GTS Hungary spends HUF 2bn on investments this year

IT and telecommunications company GTS Hungary is spending HUF 2bn on investments this year or about 14% of annual revenue, managing director Pál Pauer said at a press conference on Tuesday.

CAPEX is up from HUF 1.5bn in 2010, Pauer said.

GTS Hungary expects to close 2011 with revenue level with last year's HUF 14.7bn.

Revenue is stagnating because the retail market is not growing and the economic environment does not support expansion, Pauer said.

GTS Hungary has an optical backbone network in Hungary that runs for more than 2,200km.

The company paid HUF 1bn on a "crisis tax" levied on telcos last year and expects to pay about the same this year, Pauer said.

Answering a question, Pauer said the GTS group has €50m in cash, thus it could, in principle, buy a 900-Mhz mobile frequency on offer in a tender. But movement toward the mobile market is not part of the group's strategy, rather it aims for the corporate market with services such as land lines and broadband, he added.

The GTS group, which operates in five countries in the region, had revenue of €390m last year. Pre-tax profit came to €91m.

GTS sees the future in developing virtual services, Pauer said. It expects the market to grow 10-15% next year, he added.

While virtual services generated just 1% of GTS Hungary's revenue this year, it expects the proportion to grow to 5% in 2012.

GTS Hungary has 23,000 retail clients and 7,000 corporate clients.

The company would sell its retail division if it received a suitable offer, Pauer said.

GTS Central Europe, operates optical networks in the Czech Republic, Poland, Slovakia and Romania, in addition to Hungary.

The group is owned by a consortium of private equity funds led by Columbia Capital, M/C Venture Partners and Innova Capital.