent years OTE has successfully met the country’s need for technological advancement. Without any financial support from the Greek State or the European Union, OTE has secured the availability of broadband ser-vices to the overwhelming majority of the country. Today, over 95% of existing telephone connections in Greece feature the infrastructure necessary to provide broadband services. The development of OTE’s ADSL network continued in 2010 throughout Greece, with its Points of Pres-ence (PoPs) coming to 1,937 of which 1,710 are with-in the Attica region.

Moreover, through OTE’s satellite broadband Internet service and its Hellas Sat satellite, broadband services are now available in Greece’s most remote areas. During 2009-2010, OTE employees installed a to-tal of 301,588 new ADSL ports through 856 new DSLAMs. Responding to the needs of other telecom-munications operators, the company also activated a total of 733,625 new lines for unbundled local loop access – LLU (341,175 LLU in 2009 and 392,450 new LLU lines in 2010).Through Conn-x, OTE leads new technology devel-opments in Greece and remains the first choice, for customers seeking quality broadband services. In De-cember 2010, OTE’s broadband services customers were more than 1,140,000.

EMPHASIS ON BUNDLES AND INTERNET SERVICES

During 2010, competition among operators was es-pecially intense with respect to bundled products for residential customers, the marketing of new bundled products, as well as the continuous promotion of of-fers and discounts on packages that combine voice, broadband Ιnternet (Double Play), and/or pay-TV (Triple Play). Competition intensified even further, as a result of the promotion of bundles of fixed-line and mobile teleph-ony services (that were a result of the collaboration of mobile telephony companies and fixed-line operators,


Evolution of Greek broadband market - Active lines (000)

0

500

2007 2008 2009 2010

1000

1,083

1,606

2,100

2,529

1500

2000

2500

3000

Greek Broadband Population Penetration

0%

5%

2003 2004 2005 2006 2007 2008 2009 2010

10%

15%

20%

25%


The New Generation Access Network will provide final users with super high - speed broadband services, based on fiber optic (Fiber-To-The-x), with advanced qualitative features

in line with the trends of convergence of telecommu-nication services).The new emerging trend is that de-mand is turning to bundled packages, which greatly reduce the cost of telecom services for residential customers.Tariffs for broadband services dropped considerably as a result of the continuous promotional offers in the market. Despite intense regulatory intervention, OTE succeeded in remaining competitive, in terms of its tariff policy. The quality of the services pro-vided, along with OTE’s response to its customers’ specialized needs, and also through a comprehensive customer service system and a well-organized distri-bution network, contributed significantly to OTE’s success in maintaining its market share. As regards companies and businesses, broadband ser-vices are still a necessary tool for their operation and commercial activities (as indicated by the increase in electronic shops and the promotion of products through social media and other online marketing ac-tivities in 2010). As a result, last year, the demand in services in the corporate customer market, focused on value - added and networking services. Furthermore, during the year, a gradual replacement of traditional connectivity services (e.g. leased lines, ΑΤΜ) with newer ones (IP VPN, Ethernet) was re-corded. These new services offer customers more versatile, simplified and economical solutions. During the same period, synergies between telecom-munication companies increased in the overall mar-

ket, and a new telecommunications provider (who was active in other regions in Greece) expanded its activities in the Attica region.

ΟΤΕ: NEW GENERATION ACCESS NETWORK

As part of its strategy to provide new, innovative ser-vices, while at the same time improving the quality of broadband access, OTE began, in 2010, to develop, for the first time in Greece, a New Generation Access Network (New Generation Access - NGA). This net-work will provide final users with super high-speed broadband services, based on fiber optic (Fiber-To-The-x) with advanced qualitative features (down-loading up to 50Mbps and uploading up to 5Mbps).Τhe development of the New Generation Network was launched in a limited number of urban areas throughout Greece and will gradually expand to other areas as well.

PRODUCTS AND SERVICES FOR RESIDENTIAL

CUSTOMERSThe convergence of telecommunication services, the consumer trend towards home entertainment, as well as the considerable expansion of ADSL in re-cent years, have led telecommunications operators worldwide to provide digital TV services through broadband access (IPTV). These services are usually


offered to customers as part of triple-play products, a combination of voice (mainly VoIP), ADSL and TV/VοD services. In response to international trends and customers’ evolving needs, OTE launched, in early February 2009, the Conn-x TV (IPTV) service, available at 460 Points of presence of OTE’s network throughout Greece. These include the capitals of all the prefec-tures, small towns, islands, and urban centers with even smaller populations. The service is available at speeds, 2 and 24Mbps.In terms of content, the number of TV channels has increased to 48, covering most genres and interest areas, such as children’s programs, documentaries, sports, fashion and lifestyle, news, music and en-tertainment, i.e. films and TV series. Content is ex-pected to expand even further in 2011. Key to OTE Conn-x TV’s take up, was the securing of the rights to OPAP’s Greek Football Cup for 3 years, starting with the 2010/11 season. At the end of 2010, the customer base of OTE’s IPTV services was 50,038 subscribers. Throught the Conn-x TV offering, OTE aims at meet-ing its customers’ demand for a greater selection of TV options and programs, while at the same time cap-turing first position in the triple-play market. Never-theless, a large portion of OTE’s subscriber base, and the overall Greek population, cannot opt for Conn-x TV services due to ADSL2+ technology limitations (mainly because of the distance between the customer

and a DSLAM). OTE intends to bridge this gap, with-in 2011, by offering Conn-x TV via satellite as well. During 2010, and as part of its commitment to the development of new technologies and the increase of broadband penetration, OTE:> Upgraded ADSL speeds for all subscribers

throughout Greece at no extra cost. In particu-lar, 8Mbps customers were upgraded to 24Mbps, while 2Mbps customers were granted double the speed of uploading, at 512 Kbps. Those who al-ready had 24Mbps were offered lower prices

