HTCC shareholders approve corporate restructuring

25 Feb 2009

Hungarian Telephone and Cable Corp (HTCC) announced today that its stockholders approved a corporate reorganisation to effectively change HTCC’s place of incorporation from Delaware, USA to Denmark. Of the 16,425,733 shares entitled to vote at today’s Special Meeting of Stockholders, 71.8% voted in favor of the proposal. As a result of the vote, HTCC will transfer its assets and liabilities to a newly formed Danish subsidiary, Invitel Holdings (Invitel Denmark), and merge into a newly organised subsidiary of Invitel Denmark. As a result of these transactions, Invitel Denmark will be the successor to HTCC as the holding company for the HTCC group of companies. HTCC expects the reorganisation to be effected as soon as practicable, subject to satisfaction of conditions specified in the merger agreement.

According to TeleGeography’s GlobalComms database, HTCC is the second largest player in the Hungarian fixed line market having emerged as a serious challenger to incumbent PTO Magyar Telekom (MTel) following a string of high profile acquisitions in recent years. HTCC said its 3Q 2008 revenue increased by 32% year-on-year from USD116.1 million to USD153.1 million, and its gross margin increased by 55% to USD91.2 million, compared to USD58.7 million for the third quarter of 2007. Income from operations increased by 114% to USD28.5 million, up from USD13.3 million a year earlier, while the net loss attributable to common stockholders for the third quarter 2008 widened to USD20.1 million from USD11.2 million. HTCC’s Mass Market Voice division said revenue grew by 26% year-on-year from USD33.3 million to USD41.8 million in the third quarter 2008, mainly due to the inclusion of Tele2 Hungary which was acquired in October 2007. Its HTCC’s Business unit posted revenue of USD40.4 million, up 17% y-o-y, mainly as a result of foreign exchange movements. In functional currency terms, Business revenue was flat compared to 2007.

Meanwhile, HTCC’s Mass Market Internet division continued to grow, driven by strong demand for high speed DSL internet access services both inside and outside its historical concession areas. HTCC’s Mass Market Internet revenue increased to USD14.9 million in the third quarter 2008 as compared to USD11.6 million in the third quarter 2007. HTCC increased its broadband DSL customer base from approximately 115,000 subscribers as of the end of the third quarter 2007 to approximately 135,000 subscribers as of the end of the third quarter 2008. HTCC’s Wholesale revenue increased 53% from USD36.6 million in the third quarter 2007 to USD56.0 million in the third quarter 2008, primarily due to the Memorex acquisition.

Hungary,Invitel (a subsidiary of DIGI),

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