Investor News

Budapest, May 8, 2018 18:00

Magyar Telekom (Reuters: MTEL.BU and Bloomberg: MTELEKOM HB), the leading Hungarian telecommunications service provider, today reported its consolidated financial results for the first quarter of 2018, in accordance with International Financial Reporting Standards (IFRS).

Financial highlights:

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Strategic highlights:

• Continued increase in Group revenue driven by sustained growth in mobile data, equipment and SI/IT sales
  • Hungarian service revenue growth thanks to further expansion of the mobile postpaid, fixed broadband and pay TV customer base
  • SI/IT revenue growth driven by high volume public sector infrastructure projects
  • Macedonian revenue improvement reflecting slowdown in fixed and mobile voice revenue erosion
• EBITDA growth driven by higher revenues coupled with savings in other operating expenses and lower utility tax
• Free Cash Flow reduction due to unfavourable seasonality in working capital, including higher payments to handset suppliers
• Net debt ratio improved to 34.4% driven by changes in retained earnings reflecting IFRS 15 adoption

Christopher Mattheisen, CEO commented:

“I am pleased to confirm that Magyar Telekom has maintained its momentum from the previous fiscal year to deliver strong growth in both revenue and EBITDA in Q1 2018.
Our continued commitment to meeting customer needs and refreshing our product offering ensured the Hungarian operation continued along the positive trajectory set last year, with revenue increasing across all three major services lines.
In the mobile segment, data services continued to play a significant role in revenue creation with both domestic and visitor data usage increasing. In addition, regulatory changes introduced in 2017 requiring the sale of audiovisual equipment with 2-year loyalty contracts boosted revenue in the equipment line. Pre- to postpaid migration continued in the quarter, leading to a more favorable customer mix and higher altogether mobile ARPU.
In the fixed segment, revenues from equipment sales rose by 70% year-on-year for the period due to successful efforts to develop the network and restructure the broadband offering. As a result, we managed to grow our broadband and TV customer base by over 5% in the quarter and are confident that we are well positioned to capitalize on the positive trends in the segment going forward.
FMC remained a key focus for the quarter as we introduced our ‘FMC first’ strategy to further expand our FMC customer base while giving customers a complete solution for their communications needs.
Turnaround in Macedonia continued into Q1 2018 with revenue up 2.6% year-on-year, primarily as a result of positive dynamics in the mobile segment. Despite growing competitive pressures, EBITDA increased by 11% as a result of ongoing cost saving measures.
We have had a strong start to the year. Having strengthened our position in several key areas, such as post-paid mobile and fixed broadband, and with our strategic focus on expanding our FMC customer base, we are well placed to deliver another year of growth in 2018. As you probably know I’ll be leaving Magyar Telekom at the beginning of July and as such you’ll hear the rest of this success story from my successor Tibor Rékasi”

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, 2017, 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.

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