Question-and-Answer Session
Operator
Thank you. [Operator instruction]. Your first question comes from Terrence Sinclair of Citi. Please ask your question.
Terrence Sinclair - Citigroup
Good afternoon, good evening. I have got a couple of questions. One relates to Cosmote and one relates to the ownership of OTE. Financial sense, yes. You mentioned that investors have unanimously approved the strategic sense for Cosmote to buy in and I wondered if you could sketch out for us what would change in the strategy of your mobile division. I know it says hold once it says 100% of Cosmote. ItÌs the first question, what would change and the second thing is thereÌs always been some important changes in the ownership of OTE and I wondered if you had a view on whether the government is less likely to sell down in 2008, now that you have another large substantial investor. I heard you are making new representations to government on what right ownership structure for OTE should be.
Iordanis Aivazis - Chief Operating Officer
Okay, Terry I will take the first question on Cosmote. The acquisition of the minorities of Cosmote will give us ample opportunities to work on a certain array of product offerings and on certain operational issues. That will enable us to address in a much more efficient way the competition and especially competition from mobile operators and also to derive certain benefits from, on the operational side of the business like the retail distribution chain, the logistical support and probably other shared services. So, the benefits we are going to derive are both on the revenue side, we believe and on the cost side. And as I mentioned in my presentation we are working on both those issues. Now, on the ownership, of Cosmote, I donÌt want to comment since the management stance is that we have a business plan, we are abiding by the business plan and everything we are doing is in the public domain. So, I donÌt want to comment on the ownership, on whether the government would like to sell or not and I will stay at that.
Terrence Sinclair - Citigroup
Okay, I suppose I could solve one thing. You said you plan to reduce leverage rapidly.
Iordanis Aivazis - Chief Operating Officer
Yes.
Terrence Sinclair - Citigroup
Should we make any implication for the dividend in that statement?
Iordanis Aivazis - Chief Operating Officer
Well, for the time being I donÌt want to make any comments on the dividend payment. Our statement that we want to deliver it has to do with the very good capacity that the group has in generating cash which we intend to use in leveraging our acquisition and going forward we will decide on the dividend side which we intend to keep along the same lines as last year.
Terrence Sinclair - Citigroup
Thank you very much.
Iordanis Aivazis - Chief Operating Officer
Thank you, terry.
Operator
Your next question comes from Christian Kern of Lehman Brothers. Please ask your question.
Christian Kern - Lehman Brothers
Hello, itÌs Christian Kernie from Lehman. Can I ask about the operations of the÷ more detail like, at least the line losses slightly accelerated in the domestic business again and in Romania being at ads÷ intake on the TV side has slowed down a bit. Any color on that would be fantastic and as a final point and if you could clarify the real estate project various strands of it. And then what you consider non-core assets beyond the Infotain [ph] 40 asset? Thank you.
Iordanis Aivazis - Chief Operating Officer
Christian, we will address the first part of the question, regarding line losses. What we are experiencing is not beyond the boundaries of what we indicated in our business plan. The second is, and this has to do with the line losses is the increasing significance of the unbundled lines in the broadband market. And as you are well aware that trend was enhanced over the last few months of the year. But we are not beyond the set of boundaries of our business plan provisions right now. And as a matter of fact, in spite of the increasing presence of unbundled lines we are capturing almost half of the net additions in the broadband market. I didnÌt understand your second question regarding RomTel, could you repeat it, Christian please?
Christian Kern - Lehman Brothers
Sure, on the TV service in Romania which has been stabilizing a fixed line business. I understand that the net add intake in Q3 has been slower than in Q2.
Iordanis Aivazis - Chief Operating Officer
Yes.
Christian Kern - Lehman Brothers
I was just wondering about happening we should be aware of or is that a seasonality effect?
Iordanis Aivazis - Chief Operating Officer
Actually all the efforts of RomTelecomÌs management are concentrated in÷ as you know in reducing churn. So whatever they did actually have that target. Faster deployment in Mediatel pushing for the satellite TV service and addressing the market with different products I believe had the positive effect. It is too early to talk about the stabilization. But the signs are already there and your last question, Christian?
Christian Kern - Lehman Brothers
Last one was around being an uptake on the real estate project and definition of non-core assets.
