Magyar Telekom results for the second quarter of 2021 Budapest, August 10, 2021 17:30
Magyar Telekom today reported its consolidated financial results for the second quarter and the first half of 2021 , in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU.
Highlights:
Total revenues increased by 5.7% year-on-year to HUF 166.1 billion in Q2 2021 and by 3.8% year-on-year to HUF 328.4 billion in the first half of 2021. Increases in telecommunication service revenues, with especially strong performance in mobile data, compensated for moderately lower System Integration and IT ( SI/IT') sales in both countries of operation.
Mobile revenues increased by 8.6% year-on-year to HUF 93.4 billion in Q2 2021 , driven by further growth in mobile data, SMS and equipment sales revenues which fully offset lower retail voice revenues.
Fixed line revenues increased by 3.7% year-on-year, to HUF 55.1 billion in Q2 2021 as improvements in broadband and TV revenues outweighed the decline in voice revenues in both markets.
System Integration (SI) and IT ( SI/IT') revenues were down by 2.5% year-on-year, at HUF 17.7 billion in Q2 2021 , reflecting some reduction in revenues from outsourcing services mostly compensated by increased volume of implementation projects in Hungary; whilst revenues from customized solution projects declined year-on-year from an elevated base in North Macedonia.
Direct costs increased by 3.9% year-on-year to HUF 69.7 billion in Q2 2021, and by 3.5% year-on-year to HUF 138.8 billion in H1 2021, mostly driven by higher interconnect and equipment costs.
Interconnect costs increased by 16.0% year-on-year to HUF 6.3 billion in Q2 2021, reflecting primarily the higher off-network mobile voice and SMS traffic at the Hungarian operation, which resulted in higher payments to domestic mobile operators.
SI/IT service-related costs declined largely in line with revenues on an underlying basis in Q2 2021 year-on-year. The recognition of a one-off provision however drove overall SI/IT costs to HUF 12.7 billion in Q2 2021.
Bad debt expenses improved by 11.8% year-on-year to HUF 1.9 billion in Q2 2021, thanks to the combined impact of favorable factoring results at the Hungarian operation and the absence of one-off expenses in relation to the outbreak of COVID-19 pandemic in North Macedonia.
Telecom tax was stable year-on-year, amounting to HUF 6.8 billion in Q2 2021, reflecting the combined impact of the still increasing residential mobile usage being mitigated by the somewhat lower usage levels of the business customers.
Other direct costs were up 5.2% year-on-year to HUF 42.0 billion in Q2 2021, driven by higher equipment costs coupled with an increase in the Hungarian TV content outpayments reflecting the expanding customer base.
Gross profit improved by 7.0% year-on-year to HUF 96.5 billion in Q2 2021, and by 4.0% year-on-year to HUF 189.6 billion in the first half of 2021, thanks to growing contribution from telecommunication services.
Indirect costs increased by 9.4% year-on-year to HUF 37.2 billion in Q2 2021, primarily reflecting the increase in employee related expenses. In the first half of 2021, indirect costs remained broadly stable year-on-year, amounting to HUF 80.1 billion, with lower severance expenses and higher operating income offsetting other increases.
Employee-related expenses rose by HUF 2.6 billion year-on-year, amounting to HUF 20.5 billion in Q2 2021, attributable to the general wage increase introduced in Hungary in July 2020, higher level of severance expenses in both countries of operation and higher level of performance bonus expenses. These offset the positive impacts stemming from the lower average headcount. In the first half of 2021, employee related expenses decreased moderately year-on-year to HUF 39.7 billion, as the year-on-year lower severance expenses coupled with lower average headcount offset the aforementioned increases.
Other operating expenses increased by 3.7% year-on-year to HUF 17.5 billion for the quarter, as the positive contribution of cost optimization measures was offset by higher marketing expenses reflecting different within-year seasonality.
Other operating income remained stable at HUF 0.8 billion in Q2 2021 while rose by HUF 0.5 billion year on year in H1 2021, reflecting higher income from real estate sales in Hungary.
EBITDA rose by 5.6% year-on-year to HUF 59.3 billion, with EBITDA AL improving by 6.1% year-on-year to HUF 53.2 billion in Q2 2021 , whereas in the first half of 2021, EBITDA rose by 6.8%, with EBITDA AL improving by 7.0% year-on-year. These improvements were primarily driven by the increase in service revenues and consequently gross profit levels.
Depreciation and amortization ( D&A') expenses rose by 3.8% year-on-year to HUF 36.7 billion in Q2 2021, attributable to the frequency licenses activated in September 2020 in Hungary and higher depreciation in relation to copper retirement project.
Profit for the period rose by 26.4% year-on-year to HUF 14.5 billion in Q2 2021 , and more than doubled year-on-year, amounting to HUF 24.6 billion in the first half of 2021, thanks to the increases in EBITDA that was coupled also with better financial results.
Net financial result improved by HUF 1.4 billion year-on-year, amounting to a loss of HUF 4.0 billion in Q2 2021. The improvement was primarily attributable to the overall positive FX impacts due to the significant strengthening of the forint against the euro during the second quarter of 2021. This fully offset the moderate increase in interest costs that mostly reflects the higher interest expenses in relation to lease and frequency usage rights liabilities.
Income tax expensesincreased by 5.3% year-on-year to HUF 4.1 billion in Q2 2021, reflecting the year-on-year higher profi
