Matav: Balanced Segment Performances Lead Healthy 2002 First Half Results.Business Editors BUDAPEST Budapest (b  `dəpĕst'), city (1990 pop. 2,016,100), capital of Hungary, N central Hungary, on both banks of the Danube. , Hungary--(BUSINESS WIRE)--Aug. 14, 2002Matav (NYSE NYSE See: New York Stock Exchange : MTA (1) (Message Transfer Agent or Mail Transfer Agent) The store and forward part of a messaging system. See messaging system. (2) See M Technology Association. 1. (messaging) MTA - Message Transfer Agent. .N and BSE See Bombay Stock Exchange. BSE See Boston Stock Exchange (BSE). : MTAV.BU), the leading Hungarian telecommunications service provider A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. , today reported its consolidated financial results for the first half 2002 according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. International Accounting Standards (IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. ). Highlights: - Total revenues grew by 9.2% (17.3% in EUR terms) to HUF 287.5 bn (EUR 1,181 mn) in 1H 2002 compared to 1H 2001 primarily due to the revenue growth of mobile and international segments but partially offset by lower fixed line traffic revenues. - EBITDA grew to HUF 121.7 bn (9.1% growth) and EBITDA margin reached an impressive 42.3%. - Fixed line segment EBITDA margin grew slightly to 39.1% mainly due to leased line and data transmission revenue growth and lower payments to other network operators, offset by a decline in domestic and international traffic revenues. - Mobile segment revenue went up by 19.0% mainly driven by a strong increase in the customer base. EBITDA margin slightly reduced to 36.4% in 1H 2002 from 37.0% a year ago. Westel had nearly 3 million customers at the end of June, 2002. Westel successfully kept its leading position with a 50.7% market share. - International segment (mainly MakTel) revenue grew by 18.9% and EBITDA margin was 49.5% due to strong growth in fixed line and mobile subscriber base as well as higher domestic prices partly offset by lower mobile MOU and lower international traffic revenue. - Net income reached HUF 37.7 bn (EUR 155 mn), a decline of 14.5% as net interest charges (due to higher loan balance, sharp decline in net FX gain and increase in swap related expenses), as well as minority interest (MakTel) and income tax expense (Westel) grew significantly over 1H 2001. - Net debt at period-end sharply rose to HUF 415.1 bn against HUF 254.5 bn in 1H 2001 due to the Westel acquisition. However net debt showed a decrease of HUF 27.8 bn compared to the end of 2001, resulting in a reduced net debt to total capital (net debt plus equity plus minority interest) ratio of 43.4% compared to 46.6% at year-end 2001. Elek ELEK Electronic Straub Straub is a Germanic surname that literally means “one with bushy or bristly hair” and “destroy or rob.” [1] It may also refer to people who come from Straube in Germany. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commented: "Strong cash generation characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. the fixed line segment, as a combined result of strict capital expenditure and cost control. In a still expanding mobile market, Westel managed to keep both net additions and market share above 50% in the first half of the year. This achievement was coupled with continued delivery of mobile segment profit growth. The churn rate (1) The percentage of customers who cancel their online, cellphone or other subscription service during a certain time period. (2) The percentage of employees who leave the company during a certain time period. See churning. in the prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. and contract segments reduced quarter on quarter in 2002.