Iordanis Aivazis - Chief Operating Officer
Okay. Non-core assets, the definition when we talk about yellow pages, we believe this is a non-core asset. Now on the real estate recently we made our intentions clear apart from the developments that we are considering right now, our intention is to create or to establish if you want real estate investment companies in which OTE is going to contribute itÌs real estate or part of it and which eventually, as it is mandatory will be in IPO and we expect to get values out of the÷ such a move. So, this is something which we are planning and you will get to know pretty soon what the result of our actions will be.
Christian Kern - Lehman Brothers
Very clear. Thank you.
Iordanis Aivazis - Chief Operating Officer
Thank you Christian.
Operator
Your next question comes from George Ierodiaconou of Dresdner. Please ask you question.
George Ierodiaconou - Dresdner Kleinwort
Good afternoon. ItÌs George Ierodiaconou from Dresdner. Two questions please. The first one is regarding wage inflation, if IÌm not mistaken you have negotiated last year with the trade unions for Ì06 to Ì07 grievance regarding wages. I was wondering whether you could give us any color on to what to expect in Ì08 with regards to inflation and the second one is regarding OTEGLOBE. You spoke about the revenue impact that I was wondering whether you can give us some color on the cost side on the spin off and whether the reduction stabilization sort [ph] in other OpEx is due to this and if you could tell us the EBITDA position of OTEGLOBE that will be great. Thank you.
Iordanis Aivazis - Chief Operating Officer
Okay. First of all on wage inflation, before we embark on any collective or negotiations on any collective agreement. I cannot give you any flavor regarding any possible outcome for 2008. Whatever is been let say the existing situation is clearly depicted for 2007 in our financial statements and the impact of it. So, as soon as we have something more tangible, we will let you know. On OTEGLOBE, we mentioned that if we take÷ first of all that it didnÌt have any impact on the OpEx side, I mean any changes in the OpEx side are not attributed to OTEGLOBE. The OTEGLOBE, letÌs say deconsolidation, if I may within swaying or spin off had a positive effect on our financial statements. Since, it had a positive impact on EBITDA margins as we saw it and the company became more integrated and believe more efficient. I will ask my colleagues to give me the EBITDA margins of OTEGLOBE. If we can follow if there are any other questions George Ieni tell you eventually the EBITDA margin on OTEGLOBE.
George Ierodiaconou - Dresdner Kleinwort
Okay. No other questions. Thank you.
Iordanis Aivazis - Chief Operating Officer
Okay George. Thank you.
Operator
Your next question comes from John Karidis of MF Global. Please ask your question
John Karidis - MF Global
Thank you very much. I have a few if I may firstly what was RomTelecomÌs CapEx during the quarter. Secondly, is there any chance at all that the Greek government will not pay its EUR390 million share of last years VRP. And how big is that chance, please? Thirdly I am a bit confused about what you said about OTEGLOBE because in the past you have said that OTEGLOBE has had a positive impact on the EBITDA margin of OTE fixed. And a few quarters ago as a suggestion was that the cost coming out of OTE fixed would actually be greater then the revenues coming out of OTE fixed revenues. So, is it possible just to add a bit more color to that please?
Iordanis Aivazis - Chief Operating Officer
This set of questions. Okay, let me start with RomTelecomÌs CapEx. RomTelecom will have a CapEx figure for the internal year calculated to 200 million euros. Well as in the third quarter the CapEx of RomTelecom was 36 million euros. Okay?
John Karidis - MF Global
Thank you.
Iordanis Aivazis - Chief Operating Officer
Now on the states contribution to the pension fund of OTE it is not the matter of that being likely, it is a matter of going through certain red tape and we are going to get that, but since there are certain formalities which need to be completed. We are not mentioning that unless it is final. As soon as it is final you will get to know both the accounting and the cash flow effect on our P&L and balance sheet. Now what I mentioned about OTEGLOBE and I reiterate now and I reiterated a minute ago was that the spin off of OTEGLOBE indeed had a positive impact on OTE fixed line. So, it is a statement which has not changed.
