Ladies and gentlemen, thank you for standing by. I'm Constantinos, your Chorus Call operator. Welcome, and thank you for joining the OTE conference call and live webcast to present and discuss the third quarter and nine months 2022 financial results. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Babis Mazarakis, Chief Financial Officer, Mr. Panayiotis Gabrielides, Chief Marketing Officer, Consumer Segment, and Mr. Evrikos Sarsentis, Head of IR and M&A. Mr. Mazarakis, you may now proceed.
Good morning and good afternoon to all of you. I am very happy to welcome you all to OTE's third quarter of 2022 earnings call. Michael is not able to join us today on the call due to urgent obligations, but we are plenty around the table to take you through the discussion and answer your questions. Michael, of course, will be with us in our next call. Our performance from the third quarter in a volatile environment clearly demonstrate our strengths and the validity of our strategy. Facing inflation, rising interest rates, other consequences of hardening global conditions and intensifying competition in our home market, et cetera, some organization might have decided to retrench, but it's not what we are doing. We are continuing to push forward and build the conditions for continued overperformance way into the future.
We are leveraging our state-of-the-art infrastructure in fixed and mobile and our whole ecosystem to make further progress. We are mindful of the increasing pressure on the wallets of all of our customers and want communications to be on one thing they don't worry about. This is why we raised our speed of our broadband offerings without changing our prices. The impact on customer satisfaction is appreciable. These accomplishments did come at the detriment of some of our top line growth in fixed retail. However, we are confident that they will put us in a very strong shape to face the existing and future competition in the next quarters. In the meantime, growth in the Greek mobile remains buoyant above the level in the first half of the year. We have good performances from all segments of the market.
Greece had a stellar tourist season. As a result, in the first nine months of the year, OTE's visitor roaming revenues already exceeded the record figure we achieved back in 2019. Revenue growth in Greece also benefited from strong wholesale and particularly ICT and system solutions, where our expertise landed us many important public and private assignments. The newest addition to the COSMOTE's offering, which is the payzy payment application for everyday transactions that we launched at the beginning of October, bringing flexibility and simplicity to our world of payment systems. It is still early days to report numbers, but we base our ambitious goals on the fact that so far, mobile payment solutions in Greece accounted for only 3% of the total, giving us thus a huge upside.
In Romania, year-on-year revenue comparisons continue to be impacted by stringent cuts in mobile termination rates, which are scheduled to continue over the next couple years. Our mobile operator is successfully adapting to the new top line environment and is making further progress implementing its mobile-only strategy. We are maintaining our disciplined approach to investments in our future successes. We are targeting EUR 640 million in CapEx for this year. This is roughly around EUR 20 million higher than our earlier expectations due to a timing shift of Fiber- to- the-H ome CapEx against future years. Our cash flow generation, however, remains on track, and we are once again confirming our 2022 outlook. Let me now deep dive a little deeper on the results of the third quarter.
Total revenues were up 5.9% year-on-year and reached EUR 905 million, maintaining a strong trend. The increase is entirely due to our operations in Greece. As we started flagging earlier in the year, the change in Greek retail fixed revenues reflects a combination of post-COVID line disconnections, the accelerated switch by certain customers from voice to data lines, the impact of the speed upgrades and the commercial activity to boost loyalty and service to our customers. This picture is expected to be there in the coming couple of quarters before stabilizing thereafter. In Romania, revenues show the impact of mobile termination rate cuts along with a base effect due to some ICT revenues booked last year. As a result, group adjusted EBITDA after leases was up 1.6% to EUR 358 million in the quarter.
The increase in total operating expenses largely reflects costs directly tied to higher revenues, notably device costs, marketing and third-party fees, as well as the impact of higher one-off accounting provisions in personnel. The group's EBITDA margin was down in the quarter, reflecting all the above. We should see our margin rebound as we maintain our efforts to improve costs in the coming quarters. Turning to Greece, retail revenues were up thanks to another outstanding quarter in mobile. This more than made up for the drop in fixed retail of nearly 5%. With wholesale up 4%, the other revenues were up nearly 29% on an exceptional level of ICT and system solutions revenues. Total revenues increase were up more in total than 6%. Growth in broadband revenues slowed down as we had expected, following our competitive strategy and efforts to enhance loyalty.
We are maintaining our market share as we accounted for a significant portion of all market net additions since the beginning of the year. Our Fiber-to-the-Home rollout is proceeding apace. This quarter, we added 18,000 new Fiber-to-the-Home subscribers to reach a total of 110,000. Despite the absence of any state subsidy for a period of time, we have very ambitious new Fiber-to-the-Home subscriber targets going forward. With 753,000 homes passed as of the end of September, we will reach our target of a little bit below 1 million homes passed for the end of the year. Our utilization rate had gained 2 percentage points in the quarter alone to above 16%, a very satisfactory ratio given the very rapid growth of the number of houses passed.