> Launched three new double-play discount packag-es at a fixed net price: the Conn-x Mixed 200 pack-age (a fixed price which includes the monthly fee for a PSTΝ/ISDN BRA telephone connection, plus 180 minutes local or long distance calls, within or outside the OTE network, 20 minutes of calls to mobile phones of any Greek network, as well as unlimited access to the Internet through a Conn-x connection at 2Mbps speed); the DP2 discount program (a fixed price which includes the monthly fee, unlimited local and long distance calls within and outside the OTE network, as well as unlim-ited access to the Internet through a Conn-x con-nection at 2Mbps speed); and the DP24 discount program (a fixed price which includes the monthly fee, unlimited local and long distance calls within and outside the OTE network, as well as unlimited access to the Internet through a Conn-x connec-tion of 24Mbps)

OTE’s objective: to become customer’s first choice in the triple-play market segment


OTE retail ADSL market share (2010)

56.0% 44.0%

ΟΤΕ Retail ADSL

Total LLU & OTE

wholesale

16

50

2009

2010

IPTV subscribers (000)

2008 2009 2010

801

34.8%

41.1%

55.2%

1,0111,044

Conn-x subscribers

Conn-x subscribers

% Subscribers using voice and broadband as % of total Conn-x subscribers


The two most successful broadband programs, in terms of sales, were the DP24 with 117,600 new customers and the DP2 with 82,000 new customers

> Launched the new Cοnn-x on a 2nd phone line, addressing customers that wish to alternate their Conn-x connection, between two telephone con-nections at a lower cost than the sum of the two connections

> Developed a service for the long-distance man-agement of xDSL equipment, for the activation of broadband services, and the automatic set up of equipment supported by communication protocol TR069. This service is a comprehensive solution which will benefit both OTE, by virtue of the easy and fast set up of its equipment, and the customer, by virtue of the immediate service offered after the sale in the event of malfunctions

> Provided voice and broadband services through the WiMAX fixed wireless access network in ar-eas, where broadband services through a wire line network are not possible

The two most successful broadband programs, in 2010, in terms of sales, were the DP24, with 117,600 new customers and the DP2, with 82,000 new cus-tomers. It should be noted that during the last quar-ter of the year, OTE offered Conn-x 6+6. Despite the short time it was on offer, the number of applications came close to 30,000.

PRODUCTS AND SERVICES FOR CORPORATE AND

BUSINESS CUSTOMERSIn the corporate and business market, besides the basic telecommunication services (telephony, broad-band, and connectivity services), OTE also offers managed network services, as well as supply, set up, installation, and equipment and software support ser-vices. To this end, the company develops and offers standardized solutions and packages that combine te-lephony, broadband Internet access, and Data Center services.During 2010, demand in the corporate and business customer market segment centred on broadband ac-cess services, bundled services and packages with value-added services with guaranteed quality and competitive prices.Within this framework, in 2010, OTE proceeded to: > Carry out a review and a full evaluation of the

ΟΤΕ IP VPN service, in order for it to correspond perfectly to customers’ different needs for price, speed and quality, within a highly competitive en-vironment

> Draft a standardized SLA (Service Level Agree-ment) for its IP VPN, Ethernet & DIA services, in order to provide guarantees with respect to the quality of its services

> Create and launch new products/bundles for equipment hosting services (Data Center, Co-lo-cation)


The company provides corporate and business customers with inte-grated solutions and standardized service packages that combine tele-phony, broadband access and Data center services

> Launch a new ΟΤΕ Business Portal Packs pack-age addressing mainly small and mid-sized com-panies that wish to develop their own website (Corporate Site package) or e-shop (e-shop pack-age) and make use of corporate applications

> Review and evaluate the Dedicated Internet Ac-cess service, as a premium solution for corporate and business customers in terms of Internet ac-cess, with a new tariff policy and fully automated IT Systems. This service provides the combination of a circuit and Internet feed to OTE customers that opt for permanent and high quality Internet access at a wide range of speeds (1Mbps-1Gbps), through various access technology options

> Integrate the 3 Ethernet services (Basic, Advanced & Wide-area) into a single e-line Ethernet service with a simplified structure, improved features and a new tariff policy. The Ethernet services network meets a) the connectivity needs of businesses’ points of presence, for the transmission of large volumes of data at high speeds, while at the same time reducing their telecommunication cost, and b) the network connection needs of the customers

> Integrated solutions packages that combine net-work and IT technologies (ICT services) for state-funded projects under the Greek National Strate-gic Reference Framework (NSRF), such as Digi Lodge, Digi retail, and E-health. ΟΤΕ participates in the NSFR program, offering reliable services and telecommunication and IT products. Specifi-

cally, the NSRF’s Digi-Retail and Digi-Content initiatives, allow the companies that are involved to make use of Information and Communication Technologies (ICT)

Through the development and implementation of ad-vanced Data Mining models (which include, among other things, an analysis of a project’s value, tariffs optimiza

CONTENTS · OTE also owns 54% of RomTelecom, the telecom-munications incumbent in Romania,...

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