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Budapest, May 15, 2024 17:35

Magyar Telekom today reported its consolidated financial results for the first quarter of 2024 , in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU. The quarterly financial report contains unaudited figures.


Total revenue increased by 14.5% year-on-year to HUF 224.2 billion in Q1 2024 . This improvement was driven by strong growth in mobile data revenues and increases in fixed broadband revenue, both reflecting the underlying business growth whilst the positive impact of the inflation-based fee adjustment in Hungary led to higher subscription fee revenues across all service lines. These increases were now coupled with higher revenues from mobile and fixed equipment sales as well.

Mobile revenue rose by 16.6% year-on-year to HUF 130.9 billion in Q1 2024 , driven by the continued growth in mobile data revenue and higher equipment sales.

Fixed line revenue increased by 15.0% year-on-year, to HUF 72.6 billion in Q1 2024, thanks primarily to increases in fixed broadband and TV revenue driven by the customer base expansions as well as the favorable impact of the inflation-based fee adjustment applied to the Hungarian subscription fees.

System Integration and IT ( SI/IT') revenue remained broadly stable year-on-year, amounting to HUF 20.7 billion in Q1 2024, reflecting the year-on-year similar customer demand developments on our key markets.

Direct costs were up by 8.5% year-on-year at HUF 88.8 billion in Q1 2024, driven by higher equipment costs, parallel to the increase in sales and an increase in bad debt expenses, reflecting primarily the higher revenue base.

Interconnect costs declined by 21.6% year-on-year to HUF 4.3 billion in Q1 2024, reflecting the cut in the Hungarian mobile termination rates, effective from January 1, 2024.

SI/IT service-related costs remained broadly stable year-on-year, amounting to HUF 15.1 billion in Q1 2024, in line with the related revenue developments.

I mpairment losses and gains on financial assets and contract assets (bad debt expenses) was higher by HUF 1.3 billion or 64.2% year-on-year, amounting to HUF 3.4 billion in Q1 2024, in line with the higher revenue base, including increase in instalment sales revenue and also reflecting less favorable aging structure of the customer receivables at the Hungarian operation.

Telecom tax was broadly unchanged year-on-year, amounting to HUF 6.3 billion in Q1 2024, as lower overall fixed voice usage and decline in mobile voice traffic generated by business customers were offset by higher voice minutes used by the expanding residential subscriber base.

Other direct costs were up by 12.5% year-on-year at HUF 59.6 billion in Q1 2024, primarily driven by higher equipment costs, in line with higher related sales volumes, and an increase in TV content fees.

Gross profit improved by 18.7% year-on-year to HUF 135.5 billion in Q1 2024, thanks to higher service revenues partly mitigated by increase in the equipment sales related costs and bad debt expenses.

Indirect costs were lower by 9.3% year-on-year, at HUF 50.9 billion in Q1 2024, primarily driven by the elimination of the utility tax in Hungary.

Employee-related expenses increased by 10.9% year-on-year, amounting to HUF 21.8 billion in Q1 2024, reflecting primarily the wage increase in effect from July 1, 2023 at the Hungarian operation.

Utility tax was repealed effective from January 1, 2024, resulting in a HUF 7.8 billion improvement year-on-year, as in previous years, utility tax for the full year had to be accounted for in the first quarter in line with relevant IFRS accounting rules.

upplementary telecommunication tax was up by HUF 1.6 billion, amounting to HUF 8.9 billion in Q1 2024, reflecting the revenue increase.

Other operating expenses (excluding the utility tax and the supplementary telecommunication tax) decreased by 4.2% year-on-year to HUF 21.1 billion in Q1 2024, driven by lower energy costs that could offset inflation-driven cost pressures on other expenses.

Other operating income was HUF 0.9 billion in Q1 2024, in line with earlier trends.

EBITDA increased by 45.8% year-on-year to HUF 84.6 billion in Q1 2024 driven by the improvement in gross profit coupled with the positive impact of the elimination of the utility tax. EBITDA AL was up by 51.4% year-on-year to HUF 77.0 billion in Q1 2024.

Depreciation and amortization ( D&A') expenses were up by 5.0% year-on-year, amounting to HUF 35.3 billion in Q1 2024, reflecting increases in IFRS 16 right-of-use asset related depreciation expenses coupled with temporarily higher depreciation related to software licenses.

Profit for the period rose by 197.4% or HUF 23.2 billion year-on-year to HUF 35.0 billion in Q1 2024. Improvement was driven by the strong growth in EBITDA.

Net financial result improved from a loss of HUF 8.7 billion in Q1 2023 to a loss of HUF 7.8 billion in Q1 2024. Improvement in net interest expense was driven by lower overall loan balances more and favorable liquidity positions leading to lower related costs. The unfavorable change in other finance expense primarily reflects the different quarterly movements of the HUF during the period resulting in higher FX losses in Q1 2024 vs Q1 2023. These were partially offset by unrealized gains on derivative positions.

Income tax expenses were up by 62.3% or HUF 2.5 billion year-on-year at HUF 6.5 billion in Q1 2024, reflecting the year-on-year higher profit levels resulting in higher trade and income taxes as well.

Profit attributable to non-controlling interests increased by 6.4% year-on-year to HUF 1.3 billion in Q1 2024 , reflecting the improvement in the operational result of the North Macedonian subsidiary.

Free cash flow, excluding spectrum
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