Magyar Telekom - The stars are aligned, it is time to buy
We update our model after the strong second quarter results and as a result increase our Target price by 40 per share to HUF 480 per share and we lift our recommendation to BUY. We believe that the stars are aligned to BUY MTEL – here are our reasons:
- Firstly, from 2022 Q3 MTEL introduces inflation indexed contracts which will allow the company to increase clients’ ARPUs. The effect could be HUGE, +1% increase across the HU portfolio (sales of HUF 550 bn) could result in 10% boost in profit. Therefore we are confident that cost pressures (indirect cost such as: energy, contractors etc...) will be easily offset by the increase on the headline, and from now on MTEL could truly be a real asset, in our view.
- Secondly, RGU & ARPU growth in the last two years were significant (RGU +8%; blended ARPU 6%) which increased MTEL’s run-rate profit from the HUF 45 - 55 bn level to 65 – 75 bn - excluding the windfall profit tax.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.