We anticipate demand will accelerate in the next quarters as consumer appreciate more and more the full fiber experience. We hope to see another government-sponsored subsidy put in place within 2023, targeting the higher speed range. In the interim, we are leveraging our market leading positions and the breadth of our network to continue attracting new clients. In TV, revenues grew by more than 4%. We ended the quarter with 644,000 subscribers, up more than 7% compared to September 2021. Our content remains as rich as ever, but macro factors affecting consumer confidence are lowering subscribers growth, also impacted by taxes on TV subscription, which were reinstated in July 2022. We had an extremely good quarter in terms of ICT revenues, which were up 43% year-on-year.
We expect ICT and system solutions to remain important drivers of growth for us, though obviously not at the exceptional pace as the need for digitalization of public and private entities only grow more pressing, and European programs provide an additional incentive. Growth in Greek mobile service revenues further accelerated in the quarter, exceeding 5%. COSMOTE customers are evidently perceiving the differentiation of our superior infrastructure provides. Mobile service revenue growth was well balanced between prepaid and postpaid. Both the revenues numbers of each segment and their respective customer bases were up in the quarter. As in prior years, our summer data packages proved extremely useful and successful. Average monthly data consumption per user exceeded 11 GB for the first time this quarter.
The recovery in inbound tourism had begun last year, but it really took off in the past two quarters. As a result, our revenues from visitors roaming jumped 33% compared to the third quarter of 2021. The increase in total operating expenses, excluding depreciation and amortization and one-offs, were up more than 10% in the third quarter. Nearly 1/2 of the increase is due to higher device costs. Personnel costs were about 3% due to the anticipated one-off payments and provisions. This rise in energy cost was contained due to the preventive actions we had taken in the previous quarters. Greek adjusted EBITDA after leases stood at EUR 346 million and was 1% up in the quarter. In Romania, total revenues were down 5%, largely reflecting one-off ICT projects recorded in the same quarter of last year.
Service revenues were down nearly 9%, primarily due to the continuing impact of sharp mobile termination rate cuts. Excluding the MTR cuts, mobile service revenues would be down approximately 4%. The sharp growth in total number of Telekom Romania mobile subscribers continues in the quarter. Importantly, postpaid subscribers were up more than 6%. Total operating expenses, excluding depreciation and amortization in Romania, were down 9%, mainly reflecting adjustments in several key OpEx lines. Telekom Romania mobile adjusted EBITDA after leases amounted to nearly EUR 13 million, up 20% year-on-year. Approximately EUR 4 million of this number is related to a reversal of sales provisions and therefore not recurring. For the nine months of the year, adjusted EBITDA amount to EUR 38 million, close to our full year targets of approximately EUR 40 million.
Now looking at the rest of our P&L, interest expense was down 26% from the prior year, partly reflecting our ability to lower the cost of our debt despite the interest rate climate. We repaid the remaining EUR 375 million bond issue in July, and refinance this with a EUR 150 million loan for our fiber investments subsidized by the RRF, and with a short-term, a EUR 150 million bond, which will be repaid next year from existing resources. Therefore, we do not anticipate any refinancing needs until maturity of our EUR 500 million bond in 2026. Income taxes were down 36%, reflecting lower earnings before taxes due to the last year's benefit of the one-off reversal of provisions related to OTE's voluntary leave schemes from earlier years. Turning to cash flow.
Adjusted CapEx was EUR 178 million, up more than 10% from the third quarter last year, largely on Fiber- to- the-H ome investments and TV content acquisition. The full year increase in expected adjusted CapEx to EUR 640 million primarily reflects a slightly different building mix for the Fiber- to- the-H ome rollout from what we had originally been planning. Higher CapEx, as anticipated, led to a 2% reduction in our adjusted free cash flow after lease. Reported free cash flow was down 26% in the quarter, reflecting a different schedule of payments for voluntary exit schemes. In the nine months though, however, reported free cash flow is up more than 20% to EUR 459. Overall, we don't expect the slight higher-than-planned full year CapEx to affect our free cash flow targets.
We will give more detail for 2023 CapEx guidance next quarter when we will report the full year. I want to emphasize right now that the 2022 excess does not imply any upward adjustment for the following years, it's rather the contrary. Taking that into account, we reiterate our stated guidance of EUR 600 million in reported free cash flow for the year. To conclude, third quarter has been solid, both in terms of delivering further growth and in putting aside some of the fruits of our growth to strengthen our future potential. With increasing uncertainties ahead, we have improved our readiness to meet our competition and weather a tougher economic climate. Now at this point, with our other colleagues around the table, we are ready to take your questions. Operator?
Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Draziotis Stamatios with Eurobank Equities. Please go ahead.
Question, please.
Mr. Draziotis, I apologize to interrupt, but your line is very, very bad. Could you please hang up and try to call back?
Okay. Thank you.
The next question is from the line of [Sonia Jay] with JP Morgan. Please go ahead.
Hi. Can you hear me well?
We hear you.
Yes, we hear you. Please go ahead.
Okay, good. Yeah. Hi. I had two questions, please. In the fixed service revenue decline, I guess a part of that is due to the customer that switched from traditional fixed voice to data communication. What are you seeing on that migration for other customers? Like, do you think this is a trend that could continue that more customers would switch? Second question would be, I think in the report, you guided towards low to mid EBITDA growth, but that also implies that Q4 EBITDA growth would be kind of flat to like low single digits. Is there any factors that would lead to higher costs in the last quarter, please? Thank you.
Thank you for the questions. On the first question about fixed, I think we, as we described it, this is a trend that is caused by, let's say, controlled items. It's of course the migration of customers from the traditional voice to the data comms, and this is also captured in the other line, the other revenues. Also the continuous commercial activity to refinance our investments in the broadband and continue to grow our broadband base. I think the most important KPI that we should flag out in this quarter is the continued growth on the broadband customers in a environment which is rather the market is declined. We are capturing the biggest part of these additions.
This one is a result of our commercial activities, which not only ensures that we defend the current base, but also we build the basics in order to be able to capitalize on this investment in the future. In this trend, as we described also in the presentation, the next couple of quarters might be looking along the same investment targets in terms of nurturing our customer base before stabilizing thereafter. It's not worrying us. It's actually deliberate action we are taking the advantage of the very good performance in other areas of our business to reinvest and reinforce the critical part of our investments, which is on the fixed part.
On the second question, and if I understood you correctly, is whether this trend in Romania will persist also in Q4. Before that one, let me say that, in terms of
Sorry.
Yeah.
Sorry to interrupt. No, my question was just on the guidance for this year for EBITDA growth that would be low to mid-single-digit and what it implies for Q4. The nine months EBITDA growth is around 5% already.
Okay. Well, as we discussed in Q3, we had the effect in Greece, and that's why EBITDA growth was 1%. However, as we go forward and also in Q4, we expect to rebound some of our dynamics that we have in EBITDA. Of course, we cannot disclose the exact numbers. Because again, I may repeat myself, but it's very important, the investments we are doing in our base in this quarter are intentional. I repeated this. They are intentional in order to secure the base for the next quarters. To the extent that the dynamics of this go to the right direction, we should expect to see in Q4 a rebound of the EBITDA growth.
Despite the fact that we will continue also as this strategy on the fixed segment, it will also be present in Q4. Obviously our growth is also fed by the other lines and the underlying savings that we have on the cost side. It's not Romania that drags the whole group down. It's Greece and the for Q3. As I said, this one is going to be looking much better in the coming quarters.
Thank you.
The next question is from the line of Ierodiaconou Georgios with Citi. Please go ahead.
Yes, hi, and thanks for taking my questions. My first question is around the line, just on fixed KPIs. Firstly, around the line losses which accelerated for the whole market, I was wondering if there is any trend that could be long-lasting or is it a one-off effect of certain contracts being migrated. Just curious to see if there is anything structural shifting in the market. My second question again on the fixed KPIs on the broadband side. You clearly have done very well on the retail side, but the market is slowing down. Is it just macro factors that are driving this, or is there anything more structural, maybe customers moving to mobile in areas where fixed infrastructure hasn't been upgraded. Just trying to understand if it's something that may be temporary or again, a bit more long-lasting.
My third question is around the OpEx phasing. Obviously you mentioned that you expect EBITDA to improve a bit in the coming quarters. Is this something that you will implement through cost control? Is there any one-off costs that will not recur? Is there any cost savings that you are implementing? Just trying to understand whether it's more revenue or OpEx driven. Thank you.
Thank you for the questions. On the first one, the line losses that the market reported is mainly on the access part, so it's also some voice-only customer lines that are disconnected. We discussed that this one on the access lines, there's also some substitution because some customers, B2B customers, are moving from traditional fixed voice to data comms, and this revenue is captured in another line. But in terms of number of access lines, that's one reason for reduction. Another reason for reduction is the continuous but fading out post-COVID effect that we have in the country after the surging of the lines during COVID.
To a lesser extent, some of the macro things that in seasonal let's say B2B business, which take out big businesses in the aftermath of the touristic season. That's for the access lines. On the broadband side, the total at least our customer base continues to grow, albeit at lower numbers. This is also explained by the fact that Q3 usually is the lowest production of items because of the summer break.
