Declining Revenues at Magyar Telekom

Magyar Telekom has published its financial results for the second quarter and first half of 2020 on the website of the Budapest Stock Exchange.

Among the financial highlights, the company says revenues declined by HUF 3.6 billion, or 2.2% year-on-year, to HUF 157.2 billion in Q2 2020, driven by lower contribution from the SI/IT business segment. Also, gross profit declined by HUF 2.5 billion, or 2.7% year-on-year, to HUF 90.1 billion in Q2 2020, attributable in part to the impact of COVID-19 on the profitability of mobile and fixed line services. Net debt grew to HUF 471.6 billion at June 30, 2020, corresponding to a net debt to total capital ratio of 43.2% driven by the spectrum and dividend outpayments and sharebuyback transaction during Q2 2020.

As for operational highlights, the gigabit capable network reached over 2.2 million access points in Hungary by the end of Q2 2020. Following the launch of 5G services in early April 2020, Magyar Telekom is now able to offer significantly higher bandwidth, lower latency and seamless connectivity. The service has been subsequently extended and now covers new areas in Hungary such as parts of the Lake Balaton. Also, Magyar Telekom signed a supplier agreement with Ericsson to support the modernization of the mobile network and the roll-out of 5G services.

Commenting on the report, Magyar Telekom CEO Tibor Rékasi said that the company "has been through an extremely challenging second quarter with COVID-19 impacting our operations in many ways. I am very proud that we supported families, communities as well as businesses allowing for enhanced digital cooperation during this extraordinary period. At the same time, we were equally successful in preserving the profitability of Magyar Telekom by delivering strong results in the second quarter despite
fast-changing external conditions.

We have decided to fast-track the development of our fiber network to enhance broadband coverage, driving our 2020 investments higher than we anticipated earlier. Early signs of changing customer behavior in light of COVID-19 proves that we are on the right track. We expect these investments to further reinforce our position as a trusted provider of seamless telecommunications services in both Hungary and North Macedonia, which will be key to leveraging favorable long-term trends accelerated by recent developments.

Looking ahead to the second half of 2020, we will focus on delivering our previously announced EBITDA AL target.”