Magyar Telekom 1Q 20 - Operating results in line, more interesting quarters lie ahead
MTEL delivered a set of operating results that were right in line with our and consensus estimates. EBITDA remained flat yoy at HUF 46.4 bn, while EBITDA AL (after leases) improved by 1.1% yoy to HUF 40.9 bn on the back of lower lease-related depreciation and interest expense due to reassessments/modifications (IFRS 16). Contrary to expectations MTEL suffered a net loss, albeit the delta to our estimate was modest at HUF 1.9 bn. Net financial costs grew by 95% yoy to HUF 10.97 bn driven by the 8.6% decline of HUF vs. EUR, which resulted in FX losses in relation to lease liabilities and trade payables. While we reckoned with a steep increase of financial costs the income tax was more burdensome than we expected at HUF 2.50 bn (RCBe HUF 1.76 bn) and exceeded the value of PBT of HUF 1.69 bn. The local business tax which is based on direct profit represents a substantial portion of the income tax burden, resulting in the high tax level.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.).
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