Digi - Strong growth in Spain comes with higher cost, RGU decline in Hungary

DIGI’s net profit arrived to EUR 14 million (-122% y-o-y) and its EBITDA to EUR 122 million (+5% y-oy). Two segments EBITDA margin declined while Romania further improved.
 Key positives:
1. RGU growth maintained (+12% y-o-y; +2% q-o-q)
 Key negatives:
1. RGU declined in Hungary (-2% q-o-q) implying that HU mgmt’s focus has
shifted to the due diligence because of the potential sale. Revenue fell and
OPEX increased which dragged down EBITDA margin significantly 18% vs
22% a year ago.
2. Spain’s growth came at the expense of EBITDA margin 15% vs 20% a year
ago.
 Underlying trends: Growth trajectory was continued in Q1 which translated into higher EBITDA
but at expense of margins. We surprised by the lower RGU’s in Hungary which gives the
impression that management focuses on the divestment of the Hungarian segment rather than
on maintaining the growth. Please note that management the Hungarian operation is an asset
held for sale. Due diligence process is expected to be finalized by September 2021.