Also it's because there is some temporary slowdown because of the macro, because that also plays some role. That is why also coming back to the previous point of the fixed activity. This is why we have intensified our commercial approach to, even in this declining environment, continue to grow our broadband base, especially the percentage of our broadband that is migrated into the higher speeds, what we call fiber internet which is 50 Mbps and higher. We believe that at this point of time we have to be close to our customers to help them weather this crisis and this environment in order to keep the loyalty or to gain the loyalty for the future quarters.
Regarding going forward with Q4, we expect Q4 to be a combination. The improvement that we expect in EBITDA is going to be in combination of both top line, because the mobile parts continue to perform as we have demonstrated quite satisfactorily, thanks to the appreciation of our network superiority by our customers. OpEx savings, I think that we reported this quarter there were some one-off seasonal bookings of provisions for annual bonuses, et cetera, for the personnel, which is not of course recurring the next quarter. The organic reduction in the OpEx that we have been traditionally doing through our activities will be more evident in Q4.
A combination of the two is expecting to help us improve our EBITDA in Q4. Although as I said, the investment that we are doing on the fixed line will continue to persist for the next couple of quarters, certainly for quarter four.
Thank you.
As a reminder, if you'd like to ask a question, please press star one on your telephone. Once again, to register for a question, please press star one on your telephone.
Okay. I think we have some questions from the emails and from the text. Allow me to take them through so we can answer to them to the whole plenary. The first question is, we have seen some EU operators echoing a cautious message about cost inflation, particularly with respect to staff and energy. I would appreciate some granularity as to the extent of inflationary pressure you expect to face on these two items in 2023, especially with respect to energy, given the changes that you put in place over the course of the year. Thank you. I think here the question also provides some of the answer.
I mean, for energy costs for next year, we continue to have our agreements, which are helping us to look a little bit stable for 75% of our consumption. The remaining part is due to floating, and we are monitoring the current progress and the current price of the electricity in order to be able to compare how it will evolve. As it looks today, the comparison between 2023 and 2022 looks like this floating part will be moving around the levels of this year in terms of the averages. We don't expect dramatically particular pressure on that side. On the other inflationary pressures, the value chains are of course absorbing gradually the inflationary pressures.
I think the October number for inflation is lower than what has been the past four months. That's indication that at least one month is not low, but is stabilizing in terms of the inflationary pressures. We hope that with our agreements in place and our management of the value chains, we will be able to absorb most of this inflationary pressure without significant hits in our costs. Again, that's all subject to the evolution of the overall environment the next year. We certainly will not be able to defend it 100%. Some of this inflationary pressure will hit our P&L, but this doesn't change the overall direction of our growth.
Second question is, there is, I'm quoting the question. There is a reduction in the retail fixed revenues in Q3 of 4.6%. Do you expect a rebound in the next quarters? Have there been any special events during the third quarter that led to this reduction? I think we responded extensively in this call. Just, I don't know if Mr. Draziotis who asked the question was here from the beginning of the call, so I will repeat very broadly and very in brief the answer.
This one is a result of mainly our commercial activities that are aiming to strengthen the broadband base and increase the loyalty in our customers in a difficult period, that we expect this will secure the loyalty and the stickiness of these customers and will help us to monetize our Fiber- to- the-H ome strategy in the coming months. We said that we expect to continue this strategy, this tactic on the fixed also in Q4 at least, and perhaps in the quarter after. Overall after that one, we expect to rebound thereafter. The next question I see on the screen is from Mr. Patrick, and it reads as follows: Good afternoon. I'm Maurice Patrick from Barclays, and thank you for taking my question.
Couple of them from my side. What is the energy cost as a percent of OpEx, and would you provide some color on hedges? Secondly, any updated thoughts on mobile and disposal in Romania? Thank you very much. Regarding the energy cost, again, we have discussed, approximately this is, roughly about 5% of our overall OpEx, in terms of size, overall OpEx. And we have agreements in place that cover with certain prices for almost 70%, 77%-85% of consumption. On the Romania part, I think we described the operational part quite well in our speech. If discussing regarding disposal or strategies about the asset, we have nothing new to report in this call.
Obviously, whenever we have more, we will revert to the audience for news. So far, we don't have to report anything new. To the operator, I think I read all the questions from the ones on the screen. I didn't know if there's another question waiting in the room. Otherwise, you can take it to the closing.
As a final reminder to register for a question, please press star one on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.
We thank you all for the attention, questions and your interest in the team. For those of you who will not meet until February, when we report our 2022 results, we wish you a peaceful and healthy year-end. Good evening and until next time, bye-bye.
Ladies and gentlemen, the conference is now concluded. You may disconnect your telephone. Thank you for calling. Have a good evening.