Economies of scale, cost minimization and productivity in telecom markets under economic crisis: evidence from Greece

Abstract

Telecommunications has entered a new age of development with advanced technology and increased competition with established players. The main focus of telecom operators is to maintain and increase their market shares by creating a loyal customer base and technology advancements. However, it remains difficult for telecom operators to evaluate their performance and competence within a fast-changing environment, especially since the telecom business is complex and involves unknown trade-offs. The current study proposes a series of methods in order to evaluate the performance of telecommunication companies, using as a case study the Hellenic Telecommunications Organization (OTE). OTE’s importance lies on its role as one of the leading companies in Greece affecting the economy. On the methodological side, this paper applies the linear regression analysis to measure and evaluate the performance of OTE. The results show that during the period 2005-2015 there are events which affect the operation of OTE and create conditions for cost optimization which are of great importance and they determine the future evolution of the organization. The results of this study are expected to be utilized as guidelines for the telecom operators as well as for regulators and decision makers in general.