Magyar Telecom B.V. Announces Financial Results for the Third Quarter Ended September 30, 2015 and Investor Call

LONDON--()--Magyar Telecom B.V. (“Matel B.V.”) today announced its financial results for the third quarter and nine months ended September 30, 2015. The unaudited Condensed Interim Consolidated Financial Statements are 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.

RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

When comparing the financial results for the nine months ended September 30, 2015 to the financial results for the nine months ended September 30, 2014, the reported results in euro have been affected to a minor degree by the difference between the average HUF/EUR exchange rates in the periods. The Hungarian forint depreciated against the euro by 0.1% with an average HUF/EUR exchange rate of 309.01 during the nine months ended September 30, 2015 compared to the average HUF/EUR exchange rate of 308.76 during the nine months ended September 30, 2014.

The Company’s revenue was EUR 108.3 million for the nine months ended September 30, 2015 which represents a 3% decrease compared to the nine months ended September 30, 2014. Segment gross margin decreased by 1% from EUR 87.9 million for the nine months ended September 30, 2014 to EUR 86.6 million for the nine months ended September 30, 2015. General operating expenses decreased by 5% from EUR 56.5 million for the nine months ended September 30, 2014 to EUR 53.7 million for the nine months ended September 30, 2015. Result from operations changed to an income of EUR 2.6 million for the nine months ended September 30, 2015 from a loss of EUR 0.8 million for the nine months ended September 30, 2014, mainly as a result of lower general operating expenses and lower depreciation and amortization. Net result for the nine months ended September 30, 2015 was a loss of EUR 10.3 million compared to a loss of EUR 13.9 million for the nine months ended September 30, 2014.

Residential Voice – Residential Voice segment gross margin was EUR 17.8 million for the nine months ended September 30, 2015, representing a decrease of 2% compared to the nine months ended September 30, 2014. This decrease was mainly due to the decrease in our Residential Voice revenue as a result of the decrease in the number of our Residential Voice subscriptions.

Residential Internet & TV – Residential Internet & TV segment gross margin was EUR 17.3 million for the nine months ended September 30, 2015, representing an increase of 1% compared to the nine months ended September 30, 2014. This increase was mainly due to the increase in the number of TV subscriptions.

Cable Cable segment gross margin was EUR 10.8 million for the nine months ended September 30, 2015, representing an increase of 9% compared to the nine months ended September 30, 2014, due to the increase in our customer base and higher ARPU.

Corporate – Corporate segment gross margin was EUR 30.4 million for the nine months ended September 30, 2015, representing a decrease of 3% compared to the nine months ended September 30, 2014. This was mainly due to the decrease in Corporate voice and data revenue as a result of the decrease in traffic and price erosion on contract renewals.

Wholesale – Wholesale segment gross margin was EUR 10.3 million for the nine months ended September 30, 2015, representing a decrease of 9% compared to the nine months ended September 30, 2014. This decrease was due to lower Wholesale data monthly fee revenue.

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 Condensed Interim Consolidated Statement of Profit and Loss and Other Comprehensive Income in the Condensed Interim Consolidated Financial Statements of the Company:

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

 
    Nine months ended
September 30,
(euro in millions) 2015     2014
 
Residential Voice 17.8 18.1
Residential Internet & TV 17.3 17.2
Cable 10.8 9.9
Corporate 30.4 31.4
Wholesale 10.3   11.3  
Segment gross margin 86.6 87.9
Network operating expenses (11.5 ) (12.8 )
Direct personnel expenses (6.5 ) (5.8 )
Selling, general and administrative expenses (35.7 ) (37.9 )
Depreciation and amortization (30.3 ) (32.2 )
Income / (loss) from operations 2.6 (0.8 )
 
 

Other Financial Data

 
Nine months ended
September 30,
(euro in millions) 2015 2014
 
Income / (loss) from operations 2.6 (0.8 )
Depreciation and amortization 30.3   32.2  
EBITDA 32.9 31.4
 
Capex 24.0 16.0
 
Cash and Cash Equivalents

at period end

23.4 18.7
 

Net cash provided by operations, which includes interest paid but excludes capital expenditure was EUR 22.3 million for the nine months ended September 30, 2015.