John Karidis - MF Global
Thank you. Can I ask you, I mean so, how many millions of euros left on the fixed cost base as a consequence of OTEGLOBEÌs spin off on April 1,
Iordanis Aivazis - Chief Operating Officer
It is not easy to talk about this spin off right now but I can send you over the figures because a number of lines were affected. ThatÌs why we concentrated on the positive impact on EBITDA line.
John Karidis - MF Global
Okay. Thank you.
Operator
Your next question comes from John Pierce from Dresdner now please ask your question.
John Pierce - Dresdner Kleinwort Credit Research
Hi good afternoon. John Pierce from Dresdner Kleinwort Credit Research. IÌm interested in your plans and policies for leverage. Your press release mentioned two times and you just mentioned it again now. Is now a two time leverage something we should now think of as a policy or a long-term target for OTE, or if I might put that another way. Could we perhaps assume now that OTE will manage any share buy backs and further dividend payouts so as to keep leverage very close to two times. And lastly perhaps could I ask. Have you discussed the financial impact of the Cosmote transaction with the rating agencies and have they left you comfortable with the current ratings that you have will be maintained? Thank you.
Iordanis Aivazis - Chief Operating Officer
John I believe I made it pretty clear in the presentation that the rating agent post transaction reaffirmed the ratings that we have. So not only we advised the÷ well in advance rating agents about the transaction but as a result of this transaction they had our ratings reaffirmed. Having said that it is our avowed policy to respect those ratings. So what we have post transaction or what we will have post transaction, which is a net EBITDA two times. This is something which we are going to observe. So for the time being you shouldnÌt expect any shares buyback.
John Pierce - Dresdner Kleinwort Credit Research
Okay. Thank you.
Operator
Your next question comes from Bosco Ojeda of UBS. Please ask your question.
Bosco Ojeda - UBS
Hi good afternoon. If I could go back to the wireline business, I wonder if you could a bit of color on the positive factors that have to sustain revenues this quarter compared to the decline in previous quarters. I think that you mentioned international calls, IÌm not sure, the corporate business. Whether those are improving and could be sustainable or is it just a level of activity in this quarter? And I just have a question on your cash flows which were close to EUR100 million outflow pensions and redundancies and I wonder if you could update us on the outlook for these outflows going forward in the next couple of years? Thank you.
Iordanis Aivazis - Chief Operating Officer
Okay Bosco. Just to start from the situation prevailing in the fixed line market environment. We donÌt claim that the pressure on the revenue line will see going forward. And also we will see÷ the last quarter of this year more or less will be on the same page. However, you should keep the guidance which is being indicated in our business plan as the revenue impact going forward. So, keep the guidance, and I believe our performance will be inline with that guidance. So, there is lot of what you read today in our press release was just the result of our efforts in the marketplace and the fact that we are quite efficient in commercial side of our business. But going forward, keep the guidance, and we believe, we will be inline with that. And the second part of your question÷ would you be kind enough to repeat it, Bosco?
Bosco Ojeda - UBS
Yes, there was a question on your cash flow, the out sale [ph] for pensions and redundancy.
Iordanis Aivazis - Chief Operating Officer
Actually, for pensions, I have nothing to say because pensions are not burdening, although, they are going forward. The redundancy is, however÷ there is a piece of information that you know, that there is a number of around 700 people, which were falling within the original VRP, and which probably they would leave the Company in 2008. But this is something which has been÷ which has included in our business plan and do you have I believe enough visibility on the impact that new VRP will have in our calculations.
Bosco Ojeda - UBS
All right. Continuing on that÷ is it just because it would be similar cost to the previous one or--?
Iordanis Aivazis - Chief Operating Officer
It wonÌt be a similar cost with the previous one. It will be a lesser cost because of they are approaching retirement age. So, a couple of years have lapsed already. So, I believe the cost will be lower than the original cost of the first VRP.
Bosco Ojeda - UBS
Okay. Thank you.
Operator
Your next question comes from Theo Ritsos of P&K Securities. Please ask your question.
Theodore Ritsos - P&K Securities
Hi. Thank you. Theodore Ritsos from P&K National Securities. Two quick questions. One, with respect to Romania, so, as far as I understand you see that some improvement is coming in the following quarters in Romania. So, my question would be whether the guidance that we have from the business plan will be met in Romania in terms of revenues and margins?
