Budapest, November 8, 2023 17:30

Magyar Telekom (Reuters: MTEL.BU and Bloomberg: MTELEKOM HB, hereinafter: Company), the leading Hungarian telecommunications service provider, today reported its consolidated financial results for the third quarter and first nine months of 2023, in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU (hereinafter: quarterly financial report). The quarterly financial report contains unaudited figures for each reporting period.


Financial highlights:

 

• Group revenue increased by 13.3% year-on-year in Q3 2023, owing to continued strong demand for mobile data and fixed broadband services coupled with the positive effects of inflation-based fee adjustments in Hungary.
• Gross profit improved by 19.0% year-on-year in Q3 2023, reflecting the growth in service revenues.
• Indirect costs grew by 12.6% year-on-year in Q3 2023, primarily driven by higher electricity costs in Hungary.
• EBITDA AL increased by 24.8% year-on-year in Q3 2023, reflecting improved gross profit that offset the rise in indirect costs.
• Net income in Q3 2023 amounted to HUF 22.9 billion, attributable to EBITDA growth that was partly offset by an increase in financial expenses.
• Adjusted net income was HUF 30.0 billion in Q3 2023 and amounted to HUF 67.8 billion in the first nine months of 2023.
• Capex after leases, excluding spectrum licenses, decreased 12.2% year-on-year in the first nine months of 2023, amounting to HUF 72.8 billion, as a result of lower network-related investments in both countries.
• Free cash flow, excluding spectrum license fees, amounted to HUF 48.6 billion in the first nine months of 2023, representing a year-on-year decrease of HUF 4.3 billion. This decline is the result of differences in the timing of supplementary telecommunication tax payments, which offset the underlying improvement in profitability. In 2022, this tax was payable in November, while in 2023 a payment of HUF 26.4 billion was required in May 2023.

Operational highlights:

• The rollout of the fiber network in Hungary continued throughout Q3 2023, resulting in 80% coverage of gigabit-capable access points within our fixed network.
• Higher gigabit coverage supported the growth in the Hungarian fixed broadband customer base and the ARPU, which were up by 5.8% and 20.5% year-on-year, respectively.
• Hungarian mobile network modernization has advanced to 75%, enabling a sustained 26.9% increase in our customers’ average mobile data usage. This growth in usage is reflected in the 15.6% year-on-year growth in the Hungarian mobile ARPU.
• Scope Ratings GmbH, following its annual credit rating review, improved the outlook on Magyar Telekom’s issuer credit rating to positive and affirmed the Company’s issuer credit rating and senior unsecured debt rating at BBB+.
• Following its annual ESG rating review, MSCI reiterated its ‘AAA’ rating on Magyar Telekom, recognizing the Company’s strong commitment to sustainable operations.

Tibor Rékasi, Magyar Telekom CEO commented:

 

“Thanks to the successful execution of our sustainable growth strategy, our operations remained resilient during the third quarter, even in the face of a challenging macro environment. I am pleased to report that, in the period, Magyar Telekom Group’s revenue grew by 13.3% year-on-year, while EBITDA AL increased by 24.8% year-on-year.

Our strong commitment to enhancing our networks enabled us to continue to deliver outstanding customer experience and meet the ever-increasing demands for fixed and mobile data. Furthermore, we recently reinforced our commitment to support Hungary’s digitalization efforts by signing a Memorandum of Understanding, confirming long-term cooperation with the Hungarian Government for the Digital Transformation of Hungary.

As communicated in September 2023, we recently upgraded our guidance for the full year. Looking ahead, we expect revenue and EBITDA AL to grow by 10%-15% for the full year, as a result of recent developments in the Hungarian telecommunications market being more favorable than previously expected.”

 

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, 2022, available on our website at http://www.telekom.huwhich 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.

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