Magyar Telekomʼs profit before income tax was down 33% at HUF 17.02 billion and after-tax profit was down 42.3%at HUF 10.66 bln in the first half of 2020, state news wire MTI reports, citing an earnings report published late Wednesday.
Consolidated group revenue, according to international accounting standards, was down 1% in January-June at HUF 316.52 bln.
Mobile revenue increased by 2.6% annually to HUF 174.1 bln. Fixed-line revenue grew by 0.6% to HUF 105.9 bln. System integration and IT revenue, however, were down 18.2% at HUF 36.48 bln.
Direct costs decreased by 0.6% to HUF 131.14 bln in H1. The telecom tax was up 6.8% year-on-year at HUF 6.8 bln in Q2, reflecting an increase in mobile voice traffic in the business and residential segments coupled with higher residential landline usage during the months of lockdown in Hungary.
Gross profit was down 1.3% at HUF 182.37 bln.
EBITDA was down 0.8% at HUF 102.52 bln and with depreciation and amortization costs growing by 4.7% to HUF 69.02 bln, operating profit was down 10.3% at HUF 33.5 bln.
Basic earnings per share came to HUF 7.29 compared to HUF 8.66 in the base period.
Total liabilities were up 13.3% at HUF 676.2 bln at the end of June and total equity decreased by 2% to HUF 619.6 bln.
In the second quarter of 2020 Magyar Telekom saw its total revenue decrease by 2.2% to HUF 157.18 bln compared to Q2 2019. Growth in telecommunication service revenues in Hungary and North Macedonia, along with positive foreign exchange impact from the strengthening of the denar compared to the forint, were offset by the decline in System Integration and IT revenues in Hungary.
Direct costs were down 1.6% at HUF 67.02 bln. While other direct costs and the telecom tax continued to rise in Q2, the SI/IT related expenses were significantly lower resulting in the year-on-year cost decline.
EBITDA was down 1.4% to HUF 56.12 bln, profit before tax was down 16.4% at HUF 15.33 bln and after-tax profit fell by 20.8% to HUF 11.48 bln as lower EBITDA and an increase in D&A expenses could only be partially mitigated by better net financial results.
In the earnings report, Magyar Telekom CEO Tibor Rékasi said the company has been through an extremely challenging second quarter with the COVID-19 virus impacting their operations.
Rékasi said they have decided to fast-track the development of their fiber network to enhance broadband coverage, driving 2020 investments higher than anticipated earlier.
Capital expenditure, which was HUF 89.6 bln in 2019, could grow by around 20% in 2020 and be broadly stable at last yearʼs level in 2021.
Free cash flow (excluding spectrum license fees) could be stable both in 2020 and 2021 at around HUF 65.1 bln reached in 2019. Annual revenue should also be little changed this year and next year compared to the HUF 666.7 bln in 2019.
EBITDA after lease is expected to increase from HUF 197.6 bln in 2019 by 1%-2% per year in 2020 and 2021.