And the second question, with respect to the ownership structure, with MIG now asking for participation in the Board of Directors whether you see some influence in terms of management team, and how this might be worked out. Thank you.
Iordanis Aivazis - Chief Operating Officer
Sure, I will comment first on Romania. I wouldnÌt like to make any comments on Romania going forward. I will stick to my comments which apply until the end of the year. And as part of that, you should keep to the guidance for the margins and everything intact. Going forward, you know that the situation in Romania is a difficult one. We will continue to be under pressure, and we believe that the efforts of the management there will improve the situation. When we are going to announce our new business plan, you will get to know what our guidelines will be.
On the second question, as part of the management team, I donÌt want to comment on what you said. This is something which the shareholders decide within the context of a general meeting.
Theodore Ritsos - P&K Securities
Thank you.
Operator
Your next question comes from Guillaume Tastet of ODDO. Please ask your question.
Guillaume Tastet - ODDO Securities
Good afternoon, Guillaume from ODDO. Three questions actually. The first one would be around the regulator. If I am right, today he talked about the possibility of functional separation in Greece. I was wondering if you can give us maybe some idea about that.
Also the last quarter you were thinking about the ideas of working on the ability to reduce payroll growth. So I was wondering if you had more precise things to say now.
And the last question would be around, in terms of fixed to mobile substitution, you are talking about in the press release. I guess that commodity is gaining part of that [ph]. If you can give us some color, it would be very helpful. Thanks.
Iordanis Aivazis - Chief Operating Officer
Okay, Guillaume, I will start with the first question which is functional separation. We donÌt think this is something which is being addressed right now. This is an issue which has a Pan European interest. It is not something which OTE addresses right now. And it hasnÌt been addressed by the regulator. So it is not something which is within our calculations right now. We are an integrated company, we will become more integrated, and we believe that values will be derived from integration.
Now could you repeat the second part of your question on what is the payroll, because the line is not good?
Guillaume Tastet - ODDO Securities
Yes, sure. Actually the last quarter you were saying that you are working on ways to reduce your payroll costs in Greece in the [inaudible]. And I was wondering if you had more precise leads to give us now about that.
Iordanis Aivazis - Chief Operating Officer
I cannot give you the data right now. But what I was trying to say was that in the last quarter, out of the 500 people which are leaving the company, almost half of them will be leaving in the last quarter. So, the positive impact on the payroll, meaning the reduction will be shown actually in the last quarter of this year.
And on the fixed to mobile substitution, I didnÌt understand the question. I believe you were talking about Greece, werenÌt you?
Guillaume Tastet - ODDO Securities
Yes, exactly. Actually I understand in the press release, you are talking about the shape of fixed to mobile substitution impacting OTEÌs activity. So I guess that could be the start of that. But I was wondering if you see your mobile competitors more aggressive on that side or any competition?
Iordanis Aivazis - Chief Operating Officer
I believe that fixed to mobile substitution is a part÷ itÌs at a decreasing, letÌs say, level. People are shifting to mobilers, not because of voice basically but because of certain product offerings, which include broadband. So, we cannot talk really about fixed to mobile substitution. This is not a pattern which is established yet. This is something which we are aware of, and this is something which we are going to fight alongside Cosmote. Because it is, after the acquisition of the minorities, weÌll talk about one group which will encompass fixed voice, mobile voice and broadband. So I believe we have more than enough good franchises to fend off the competition.
Guillaume Tastet - ODDO Securities
Okay, very good, thanks.
Operator
Your next question comes from Dimitri Kallianiotis.
Dimitri Kallianiotis - Citigroup
Good afternoon. ItÌs Dimitri from Citi. Just coming back on the last point you mentioned regarding convergent offers. Your new fixed packages have been delayed again by the regulator. Do you think that because of your current relationship with the Greek regulator, that the regulator could prevent you from offering convergent products like broadband and mobile together with Cosmote?
And regarding the Greek fixed, I know you said that we should stick to the guidance that youÌve given, the -4% to -5% in revenues. But we think at the moment that fixed is stable, if itÌs through the impact of OTE Group [ph]. And despite that, the fiber [ph] you all had is decreasing. So what exactly could make the situation really deteriorate so much that we will have revenues coming down by 4% or 5%? Thank you.
