BUDAORS, Hungary, Aug. 11 -Magyar Telecom B.V., parent company of Invitel Rt. ("Invitel") today reported its financial results for the six months ended 30 June 2005.
Financial and Operational Highlights:
-- Total revenue in EUR terms for the six months ended 30 June 2005
increased by 7% or EUR 6.1 million. In Forint terms, total revenue for
the six months ended 30 June 2005 increased by 3% or HUF 751 million
compared to the six months ended 30 June 2004.
-- The number of mass market ADSL contracts increased by 19 378 or 90% as
of 30 June 2005 compared to 30 June 2004. Growth in Broadband is
expected to continue.
-- Gross margin increased by 1% to EUR 66.2 million for the six months
ended 30 June 2005 from EUR 65.9 million for the six months ended 30
June 2005. In Forint terms, gross margin for the six months ended 30
June 2005 has decreased by 3% or HUF 485 million compared to the six
months ended 30 June 2004.
-- Recurring EBITDA for the six months ended 30 June 2005 increased 4% to
EUR 40.5 million from EUR 38.9 million for the six months ended 30 June
2004. In Forint terms, recurring EBITDA increased by 1% to HUF 10.0
billion for the six months ended 30 June 2005 compared to the six
months ended 30 June 2004.
-- Capex to revenue ratio for the period remained at 12% and was in line
with projections.
-- Net third party debt to latest twelve months recurring EBITDA continues
to reduce and was 3.1x as of 30 June 2005.
-- Cash and cash equivalents including short term investments were EUR
18.9 million as of 30 June 2005.
-- 74% of debt related foreign exchange denominated cash outflows for the
next two years are hedged.
Mass Market Voice revenues declined for the six months ended 30 June 2005 to HUF 11.4 billion (EUR 46.0 million) compared to HUF 12.5 billion (EUR 48.5 million) for the six months ended 30 June 2004. This decrease is attributable to increased competition in our historical concession areas and mobile substitution.
Mass Market Internet revenues were HUF 2.4 billion (EUR 9.6 million) for the six months ended 30 June 2005 up from HUF 1.7 billion (EUR 6.5 million) for the three months ended 30 June 2004, an increase of 42% in HUF terms and 47% in EUR terms. This performance was due to the increase in the number of our DSL packages in line with the continued expansion of the Hungarian broadband market.
Business revenues for the six months ended 30 June 2005 were HUF 5.7 billion (EUR 23.0 million) compared to HUF 6.6 billion (EUR 25.6 million) for the six months ended 30 June 2004. This change is due to the decrease in Business voice and data revenues in our traditional concession areas. Primarily, as a result of lower traffic due to mobile substitution and reduced prices as a result of increased competition. This is being partially offset by increases in Business Internet and out of concession Business Voice revenues.
Wholesale revenues for the six months ended 30 June 2005 increased to HUF 3.4 billion (EUR 13.7 million) from HUF 1.4 billion (EUR 5.6 million) for the six months ended 30 June 2004.
Martin Lea, CEO of Invitel, commented, "Overall the results for the six months ended 30 June 2005 were positive. The first half of this year has been the most competitive period that we have experienced. We have seen very aggressive activity from competitors in our concession areas. We are especially pleased with our continued progress in high-growth market segments such as in residential Internet services as well as in our out of concession business."
Robert Bowker, CFO of Invitel stated, "Whilst we saw a decline in our gross margin we were able to compensate for this by reducing our operating costs and focusing on operational efficiencies, which meant that we recorded a modest increase in EBITDA. Our net operating expenses year on year decreased by 8% compared to the six months ended 30 June 2004."
Mr. Bowker noted that as a result of the improvement in cash flows provided by operations combined with the growth in EBITDA the Company's ratio of net third party debt to the latest twelve months EBITDA decreased to 3.1x.
"Whilst we will continue to experience a gradual reduction in our traditional 'in concession' voice business, we now have strong growth in all other areas such as voice revenue outside our historical concessions, Mass Market and Business Internet, Business Voice Out, and Wholesale," concluded Ian McKenzie, Executive Chairman of the Board. "Our entire company remains committed to cost containment and disciplined growth."
A summary of Magyar Telecom B.V.'s financial results for the six months ended 30 June 2005, which includes further information regarding our financial performance and also includes qualification of some of the terms used in this press release, is available on Invitel's website (http://www.invitel.hu/eng) and should be read in conjunction with this press release.
Conference Call Information
On 11 August 2005 (at 14:00 UK time, 15:00 CET, 9:00 AM EST), Invitel will host a conference call to discuss financial results for the second quarter of 2005. You can participate in the conference call by dialling +44-145-256-0299 (UK), +1-706-679-0560 (International) or +1-877-270-4109 (US). You can access a webcast of the call on the Invitel website at http://www.invitel.hu/eng. In addition, a replay will be available two hours after the call has ended and through 19 August. To access the replay of the call, please dial +44-145-255-0000 (UK), +1-706-645-9291 or +1-800-642-1687 (US) and enter conference ID number 7802168 (UK) or 7783519 (US/International). An archived replay of the conference web cast will also be available on the Invitel web site, http://www.invitel.hu/eng.
Invitel (previously Vivendi Telecom Hungary)
Founded in 1994, Invitel offers telephony, Internet, and data services to residential and business customers in Hungary. Invitel is the incumbent operator in 9 out of 54 primary service areas, where it has a stable cash generative core telephony business. In the rest of Hungary, which represents a significant growth opportunity following the liberalisation of the telecom market, Invitel is an alternative telecom operator with a national backbone, metropolitan networks and point-to-multi-point access system.
This press release contains forward-looking statements. These statements reflect the current belief of Invitel's management as well as assumptions made by, and information available to, Invitel. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual future results and developments could differ materially from those set forth in these statements due to various factors. These factors include, among others, changes in the general economic and competitive situation, particularly in Invitel's businesses and markets. In addition, future results and developments could be affected by the performance of financial markets, fluctuations in exchange rates and changes in national and supranational law, particularly with regard to tax regulations. The company assumes no obligation to update forward-looking statements.
Contacts:
Invitel Rt. The Anne McBride Company
Robert Bowker Kathy Price
Chief Financial Officer Investor Relations
Tel: +36 1 801 1374 Tel: +1-212-983-1702 x212
Email: bowkerr@invitel.co.hu Email: kprice@annemcbride.com
Invitel Rt.
Peter Bezeredy, ACCA
Treasury and Investor Relations Manager
Tel: +36 1 801 1343
Email: bezeredyp@invitel.co.hu
Invitel Rt.
Andrea Raba, ACCA
Financial Reporting Manager
Tel: +36 1 801 1651
Email: rabaa@invitel.co.hu
