Budapest, February 22, 2017 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 fourth quarter of 2016, in accordance with
International Financial Reporting Standards (IFRS).
Christopher Mattheisen, CEO commented:
“In 2016, with regards to revenue and EBITDA, we have outperformed on our previously announced guidance, whilst managing to
reach our 50 billion forint free cash flow target a year earlier than expected. Our total revenues came to 602.7 billion forint
for the full year with EBITDA at 197.0 billion forint. This outperformance was driven by a favorable fourth quarter in Hungary,
where our increased marketing activities and higher level of subsidies led to a better than anticipated uplift to sales of
both mobile handsets and data packages. Growth in EBITDA was also supported by rise in profitability at our SI/IT services
in Hungary due to a strategic focus on higher margin projects.
Looking ahead to 2017, we are facing several competitive and regulatory risks to growth, such as the expected entry of Digi into the mobile market, further cuts in the EU roaming rates and the ongoing obligation to register prepaid SIMs; while both the prepaid and business mobile segments are likely to remain very tight. At the same time the fixed line market is experiencing increasingly competitive regional 3Play offers, a situation undoubtedly intensified by the rollout of optical networks by Digi and UPC, with the latter having only recently started to do so. However, as an integrated operator, we believe that we are well positioned to address these challenges in Hungary in terms of maximizing the telecommunication share of the household spending wallet by further expansion of our 4Play Magenta 1 subscriber base, a bundled offering that largely differentiates us from our competitors.
At the same time however, we do not assume that our results will remain immune to these headwinds. Stripping out any contribution from our Montenegrin business, whose sale was finalised in January this year, we now expect revenues to decrease to around 560 billion forints to reflect the negative competitive and regulatory impacts. Our aim is to offset these revenue pressures however, along with the non-recurrence of one-off profits from the sale of Infopark (building G) and Origo, through seeking additional operational efficiencies, such that excluding these one-off gains we expect EBITDA to remain largely stable at around 182 billion forints. Despite Capex (excluding spectrum acquisitions and annual frequency fee capitalizations) for 2016 being higher than originally planned, we still expect it to decline to around 85 billion forint in 2017. Although we still expect to continue with our fixed network investments in Hungary in terms of providing high speed internet access, coupled with further investments in our mobile network, both these programs will be less capital intensive than in the preceding two years. Furthermore, as we are nearing the completion of a number of efficiency enhancing projects, Capex related to the IP migration and other IT projects will accordingly be lower.
Based on the current operating and regulatory environment and outlook, we expect the Company to pay HUF 25 dividend per share in relation to 2017 earnings, keeping a stable dividend level compared to 2016 earnings. This is subject to the Board of Directors’ future proposal to the General Meeting which will be submitted in due course, once all necessary information is available and all prerequisites to making such a proposal are met.”
excluding Crnogorski Telekom financials
2) excluding spectrum acquisitions and annual frequency fee capitalization
3) after minority dividend payments
4) excluding the transaction price of the disposal of the majority ownership in Crnogorski Telekom
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 http://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.