* Q2 net falls 97 percent y/y to 4.7 million euros
* Q2 sales down 6.5 percent to 1.487 bln euros
* Q2 basic earnings per share 0.0096 euro, down 97 percent
* Shares fall
(Adds analyst comment, valuation)
By George Georgiopoulos
ATHENS, Aug 6 (Reuters) - Greece's largest telecoms company, OTE, missed forecasts on Thursday with a 97-percent fall in second-quarter net earnings year-on-year, hit by weaker mobile and fixed-line revenue and a one-off retirement charge.
Net profit at OTE, which is 30-percent owned by Deutsche Telekom, fell to 4.7 million euros ($6.76 million), pushing its shares down 4.5 percent to 10.57 euros on Thursday.
Analysts polled by Reuters had forecast net profit of 47.3 million euros on average, with estimates ranging from 30 million to 58.7 million.
Strong price competition and a sluggish economy at home and in the Balkans weighed on OTE's revenues. The group has been counting on mobile phone and internet revenue growth to offset shrinking income from its fixed-line business.
"Results were below expectations due to weaker market conditions in fixed and mobile telephony in Greece and Romania. This trend of renvenue weakness is seen continuing in the coming quarters," Vangelis Karanikas, analyst at HSBC Securities, said.
Expecting continued weakness in the economy in the second half of the year, Chief Executive Panagis Vourloumis said the group's objective would be to maintain profitability "roughly in line" with that achieved in full-year 2008.
"The second quarter saw further weakening of the economies in the countries where we operate," he said in a statement.
"Spending on telecommunication services is estimated to have shrunk by around 7 percent in Greece since the start of the year, with similar or worse trends in Romania, Bulgaria, Albania."
OTE said it recorded a capital gain of 24.4 million euros from the sale of Cosmofon in the second quarter but its bottom line was also affected by early retirement provisions and a new tax on dividends received from its mobile arm Cosmote.
Group sales declined 6.5 percent to 1.487 billion euros in the second quarter compared to the same period a year ago.
OTE said it would continue to build a strong platform for future growth including mobile broadband in Romania and direct-to-home satellite TV in Greece to strengthen customer loyalty and its competitive advantages when markets pick up.
It said mobile arm Cosmote contained a decline in service revenues to 2.9 percent in the second quarter but continued to gain market share, adding 381,000 net subscribers to bring its total customer base to 8.8 million, up 27 percent from the same quarter last year. OTE shares, down 9.4 percent in the year to date, have underperformed the 36 percent rise in the Athens benchmark stock index. They trade about 8 times estimated 2009 earnings, at a discount to a multiple of 11 for European peers, data from Reuters Estimates showed.
Deutsche Telekom and Portugal Telecom met market expectations for second-quarter results on Thursday, boosted by the performance of their overseas operations. (Editing by Lin Noueihed)