Investor News

Budapest, November 4, 2020 17:30

Magyar Telekom (Reuters: MTEL.BU and Bloomberg: MTELEKOM HB), the leading Hungarian telecommunications service provider, today reported its consolidated financial results for the third quarter and first nine month of 2020, in accordance with International Financial Reporting Standards (IFRS) as endordse by the EU.

Financial highlights:

• Revenues grew by HUF 3.0 billion, or 1.8%, year-on-year, to HUF 167.7 billion in Q3 2020, driven by higher fixed and mobile services contribution, both supported by growing equipment sales
• Gross profit remained broadly stable year-on-year at HUF 95.2 billion in Q3 2020 as the increase in revenues was offset by rising other direct costs resulting from the above-mentioned rise in equipment sales
• Indirect costs improved due to enhanced discipline and further cost reduction efforts. As a result, EBITDA AL increased by HUF 0.8 billion, or 1.5%, year-on-year, to HUF 54.9 billion in Q3 2020, while 9M 2020 EBITDA AL amounted to HUF 146.0 billion
• CAPEX AL (excluding spectrum license fees) grew by 13.0% to HUF 26.5 billion in Q3 2020 and amounted to HUF 75.0 billion in 9M 2020, an increase of HUF 17.8 billion year-on-year, driven by increased spending on fiber network development and the comprehensive radio network modernization
• Free cash flow (excluding spectrum license fees) reached HUF 32.9 billion year-to-date, representing a HUF 29.5 billion uplift versus the previous quarter. The growth was mainly supported by strong EBITDA generation and favorable working capital developments. Following the payment of 5G spectrum license fees in Q2 2020, total free cash outflow (after spectrum license fees) amounted to HUF 21.4 billion year-to-date
• Net debt reached HUF 439.5 billion at September 30, 2020, corresponding to a net debt to total capital ratio of 40.7%

Operational highlights

• Mobile data usage grew by 40% year-on-year in Q3 2020, supported by particularly strong demand in B2C which boosted mobile data revenues by 10.4%
• The gigabit capable network grew further, reaching over 2.3 million access points in Hungary. Accelerated FTTH roll-out enabled enhanced monetization, as reflected in broadband retail revenue growth of 10.8% year-on-year in Q3 2020
• Scope Ratings GmbH assigned Magyar Telekom a first-time issuer investment grade credit rating of BBB+
• Magyar Telekom was confirmed as a constituent of the FTSE4Good index series following the 2020 index review. FTSE4Good identifies companies that reflect strong ESG practices and strong overall ESG ratings. Magyar Telekom’s ESG Rating is 5.0, on a scale of 1-5, placing the Company in the top 1% in the global telecommunication sector.

Tibor Rékasi, Magyar Telekom CEO commented:

“Magyar Telekom continued to deliver a robust performance in the third quarter of 2020, remaining on track to meet the Group’s annual public targets for 2020. As EBITDA generation improved, accelerated investment into the fixed network allowed Magyar Telekom to provide a further 100 thousand households with fiber access. As a first mover in the domestic market Magyar Telekom has been offering gigabit speed on the 5G mobile network.  Looking ahead, I believe Magyar Telekom is well placed to provide a broader range of content, enhanced connectivity and greater flexibility to our customers as these services become even more important in an uncertain environment affected by COVID-19.”

 

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, 2019, 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.

.