(Add detail, full-year outlook)
ATHENS, May 11 (Reuters) - Greece's biggest telecoms operator OTE posted on Thursday a 1.7 percent drop in first-quarter core profit, hurt by tough conditions in its economically stagnant home market and in Romania.
OTE, the former national monopoly now 40 percent owned and managed by Germany's Deutsche Telekom, has lost market share to smaller rivals in recent years.
A sluggish economy in Greece after seven years long debt crisis and three international bailouts in turn for tax hikes and wage cuts has also dented operations.
But hefty spending in new high-speed VDSL broadband services and a fast-growing pay-TV business have helped the group win back fixed-line customers.
Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 304.1 million euros ($331 million) in the first three months of the year, down from 309.3 million euros a year earlier.
The figure strips out one-off items.
Sales were almost flat at 929 million euros, with Greek and Romanian fixed-line business offsetting a revenue decline from Greek, Romanian and Albanian mobile operations.
OTE said first-quarter trends will remain "largely unchanged" for the rest of the year and conditions in Romanian and Albanian business were still challenging. But it will stick to its investment plan with total spending of 700 million euros for the full year to improve its offering.
It kept its outlook for free cash flow of 250 million euros this year, down from 459 million euros in 2016, as a result of increased investment and income tax outlays. ($1 = 0.9192 euros) (Reporting by Angeliki Koutantou)