Investor News
Magyar Telekom disposes of its majority stake in Crnogorski Telekom
Budapest, January 10, 2017 11:00
Magyar Telekom (Reuters: MTEL.BU and Bloomberg: MTELEKOM HB), the leading Hungarian telecommunications service provider, hereby announces that it has signed a Share Purchase Agreement with Hrvatski Telekom d.d. As a result of the transaction, Magyar Telekom’s majority (76.53%) stake in Crnogorski Telekom A.D. Podgorica will be transferred to Hrvatski Telekom d.d for a total consideration of EUR 123.5 million (approximately HUF 38.1 billion at the January 9, 2017 HUF/EUR exchange rate of 308.7).
The disposal of this stake is in line with Magyar Telekom’s renewed focus on its Hungarian operations where efforts are underway to further strengthen the Company’s position in the mobile market and its ICT capabilities, alongside maintaining investment in our fixed networks and raising penetration levels in those areas already served by high speed internet access.
In addition, Magyar Telekom expects today’s transaction to accelerate the recent downward trend in its net debt ratio (net debt/total capital) such that by the end of March 2017, it will be within the targeted range of 30-40% as set out in its dividend policy. As of September 30, 2016, the Company’s net debt ratio stood at 41.6%.
Following the closing of the transaction, expected by the end of January 2017, the Montenegrin operation will no longer be
consolidated into Magyar Telekom Group’s financials.
As a result of the transaction the guidance for 2017 has been modified as follows:
Public guidance
| 2016 | 2017 original | 2017 modified | |
| Revenue | around HUF 595 bn | HUF 585-595 billion | between HUF 560-570 bn |
| EBITDA | around HUF 193 bn | HUF 189-193 billion | between HUF 181-185 bn |
| Capex 1 | ca. 10% y-o-y decline | ca. 10% y-o-y decline | ca. 15% y-o-y decline |
| FCF | - | surpassing HUF 50 billion 2 | surpassing HUF 50bn 2 |
| Dividend | target HUF 25 per share | - | - |
1) excluding spectrum acquisitions and annual frequency fee capitalization
2) after minority dividend payments
This investor news contains forward-looking statements. Statements that are not historical facts, including statements
about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates
and projections, and therefore should not have undue reliance placed upon them. Forward-looking statements speak only as of
the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future
events.
Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, our annual financial statements for the year ended December 31, 2015, available on our website at https://www.telekom.hu which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union.
In addition to figures prepared in accordance with IFRS, Magyar Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter “Reconciliation of pro forma figures”, which is posted on Magyar Telekom’s Investor Relations webpage at www.telekom.hu/investor_relations.