Magyar Telecom B.V. Announces Financial Results for the Third Quarter Ended September 30, 2016 and Investor Call

LONDON--()--Magyar Telecom B.V. (“Matel B.V.”) today announced its financial results for the third quarter ended September 30, 2016. The Condensed Interim Consolidated Financial Statements of the Company is available at http://invitel.hu/english under “Investor Relations”. Matel B.V. will host a conference call today (at 14:00 UK time, 15:00 CET, 9:00 AM ET) to discuss the results.

The results for the third quarter and nine months ended September 30, 2016 reflect the consolidated financial results of Magyar Telecom B.V. and its subsidiaries (collectively, the “Company”) in accordance with International Financial Reporting Standards, as adopted by the E.U. (“IFRS”).

The reporting currency is euro (“EUR”), however the functional currency of operations is the Hungarian forint (“HUF”), being the currency of the primary economic environment in which the Company operates.

RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

When comparing the financial results for the nine months ended September 30, 2016 to the financial results for the nine months ended September 30, 2015, the reported results in euro have been affected by the difference between the average HUF/EUR exchange rates. The Hungarian forint depreciated against the euro by 1.0% with an average HUF/EUR exchange rate of 312.15 during the nine months ended September 30, 2016 compared to the average HUF/EUR exchange rate of 309.01 during the nine months ended September 30, 2015.

The Company’s revenue was EUR 104.8 million for the nine months ended September 30, 2016 which represents a 3% decrease compared to the nine months ended September 30, 2015. Segment gross margin decreased by 5% from EUR 86.6 million for the nine months ended September 30, 2015 to EUR 82.5 million for the nine months ended September 30, 2016. General operating expenses decreased by 8% from EUR 53.7 million for the nine months ended September 30, 2015 to EUR 49.6 million for the nine months ended September 30, 2016. Results from operations changed to an income of EUR 5.0 million for the nine months ended September 30, 2016 from an income of EUR 2.6 million for the nine months ended September 30, 2015, mainly as a result of lower general operating expenses and lower depreciation and amortization costs. Net result for the nine months ended September 30, 2016 was a loss of EUR 7.8 million compared to a loss of EUR 10.3 million for the nine months ended September 30, 2015.

Copper – Copper segment gross margin was EUR 22.3 million for the nine months ended September 30, 2016, representing a decrease of 14% compared to the nine months ended September 30, 2015. This decrease was mainly due to the decrease in the number of Voice subscriptions and ADSL internet endpoints, and the impact of copper customers migrated to fiber.

Fiber – Fiber segment gross margin was EUR 8.4 million for the nine months ended September 30, 2016, representing an increase of 54% compared to the nine months ended September 30, 2015. This increase was mainly due to the increase in the number of subscriptions, including the impact of copper customers migrated to fiber.

Cable Cable segment gross margin was EUR 11.0 million for the nine months ended September 30, 2016, representing an increase of 3% compared to the nine months ended September 30, 2015. This increase was due to the higher ARPU.

Offnet – Offnet segment gross margin was EUR 1.4 million for the nine months ended September 30, 2016, representing a decrease of 25% compared to the nine months ended September 30, 2015. This lower margin was mainly due to the decrease in Offnet voice revenue as a result of the decrease in traffic and customer numbers.

Small Business – Small Business segment gross margin was EUR 4.3 million for the nine months ended September 30, 2016, representing a decrease of 10% compared to the nine months ended September 30, 2015. This decrease was due to the decrease in our customer base and lower ARPU.

Corporate – Corporate segment gross margin was EUR 23.3 million for the nine months ended September 30, 2016, representing a decrease of 3% compared to the nine months ended September 30, 2015. This lower margin was mainly due to the decrease in traditional voice revenue as a result of the decrease in traffic and in data revenues due to price erosion on contract renewals, which was offset by the margin realized on the next generation services like Datacenter and IT Services.

Wholesale – Wholesale segment gross margin was EUR 11.8 million for the nine months ended September 30, 2016, representing a decrease of 16% compared to the nine months ended September 30, 2015. This decrease is due to the decrease in dark fiber sales, construction projects and leased line services.

Segment gross margin is a non-IFRS financial measure, which is used by management to evaluate the performance of the business segments.

