Hungary’s leading telecoms operator by revenues and subscribers Magyar Telekom reported a 9.1% rise in revenues in FY2006, to HUF671.2 billion (USD3.29 billion), as higher mobile, internet, systems integration and IT-related sales helped offset a decline in outgoing fixed line traffic revenues. Group EBITDA rose slightly by 0.9% to HUF258.6 billion, with an EBITDA margin of 38.5%.
In the fixed line segment, Magyar Telekom posted external revenues (after elimination of inter-segment revenues) of HUF343.9 billion, up 4.5% year-on-year thanks to an increase in internet and system integration, and IT-related revenues. EBITDA for the unit amounted to HUF118.7 billion and the EBITDA margin on external revenues was 34.5%. The telco’s mobile arm T-Mobile Hungary reported revenues of HUF327.3 billion, up 14.5% year-on-year, driven in part by increased voice revenues. EBITDA was HUF139.9 billion, with the EBITDA margin on external revenues reaching 42.8%. Net income fell by 2.2%, from HUF78.4 billion to HUF76.7 billion despite the slight EBITDA growth, which the company attributed to higher depreciation and amortisation expenses. Net cash from operating activities fell to HUF186 billion at the end of 2006, and net debt decreased by HUF68.7 billion to HUF227.9 billion. The net debt ratio (net debt to net debt plus total equity) fell to 27.7% at end-December 2006 (33.2% at end-December 2005). This is due to the fact that the company has not paid dividends for 2005 earnings in 2006.
Commenting on the results Magyar Telekom’s chairman and CEO, Christopher Mattheisen, said: ‘Operationally, 2006 saw a number of positive developments for Magyar Telekom. Despite strong competition in all areas, we preserved our leading position in our key businesses. Both revenue growth and EBITDA in forint terms were comfortably in line with our full-year targets. The gross additions to tangible and intangible assets to revenues (capex to sales) ratio was 13.5%, in line with our goal of keeping the ratio below 15% in 2006. In the Hungarian fixed line business, we made several acquisitions and successfully integrated these investments into our existing portfolio. We developed a strong position in the growing IT, SI and telco-outsourcing market. The number of broadband connections has increased by 60% during 2006 and we launched IPTV service at the end of the year. We continued to focus on customer retention through our flat-rate offers. As a result, access, internet and IT related revenues increased, offsetting the continued erosion of traffic revenues. In 2006 we saw the initial positive impacts of the fixed-mobile merger, whilst also recording some one-off costs related to this complex process. As part of the integration, we fully unified our store network, which now provides complete services to our customers. In the Hungarian mobile market, we maintained our clear market leadership. We were the first in Hungary to fully introduce the super-fast HSDPA service in the market, supporting a successful mobile broadband rollout. The country-wide EDR (unified digital radio) network rollout has also now been completed.’