Unlocking Hidden Value: Why Hellenic Telecom (HLTOY) Is Poised for Telecom Dominance in 2025 and Beyond

Amid a shifting European telecom landscape dominated by giants like Deutsche Telekom and Vodafone, one under-the-radar player is quietly building a moat of margin expansion, strategic infrastructure dominance, and shareholder-friendly policies. Hellenic Telecommunications Organization S.A. (HLTOY), the Greek telecom leader, is emerging as a hidden growth gem with a compelling value proposition: it trades at a fraction of its peers’ multiples while executing a 5G and broadband rollout that positions it to capitalize on rising digitization demand.

Margin Expansion: A Quiet Profitability Revolution

While HLTOY’s top-line revenue grew just 0.1% year-over-year (YoY) in Q1 2025 to €878.8 million, its adjusted EBITDA rose 1% to €329.1 million, and net income surged 10% to €148.9 million. This profit acceleration stems from disciplined cost management and operational efficiency in its core Greek market, which offset declines in its Romanian operations. The Greek division’s 2% EBITDA growth guidance for 2025 underscores a structural shift toward profitability, even amid flat revenue growth.

The company’s focus on cost control is critical. While competitors in Europe battle inflationary pressures, HLTOY has maintained tight spending discipline, with CEO Kostas Nebis prioritizing high-return investments over discretionary costs. This focus is paying off: its net income margin expanded to 16.9% in Q1 2025, up from 15.4% a year earlier.

5G & Broadband: Building a Wall Around Its Market Leadership

HLTOY’s strategic infrastructure investments are the unsung hero of its growth story. In Q1 2025, its FTTH (Fiber-to-the-Home) customer base grew to 430,000, with coverage expanding to 1.8 million homes (29% penetration). By year-end, it aims to cover 2.1 million homes and businesses, locking in a monopoly-like position in Greece’s broadband market.

Simultaneously, its 5G Stand-Alone (SA) network rollout is advancing rapidly, targeting underserved rural areas via Fixed Wireless Access (FWA). This dual-layered approach—high-speed fiber for urban centers and 5G for rural regions—ensures HLTOY remains the go-to provider for businesses and consumers alike.

Critically, these investments are financed without compromising liquidity. While CAPEX rose to €610–620 million in 2025, HLTOY’s free cash flow (FCF) is projected to hit €460 million, enabling it to fund dividends and buybacks while maintaining a net debt/EBITDA ratio below 1.5x—comfortably within investment-grade thresholds.

Undervalued: A 42% Discount to European Peers

HLTOY’s valuation is starkly disconnected from its fundamentals. Its EV/EBITDA multiple of 5.6x is 42% below the 9.8x median for the Western European telecom sector, per Statista. Meanwhile, its P/E of 14.8x lags far behind peers like Deutsche Telekom’s 28.1x P/E. This disconnect creates a textbook value opportunity.

The market’s undervaluation ignores HLTOY’s cash-generating power, its dominance in Greece’s telecom market (55% mobile market share), and its strategic assets in Romania. Even with Romania’s Q1 revenue decline, its Balkan footprint offers a second growth lever once stabilization occurs.

Dividend Stability: A Lifeline for Income Investors

HLTOY’s shareholder returns are rock-solid, with a proposed €0.7216 per share dividend (€298 million total) and €153 million in buybacks in 2025. This 98% payout of FCF signals confidence in its cash flow resilience, even amid elevated CAPEX. With a dividend yield of 4.2% (vs. the European telecom sector’s average of 3.5%), HLTOY offers income stability without sacrificing growth.

Deutsche Telekom’s Backing: A Seal of Approval

The recent 20% stake acquisition by Deutsche Telekom (for €2.5 billion) is a game-changer. This strategic partnership unlocks synergies, including access to Deutsche Telekom’s 5G expertise and European distribution channels. The deal also signals management’s commitment, as Deutsche Telekom’s stringent due diligence likely validated HLTOY’s operational and financial rigor.

Risks, But Manageable Ones

• Debt growth: Net debt rose 7.8% YoY to €561.7 million, but FCF coverage remains robust.
• Romanian market challenges: HLTOY’s Romanian division faces regulatory and competitive headwinds, though its Greek core is insulated.
• Regulatory approvals: The Deutsche Telekom stake deal requires Greek government approval, which is expected within six weeks.

Conclusion: A Rare Buy in a Crowded Space

HLTOY combines profitability, strategic infrastructure dominance, and valuation discounts that are unmatched in European telecom. With Deutsche Telekom’s backing, a dividend yield above peers, and a 5G/Fiber rollout that ensures long-term relevance, this is a once-in-a-cycle opportunity.

Act now before the market catches on. The stock’s 5.6x EV/EBITDA and 14.8x P/E are far below its intrinsic value. As Europe’s digitization accelerates, HLTOY will be the silent beneficiary of a $100 billion regional infrastructure boom—a tailwind no investor should ignore.

Investors seeking a low-risk, high-reward play in telecom should act decisively: HLTOY is not just a hidden gem—it’s a future leader in Europe’s digital transformation.