Magyar Telekom - Profit Is In The Red, But Guidance Is Kept
1. MTEL’s profit arrived lower than the consensus (HUF -1.5 bn) due to higher than expected loss on FX weakness (HUF – 7 bn), excluding that profit would have arrived at HUF 6.5 bn (+65% y-o-y).
2. EBITDA was flat on a yearly comparison, mainly due to the severance expenses (HUF 4bn) excluding that, EBITDA would have been up by 8.6% y-o-y.
3. Management kept its guidance for all of the KPI’s (sales, EBITDA, FCF) for 2020 and for 2021
4. COVID – effect: MTEL had limited impacts during the first quarter, only a small negative in an extent of HUF 0.6 bn which is an increase of provision for bad debt expenses. We are of the view that the net effect of the pandemic for MTEL is neutral, what the company gains on the increased voice revenue will losses on the lower roaming sales and elevated telco tax (+4% y-o-y).
Magyar Telekom is engaged in the providing fixed line and mobile telecommunication services for public and business customers. Co. provides voice and non-voice (SMS, MMS, internet, data and content provision) within mobile services; voice, data, internet and TV services within fixed line services. In addition, Co. sells equipment needed for using fixed line and mobile services (telephones, tablets, notebooks, TV sets etc.).
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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