Press Releases


Budapest, February 14, 2001

Matáv (NYSE: MTA.N and BSE: MTAV.BU), the leading Hungarian telecommunications service provider, today reported its financial results for the year ended December 31, 2000.


Revenues grew by 15.9% (12.6% in euro terms) to 445.9 billion forints (1,715 million euros) compared to 384.9 billion forints in 1999. The main contributors to this growth were Matáv's mobile, leased line and data businesses, and an increase in subscription revenues:

  • Revenues from mobile services increased by 31.6%, driven by the rapid expansion of the mobile subscriber base. Mobile equipment sales revenues more than doubled, resulting in a 68.2% increase in other service revenues.
  • Revenues from leased lines and data transmission grew by 32.5%, driven by volume growth in leased lines, cable TV, Internet and ISDN data services.
  • Revenues from fixed voice monthly fees increased by 31.2% due to the nearly 50% increase in the monthly charge at the beginning of February 2000.

EBITDA increased by 4.1% (1.2% in euro terms), amounting to 190.8 billion forints (734 million euros) versus 183.3 billion forints a year ago. The EBITDA margin for 2000 was 42.8%.

Net income decreased by 12.6% (-15% in euro terms) to 68.8 billion forints (264 million euros). This represents a net income margin of 15.4%. EBITDA and net income were negatively impacted by the charge Matáv took in the fourth quarter of 2000. Net income impact of this charge amounted to approximately 13 billion forints.

Elek Straub, Chairman and CEO commented: "As our full-year results suggest, we reached a turning point in 2000: the penetration driven growth in our fixed voice business is over, and we have been refocusing financial and human resources towards the high-growth areas of mobile, data, internet and geographic expansion. We agreed a 16% headcount reduction in the fixed line business with employee representatives, we doubled the number of Internet subscribers, almost doubled our mobile subscriber base and doubled the bandwidth sold for data communication last year. In light of our refocused activities, increased operating expenses and the inclusion of Maktel beginning in 2001, we expect revenues to grow over 22% in 2001, high single digit percent revenue growth in 2002, 2003 and we anticipate EBITDA margin in the next few years to be over 42%. "

Mobile services: Number one contributor to revenue growth
Mobile revenues increased by 31.6% to 108.9 billion forints, representing 24.4% of our total revenues in 2000. Westel's subscriber base surged 90% to 1.6 million at 2000 year-end, representing a market share of 53% in a three-player GSM market. Prepaid customers contributed 86% of the net additions, accounting for 52% of Westel's overall subscriber base at the end of 2000. The 757 thousand net additions drove a 68.2% increase in other service revenues to 37.2 billion forints.
Mobile penetration in Hungary reached 31% at the end of 2000, which Westel expects to grow to 40-45% in 2001. In that heavily competitive market segment, Westel aims to remain the market leader with a share of above 50% in 2001.

Despite the growing proportion of prepaid customers, average monthly usage per Westel subscriber remained high at 184 minutes, down 8% from last year, and average monthly revenue per user decreased by 21.7% year-on-year to 9,067 forints. Value added services represented 4.0% of service revenues of which the share of Short Messages was 3.2%.

On an unconsolidated basis Westel's revenues were 153.4 billion forints, EBITDA was 59.0 billion forints and net income was 35.5 billion forints in 2000. The detailed financial statements of Westel will be published in April, 2001.

Fixed line services: maturing voice, developing data and Internet businesses
In 2000 leased line and data revenues increased by 32.5% to 26.8 billion forints. The key driver of revenue growth was the volume growth of managed leased lines, cable TV customers, Internet subscribers and ISDN data traffic:

  • number of managed leased lines increased by 27% to over 8,900 in 2000 due to the enhanced informatics needs of corporates and the increased demand for greater bandwidth connections,
  • as a result of Matáv's focused marketing campaign ISDN channels increased 167% to 306 thousand amounting to 10% of total lines by year end compared to 4% a year ago,
  • cable TV customer base has doubled through a number of acquisitions to 267 thousand subscribers by the end of 2000,
  • Matáv's internet subsidiary, MatávNet continued to lead the Hungarian dial-up market by nearly doubling its dial-up subscribers in 2000 to over 95,000, while the number of its leased line subscribers increased by 115% to 468.

Matáv's fixed voice business experienced moderate growth. Line penetration (including ISDN channels) reached 40% at the end of 2000 with total number of lines increasing by 2.3% during the year. The composition of fixed lines is shifting towards higher quality and more valuable lines: the number of ISDN channels has grown by 191 thousand. In addition to the shift to ISDN, customer substitution for mobile contributed to a decrease in analog fixed-lines of 126 thousand since the beginning of 2000.

Domestic minutes of use rose well above line growth by 12.3% in 2000. However, increased traffic did not offset the effect of the reduction in per-minute tariffs. Consequently, there was a 3.4% decrease in domestic voice traffic revenues to 129.5 billion forints. International outgoing minutes decreased by 5.1% despite a 12% average decrease in tariffs, due to the rising share of international traffic through mobile phones, international corporate networks and the IP networks of competitors. The decrease in outgoing minutes coupled with the reductions in tariffs resulted in a 5.4% decrease of international traffic revenues to 41.4 billion forints.

Geographic expansion: Strategic stake in Maktel
The Matáv-led consortium acquired a 51% interest in Maktel, the principle telecom operator of Macedonia. The Macedonian telecom market is in an early stage of development in terms of penetration of services - having fixed line penetration of approximately 25% and mobile penetration of 5% at the end of 2000 - providing Matáv's shareholders with further growth opportunities. Matáv's key objective for 2001 is to successfully take operational and management control of the company and speed up network and service development. Matáv expects the Maktel acquisition to be accretive at the net income level in 2002.

At the end of 2000 Matáv, which owned 50% of the Emitel, signed an agreement to buy out its joint venture partner and take full control. Emitel is the local telephony operator in three concession areas in the Southern part of Hungary operating over 85,000 fixed lines. The transaction is subject to regulatory approvals.

Expenses heavily impacted by fourth quarter charges
Employee-related expenses increased by 16.6% in 2000 to 66.0 billion forints including approximately 9.5 billion provision for severance in 2001. Efficiency ratio reached 264 number of lines per fixed employee by the end of the year.

Depreciation and amortization and other operating expenses include the approximately 5 billion forints impact of the fourth quarter charges. As a result, these expense items grew by 25.4% and 26.7% respectively.

Strong cash-flow generation
Net cash from operating activities increased by 13.0% to 156.4 billion forints which more than covered the total capital expenditure of 152.8 billion forints in 2000. Beyond regular business activities capital expenditure for 2000 included 6.5 billion forints concession fee which Westel paid through year 2000 for the 1800 MHz licence. Based on current business activities for the 2001-2003 three year period capital expenditure of Matáv is expected to be approximately HUF 340 billion without Maktel's capital expenditure.

Matáv is the principal provider of telecom services in Hungary and holds the national concession for national and international long distance telephony. Matáv provides a broad range of services including telephony, data transmission, value-added services, and through its subsidiaries is Hungary's largest mobile telecom provider. Key shareholders as of December 31, 2000 include the Hungarian State (holder of the Golden Share), MagyarCom, owned by Deutsche Telekom AG (59.49%), while 40.51% is publicly traded.

This press-release 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 you should not place undue reliance on 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 Report on Form 20-F for the year ended December 31, 1999 filed with the U.S. Securities and Exchange Commission.