Magyar Telekom results for the second quarter of 2018

08/08/2018

Magyar Telekom results for the second quarter of 2018

Budapest, August 8, 2018 18:00

Magyar Telekom today reported its consolidated financial results for the second quarter and first half of 2018, in accordance with International Financial Reporting Standards (IFRS).

Highlights:

Total revenues (excluding the impact of IFRS 15 adoption) increased by 9.2% year-on-year to HUF 167.7 billion in Q2 2018 and by 7.9% to HUF 317.3 billion in the first half of 2018 compared to the same period in 2017.Revenue growth was primarily driven by a strong increase in SI/IT revenues along with further increases in equipment sales and mobile data usage. Mobile revenues (excluding IFRS 15 impacts) increased by 5.1% year-on-year to HUF 83.7 billion in Q2 2018 and by 4.9% year-on-year to HUF 161.4 billion in the first half of 2018 , as both mobile data and equipment sales revenues continued to expand dynamically. Fixed line revenues (excluding IFRS 15 impacts) were 5.4% higher year-on-year at HUF 50.8 billion in Q2 2018 and 6.5% higher at HUF 101.9 billion in the first half of 2018. Rising equipment sales, TV and broadband retail service revenues were among the key drivers behind this increase. System Integration (SI) and IT revenues grew by 36.2% year-on-year to HUF 33.2 billionin Q2 2018 , resulting in a year-on-year revenue growth of 30.0% for the first half of 2018. Growth continued to be driven by Hungarian public sector projects, with a major PC delivery completed for the education sector along with other hardware and software deliveries for different public institutions. In Macedonia, the increase in SI/IT revenues was driven by the higher volume of customized solutions projects. Energy Services were discontinued following the exit from the residential segment of the electricity market, as of November 1, 2017.

Direct costs (excluding IFRS 9 and 15 impacts) increased by 19.0% year-on-year, to HUF 74.6 billion in Q2 2018 (by 15.6% year-on-year to HUF 133.7 billion in H1 2018),driven by higher SI/IT and equipment costs, in line with the growth delivered in the related revenue lines. Interconnect costs increased by 13.8% year-on-year to HUF 5.3 billion in Q2 2018, reflecting increased mobile traffic in Hungary which led to higher payments to domestic mobile operators, while interconnect costs in Macedonia remained broadly unchanged. SI/IT service related costs increased by 40.9% year-on-year to HUF 25.3 billion in Q2 2018, driven by the strong growth in related projects and an increasing ratio of infrastructure delivery projects in the sales mix. Bad debt expenses deteriorated by HUF 0.5 billion year-on-year to HUF 2.0 billion in Q2 2018. This trend was driven primarily by an individual impairment as well as the absence of positive effects from the temporary improvement in factoring results that was recorded in the base period in Hungary. This could not be offset by the improvements recorded in Macedonia through one-offs and write downs in the base period. In the first half of 2018, bad debt expenses remained stable year-on-year, as the aforementioned deterioration was offset by a year-on-year improvement in the first quarter thanks to a temporary improvement related to factored trade receivables in Hungary. Telecom tax rose by 4.0% year-on-year to HUF 6.6 billion in Q2 2018, as a result of increased mobile traffic in Hungary, both in the retail and business segments. Other direct costs increased by 14.4% year-on-year, to HUF 35.4 billion in Q2 2018, primarily due to an increase in the cost of equipment sales in line with higher sales, and an increase in Hungarian roaming outpayments.

Gross profit ( excluding IFRS 9 and 15 impacts) grew by 2.5% year-on-year to HUF 93.1 billion in Q2 2018 and by 2.9% year-on-year to HUF 183.6 billion in H1 2018, as the strong increase in revenues outweighed pressure on direct margins stemming from higher equipment subsidies and margin dilution in SI/IT services.

Indirect costs (excluding IFRS 9 and 15 impacts) improved by 2.1% year-on-year in Q2 2018 and by 1.6% year-on-year in H1 2018 to HUF 42.1 billion and to HUF 90.7 billion respectively, thanks to savings in other operating expenses. Employee-related expenses remained stable year-on-year at HUF 20.1 billion in Q2 2018. The unfavourable impacts of insourcing trainees in the Hungarian operation and the 5% average wage increase at the Company was counterbalanced by a lower average regular employee headcount. Other operating expenses improved by 4.6% year-on-year to HUF 23.1 billion in Q2 2018. Savings in marketing, maintenance and HR-related material expenses compensated for higher fees related to the rental of local state-of-the-art cable networks. Other operating income decreased by HUF 0.3 billion year-on-year in Q2 2018, reflecting the lower income from brand fee received from the E2 energy joint venture. In the first half of 2018 other operating income remained stable year-on-year, with the aforementioned decline offset by year-on-year increases in the first quarter, reflecting one-off accrual reversals in Q1 2018 related to lapsed unbilled liabilities.

EBITDA (excluding IFRS 9 and 15 impacts) grew by 6.6% year-on-year to HUF 51.0 billion in Q2 2018 (and by 7.8% versus H1 2017 to HUF 92.9 billion in H1 2018), as a result of a combined impact of the improved gross profit and savings on other operating expenses.

Depreciation and amortization expenses increased by 5.3% year-on-year to HUF 29.0 billion in Q2 2018 and by 4.8% to HUF 55.9 billion in H1 2018, driven by shortened useful lives of customer connections related network elements.

Profit for the period from continuing operations (excluding IFRS 9 and 15 impacts) grew by 42.1% year-on-year to HUF 15.5 billion in Q2 2018 and by 55.1% to HUF 24.4 billion in H1 2018 , as the combined effect of higher EBITDA and lower net financial expenses

LINK:	https://www.telekom.hu/about_us/press_room/press_releases/2018/august_...
	See more stories from telekom

Magyar Telekom results for the second quarter of 2018

More from Magyar Telekom (T Mobile)

16/04/2024

22/02/2024

22/02/2024

22/02/2024

13/02/2024

04/12/2023

08/11/2023

17/10/2023

16/10/2023

02/10/2023

26/09/2023

15/09/2023

16/06/2023

13/06/2023

24/05/2023

10/05/2023

04/04/2023

03/04/2023

22/02/2023

22/02/2023

08/11/2022

03/11/2022

25/10/2022

22/08/2022

09/08/2022

07/07/2022

07/07/2022

05/07/2022

22/06/2022

15/06/2022

13/06/2022

27/05/2022

17/05/2022

11/05/2022

02/05/2022

20/04/2022

21/03/2022

03/03/2022

03/03/2022

23/02/2022

23/02/2022

16/02/2022

03/02/2022

11/01/2022

17/11/2021

09/11/2021

22/10/2021

20/10/2021

19/10/2021

01/10/2021