HTCC reports solid Q3 results thanks to Invitel purchase

12 Nov 2007

Alternative operator Hungarian Telephone and Cable Corp (HTCC), which markets fixed line services in Hungary under the Invitel banner, has published its third-quarter financial results for the period ending 30 September 2007. With the inclusion of Invitel for the full quarter, HTCC increased its revenue by 146% year-on-year to USD116.1 million, from USD47.2 million in 3Q06. HTCC’s gross margin rose by 163% y-o-y from USD22.3 million to USD58.7 million, and income from operations increased by 75% to USD13.3 million, compared to USD7.6 million previously. The operator posted a net loss of USD11.2 million in 3Q07, compared with net income of USD4.7 million in the corresponding period of 2006, which HTCC attributed to a USD19.2 million interest expense and a foreign exchange loss of USD8.2 million. Pro-forma adjusted EBITDA for the third quarter of 2007, excluding the effects any future synergies stemming from the Invitel acquisition, rose 21.5% to USD48.0 million.

HTCC’s mass market voice revenue grew by 245% year-on-year from USD9.8 million in the third quarter 2006 to USD33.8 million in 2007, mainly due to the inclusion of Invitel, which resulted in USD24.1 million of additional revenue for the quarter. HTCC said it continued to expand residential voice call revenues in out-of-concession areas of the country, and expects to see further enhancements here following its successful acquisition of Tele2’s Hungarian operations. Consumer internet access services also fared well, reflecting HTCC’s growth in the DSL internet sector. The company’s mass market internet revenue, including a USD10.2 million contribution from Invitel in the quarter, increased to USD11.5 million in the third quarter 2007 as compared to USD0.9 million a year ago. HTCC increased its broadband DSL customer base from approximately 8,000 subscribers at end-September 2006 to 117,000 a year later, mainly due to the acquisition of Invitel. Revenue from business services grew by 120% from USD19.1 million in the third quarter 2006 to USD42.0 million, again bolstered by its Invitel purchase. HTCC added that wholesale revenue increased 65% y-o-y from USD17.5 million to USD28.9 million in the third quarter 2007, for similar reasons.

Hungary,Invitel (a subsidiary of DIGI),

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