Hrvatski Telekom 2Q 20 - Profit margins hike is a pleasant surprise
Despite the relative resilience of the communication industry in a Covid-19 pandemic environment, the mobile revenues decline was stronger than we reckoned (-8.5% vs. RCBest: -5%). The drop is primarily attributable to lower equipment and visitor revenues, -16.1% and -46.3% in 1H 2020, respectively. Moreover, somewhat higher postpaid revenues (users +2.6%, ARPU +1.2%) could only partially compensate for the strong decline of the prepaid segment (users -7.9%, ARPU -8.1%). Furthermore, system solutions business posted a 11.6% revenue drop. The only segment that recorded positive yoy performance was Broadband & TV (+2.8%), mainly due to both broadband users and ARPU growth in retail segment, while TV revenues remained yoy flat. Optima Telekoms contribution was adversely impacted by the termination of the contract with Telekom Slovenije and Orion (HRK -20 mn). The impact is EBITDA neutral.
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