Greece's former monopoly phone company, Hellenic Telecommunications Organization SA (HTO.AT), known as OTE, Thursday reported a large rise in first-quarter net profit due to redundancy payments made a year ago and the sale of its Serbian unit but warned of a challenging trading environment.

Net profit for the first three months of the year was EUR306.6 million, compared with EUR30.2 million a year earlier.

Adjusted for a EUR39.7 million voluntary redundancy costs booked last year and a EUR211.3 million gain from the sale of its stake in Telekom Serbia, the Greek company's adjusted net income for the period rose to EUR95.3 million, compared with EUR62.8 million in 2011.

"For the balance of the year, OTE will face a number of challenging external factors. The macroeconomic environment in our markets will remain difficult, and mobile termination rate cuts should affect our performance in the coming quarters," Chairman and Chief Executive Michael Tsamaz said.

"Facing these developments, we will continue to do everything in our power to preserve our top line, adjust our cost base, and improve our financial structure."

First-quarter revenue was almost stable at EUR1.18 billion, compared with EUR1.22 billion in 2011's first quarter, while earnings before interest, taxes, depreciation and amortization, or Ebitda, rose to EUR417.5 million from EUR393.3 million.

The company said revenues continued to stabilize in Romanian fixed business and that the group's mobile operations posted an annualized quarterly revenue increase for the first time since the fourth quarter of 2008.

Capital expenditures fell 28.8% on the year in the first quarter to EUR118.5 million, while the company's underlying net debt declined by over 22% on the year to less than EUR3.4 billion.

-By Stelios Bouras, Dow Jones Newswires; +30-210-3731772; stelios.bouras@dowjones.com

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