Commenting on the results, David Blunck, Chief Executive Officer of Invitel, noted: “Our financial performance in the first three quarters of the year reflects the Company’s operational turnaround and the improved Hungarian macro environment. Adjusted EBITDA is up 2% year-to-date versus the same period last year. On the back of these results, we are raising our full-year Adjusted EBITDA guidance. Our previous Adjusted EBITDA guidance was flat to down 2%. We now expect Adjusted EBITDA to be up slightly for the full year – the Company’s first year-on-year EBITDA growth in ten years. Our investments in convergence technologies and network speed upgrades aim to keep us on this growth trajectory in the years to come.”

CONFERENCE CALL

On November 13, 2015 (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 and nine months period ended September 30, 2015.

You can participate in the conference call by dialing 0800-756-3429 (UK toll free), +1-201-689-8049 (International) or +1-877-407-9210 (U.S. toll free) and referencing “Matel B.V.” A webcast of the call and the presentation materials will be available on Invitel’s website at http://invitel.hu/english under “Investor Relations.”

CHANGE OF AUDITOR

Matel B.V. also announces the appointment of E&Y as Group auditor. The Company periodically reviews its auditor appointment for purposes of good corporate governance. The Company ran a competitive audit tender this summer with the participation of PricewaterhouseCoopers (the Company’s auditor since 2009) and other Big 4 firms. As a result of the tender process, the Board of Directors appointed E&Y as Group auditor.

ABOUT MAGYAR TELECOM B.V.

Magyar Telecom B.V., through its subsidiary, Invitel is one of the leading service providers in the Hungarian telecommunications market, offering a broad portfolio of services for residential and business customers.

Residential products include a variety of multimedia and entertainment services such as interactive, digital and High Definition television, fast internet offerings and telephony services. Business solutions include the most up-to-date ICT and cloud-based IT solutions, in addition to voice and data services, all using Invitel's nationwide fiber-optic backbone network. Invitel is headquartered in Budaörs, with customer touch points throughout Hungary.

 
Magyar Telecom B.V.
Financial Highlights

(in millions of euro)

Statement of Profit and Loss
 
       

Nine months ended
September 30,

2015 2014
 
Residential Voice 18.7 19.6
Residential Internet & TV 23.9 23.1
Cable 14.5 13.6
Corporate 38.5 40.8
Wholesale 12.7   14.2  
Total Revenue 108.3 111.3
 
Segment Cost of Sales 21.7 23.4
 
Income/(Loss) from Operations 2.6 (0.8 )
 
Interest Expense 10.9 10.7
 
Foreign Exchange Gains/(Losses), net - (0.5 )
 
Gains/(Losses) on Derivative Financial Instruments (0.1 ) (0.1 )
 
Income/(Loss) for the Period (10.3 ) (13.9 )
 

The results for the third quarter and nine months ended September 30, 2015 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.

Magyar Telecom B.V.
Financial Highlights

(in millions of euro)

Balance Sheet
       
September 30, December 31,
2015 2014
 
Cash and Cash Equivalents 23.4 20.8
Other Current Assets 19.6 20.7
Property, Plant and Equipment, net 183.9 188.2
Total Assets 251.1 254.9
 
Total Current Liabilities 41.0 36.5
Long Term Debt 156.1 154.6
Total Shareholders’ Equity 45.0 54.3
Total Liabilities and Shareholders’ Equity 251.1 254.9
 

Contacts

for Magyar Telecom B.V.
Andrea Rába
co-Chief Financial Officer, Invitel
Hungary: +36 1-801-1651

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Release Summary

Magyar Telecom B.V. Announces Financial Results for the Third Quarter Ended September 30, 2015 and Investor Call

Magyar Telecom B.V.