Iordanis Aivazis - Chief Operating Officer
Dimitri, first of all, on the convergent products, the market is changing shape. Until a few months ago, you were asking me what the alternative carriers are doing, or were doing at the time, and how we were going to react. Now you are asking me about the mobile operators, what they are doing and how we are going to react. So the market is changing fast. We believe we have the capacity to combine our good franchises, which we have, and I believe we have a good enough case because of the changing market conditions to put forward to the regulatory authority. It is not easy, but we can make it. And as I said, we have the capacity to fend off competition.
Now, on the guidance on why the things will decline within the guidance, you are well aware that unbundled lines increased significantly over the last few weeks. The trend there will continue. So this inevitably will have an impact on our revenue line, but again, well within the guidance that we gave you and within the trend that we are going to indicate to you in the next business plan.
Dimitri Kallianiotis - Citigroup
Thank you.
Operator
[Operator Instructions].
Iordanis Aivazis - Chief Operating Officer
Sorry, operator.
Operator
You have one more question from George Ierodiaconou of Dresdner. Please ask your question.
George Ierodiaconou - Dresdner Kleinwort
If I could ask a question on CapEx. You mentioned that domestic fixed in Romania will have lower CapEx for this year. Is there a risk that we will see that being carried forward to 2008? Or how do you plan to build the networks? Thank you.
Iordanis Aivazis - Chief Operating Officer
George, there is no risk whatsoever for a carryover effect regarding CapEx for next year. So what weÌre telling you is exactly the figures, and we start from a zero base every year.
George Ierodiaconou - Dresdner Kleinwort
Okay, thanks.
Operator
Your next question comes from Guillaume Tastet of ODDO. Please ask your question.
Guillaume Tastet - ODDO Securities
Yes, thank you. Actually, I have a follow-up on Romtelecom. I was wondering if you can give us the importance of ADSL and Dolce TV as a part of your revenues.
Iordanis Aivazis - Chief Operating Officer
Sorry, Guillaume, what, the DSL and Dolce TV?
Guillaume Tastet - ODDO Securities
Yes, exactly.
Iordanis Aivazis - Chief Operating Officer
The figures?
Guillaume Tastet - ODDO Securities
Yes, the part it plays in your revenues.
Iordanis Aivazis - Chief Operating Officer
You are talking about the bundles, the prices?
Guillaume Tastet - ODDO Securities
No, actually, IÌm trying to understand if ADSL and Dolce are an important thing in your Romtelecom revenues.
Iordanis Aivazis - Chief Operating Officer
ItÌs going up. The demand is increasing. But as I emphasized, this is a retention tool for the churn, and for continuing customers, Dolce and DSL rollout. So this is the main purpose.
Guillaume Tastet - ODDO Securities
Okay. Thank you.
Operator
Your next question comes from John Karidis of MF Global. Please ask your question.
John Karidis - MF Global
Thank you. Mr. Aivazis, this is somewhat sort of sensitive question. And I donÌt mean to be cute, but is there anything you can say about how your strategy compares with the sort of proposed Marvin [ph] strategy of their so-called three pillars. I am trying to understand whether÷ well, the Greek newspaper suggest that Marvin and the Greek government seem to be getting closer in terms of view. And if thatÌs the case, do you think that the three pillar strategy of Marvin sits well with what you and Mr. Vourloumis have in mind for the group going forward?
Iordanis Aivazis - Chief Operating Officer
First of all, itÌs not Mr. Vourloumis and myself. ItÌs the entire management team off OTE. Second, what you mentioned about pillars are newspaper articles, and I donÌt want to comment on newspaper articles. We have a business plan. As I said, we abide by it. And it is in the public domain. So I can only comment on the business plan that we have.
John Karidis - MF Global
Fair enough. Thank you, sir.
Iordanis Aivazis - Chief Operating Officer
Thank you. Operator, just one question, and then I believe we are okay.
Operator
.
[Operator Instructions].
There are no further questions at this time. Please continue.
Iordanis Aivazis - Chief Operating Officer
Thank you, operator. Thank you, ladies and gentlemen, for being on this call. Whatever questions are needed, we are here to respond to you, and give you more color and detail. Thank you very much.
Operator
That does conclude our conference for today.
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