The following table represents the reconciliation of segment gross margin to Income / (Loss) from Operations as per the Consolidated Statement of Profit and Loss and Other Comprehensive Income / (Loss) in the Consolidated Financial Statements of the Company:

   

Reconciliation of Segment Gross Margin to Income / (Loss) from Operations

 

For the nine months ended
September 30,

For the quarter ended
September 30,

(euro in millions) 2016   2015 2016   2015
 
Copper 22.3 25.9 7.2 8.3
Fiber 8.4 5.4 3.0 2.0
Cable 11.0 10.6 3.7 3.5
Offnet 1.4 1.9 0.5 0.6
Small Business 4.3 4.8 1.4 1.5
Corporate 23.3 24.0 7.7 7.8
Wholesale 11.8 14.0 4.0 4.3
Segment gross margin 82.5 86.6 27.5 28.0
Network operating expenses (12.4) (12.4) (4.2) (4.2)
Direct personnel expenses (6.6) (6.5) (2.2) (2.2)
Selling, general and

administrative expenses

(30.6) (34.8) (7.8) (8.5)
Depreciation and amortization (27.9) (30.3) (9.3) (10.1)
Income / (loss) from operations 5.0 2.6 4.0 3.0
 
 

Other Financial Data

 
 

For the nine months ended
September 30,

 

For the quarter ended
September 30,

(euro in millions) 2016   2015 2016   2015
 
Income / (loss) from operations 5.0 2.6 4.0 3.0
Depreciation and amortization 27.9 30.3 9.3 10.1
EBITDA 32.9 32.9 13.3 13.1
 
Capex 20.0 24.0 6.3 9.6
 
Cash and Cash Equivalents

at period end

21.9 23.4
 

Net cash provided by operations, which includes interest paid but excludes capital expenditure was EUR 22.8 million for the nine months ended September 30, 2016.

INVITEL GROUP CEO COMMENTS

Commenting on the results, David Blunck, Chief Executive Officer of Invitel Group noted: “Invitel Group’s third quarter results were in line with our expectations. Adjusted EBITDA, our preferred measure of operating performance, was up in the quarter and flat for the first nine months, consistent with our guidance of slight EBITDA growth for the full current year.”

CONFERENCE CALL

On November 29, 2016 (at 14:00 UK time, 15:00 CET, 9:00 AM ET), Matel B.V. will host a conference call to discuss financial results for the third quarter ended September 30, 2016.

You can participate in the conference call by dialing 0808-101-1183 (UK toll free), +1-785-424-1630 (International) or +1-866-932-0173 (U.S. toll free) and referencing “Matel B.V.”. A webcast of the call and the presentation materials will be available on Invitel Group’s website at http://invitel.hu/english under “Investor Relations”.

ABOUT MAGYAR TELECOM B.V.

Magyar Telecom B.V., through its main Invitel Group subsidiaries, Invitel Zrt. and Invitech Solutions Zrt., is a leading infrastructure-based telco and IT service provider in the Hungarian telecommunications market.

Invitel Zrt. offers a broad portfolio of services for residential and small business customers, including a variety of multimedia and entertainment services such as interactive, digital and High Definition television, fast internet offerings and telephony services across its regional networks. Invitech Solutions Zrt. is an IT, datacenter and telco provider to 6,000 midsize, enterprise, government and wholesale customers nationwide. Invitech Solutions Zrt. has network in all top 100 cities in Hungary, has a 9000-kilometer national backbone network with 11 border-crossing points and operates six high-spec data centers.

       

Magyar Telecom B.V.
Financial Highlights
(in millions of euro)

 

Statement of Profit and Loss

 

For the nine months ended
September 30,

For the quarter ended
September 30,

2016 2015 2016 2015
 
Copper 26.2 29.7 8.5 9.6
Fiber 11.1 7.2 4.0 2.6
Cable 14.9 14.3 5.1 4.7
Offnet 3.0 3.7 0.9 1.1
Small Business 4.5 5.0 1.5 1.6
Corporate 31.2 31.6 10.3 10.2
Wholesale 13.9 16.8 4.7   5.2
Total Revenue 104.8 108.3 35.0 35.0
 
Segment Cost of Sales 22.3 21.7 7.5 7.1
 
Income/(Loss) from Operations 5.0 2.6

4.0

3.0

 
Interest Expense 11.1 10.9 3.7 3.7
 
Income/(Loss) for the Period (7.8) (10.3) (0.5) (1.2)
 

Balance Sheet

 
At September 30,
2016   2015
 
Cash and Cash Equivalents 21.9 23.4
Other Current Assets 18.4 19.6
Property, Plant and Equipment, net 178.8 183.9
Total Assets 243.8 251.1
 
Total Current Liabilities 39.0 41.0
Long Term Debt 159.3 156.1
Total Shareholders’ Equity 37.3 45.0
Total Liabilities and Shareholders’ Equity 243.8 251.1

Contacts

Magyar Telecom B.V.
Ákos Balogh
Chief Financial Officer, Invitel Group
+36 1 801 1655
investorrelations@magyartelecom.com

Release Summary

Magyar Telecom B.V. Announces Financial Results for the Third Quarter Ended September 30, 2016 and Investor Call

Contacts

Magyar Telecom B.V.
Ákos Balogh
Chief Financial Officer, Invitel Group
+36 1 801 1655
investorrelations@magyartelecom.com