Overall, I am pleased to see a balanced performance from the fixed,
mobile and international segments. The Group's first half results
reflect that we are on the right track not only delivering healthy
financial results, but executing our strategy. I would also like to
re-confirm our public guidance set for the full year 2002."Fixed line: Impressive cash generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. , focus on innovative solutions, growth in data transmission The segment revenues grew by 1.9% to HUF HUF In currencies, this is the abbreviation for the Hungarian Forint. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 168.0 bn and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become margin also improved to reach 39.1%. Domestic and international traffic revenues combined, decreased by 5.8%, chiefly reflecting lower volumes compared with the first half of 2001. Leased line A private communications channel leased from a common carrier. Most digital lines require four wires (two pairs) for full-duplex transmission. (communications, networking) leased line and data revenues grew by 15.0% driven by the volume growth in managed leased lines, ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the subscribers. Fixed line penetration and the total number of lines remained stable. However, the number of ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. channels increased to above 492,000, representing a 27.8% growth against 1H 2001. By end-June 2002, 16.8% of Matav's total fixed lines were ISDN. We successfully managed to increase the number of ADSL lines resulting in 18,781 lines installed by end of June June: see month. 2002. Matav's Internet subsidiary, Axelero maintained its leading position among ISPs in the dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. market. The Company had 141,630 Internet subscribers (up by 28.3%). The leading Hungarian portal [origo] had over 600,000 visitors per day in the first half of 2002, an increase from around 270,000 in 1H 2001. Internet usage had a proportionally pro·por·tion·al adj. 1. Forming a relationship with other parts or quantities; being in proportion. 2. Properly related in size, degree, or other measurable characteristics; corresponding: greater stake in the total call volume. Mobile: Strong results and actively maintained leading position Mobile segment revenues increased by 19.0% to reach HUF 110.0 bn in 1H 2002 and EBITDA grew by 17.1% to HUF 40.0 bn. Depreciation and amortization reduced by 13.9% to HUF 17.1 bn as a result of lower intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. amortization in 1H 2002. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. grew strongly to HUF 23.0 bn from HUF 14.4 bn and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: grew from 15.5% to reach 20.9% in 1H 2002. Net income went up by 26.6% to HUF 17.3 bn. Under intense competition, Westel preserved its leading position in the GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. market. Westel outperformed its competitors in terms of net customer additions. Westel's subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base reached nearly 3 million at the end of June 2002. The Company had a GSM market share of 50.7% also due to the efficient customer retention program. Westel captured 52% of the total market net additions in the second quarter of 2002. Prepaid customers at the end of the period, represented 72.5% of the total customer base. Average acquisition cost per customer fell to HUF 15,139 in the first half of 2002 from HUF 21,777 a year ago. When calculating subscriber acquisition cost, we include connection margin, which is the connection fee minus the SIM card SIM card abbr (= subscriber identity module card) → carte f SIM SIM card n (Tel) (= Subscriber Identity Module card) → SIM-Karte f cost, and the sales related equipment subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. and agent fee. Both ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. (monthly average revenue per user) and MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. (monthly average minutes of use per subscriber) declined due to the continuous dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. in the customer base, providing an ARPU of HUF 5,820 and a MOU of 121 in 1H 2002. However, MOU stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. within the two quarters of 2002. Enhanced services Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; (mainly SMS (1) (Storage Management System) Software used to routinely back up and archive files. See HSM. (2) (Systems Management Server) Systems management software from Microsoft that runs on Windows NT Server. ) within ARPU reached HUF 488 (8.4% share) showing an impressive development compared with HUF 394 (5.6% share) in the first half of 2001. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. churn rate was relatively low at 15.1% in 1H 2002. The churn rate in the postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. segment reduced to 15.9% in 1H 2002 from 18.1% in the same period last year. International: Back on track International segment revenues increased to HUF 32.3 bn (up by 18.9%) in 1H 2002. EBITDA margin reached 49.5% in the first half of 2002 representing lower margin compared with 50.9% in 1H 2001 but also showing a recovery on the weaker 2002 first quarter performance. Domestic traffic revenues (mainly driven by price increases) grew. International traffic revenues declined due to a reduction in outgoing and incoming prices and, to a lesser extent, lower usage. Employee related expenses rose to HUF 3.7 bn due to wage increases. Depreciation and amortization increased by 25.2% (to HUF 5.8 bn) due to higher asset base. By end of June, fixed line penetration in Macedonia Macedonia, country, Europe Macedonia (măs'ədō`nēə), Macedonian Makedonija, officially Republic of Macedonia, republic (2005 est. pop. 2,045,000), 9,930 sq mi (25,720 sq km), SE Europe. was 27%, and mobile penetration rose to 14%. The subscriber base has continued to grow in each business areas. Fixed line customers reached 573,926 up 7.7% from a year earlier. Within this, analog subscribers grew moderately, by 6.7% to 554,582 but ISDN channels impressively increased by 50.2% to 19,344. The mobile customer base more than doubled to 291,213. The number of Internet subscribers reached 26,944 at the end of June 2002. Matav is the principal provider of telecom services in Hungary Hungary, Hung. Magyarország, officially Republic of Hungary, republic (2005 est. pop. 10,007,000), 35,919 sq mi (93,030 sq km), central Europe. . Matav provides a broad range of services including telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. , data transmission, value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. , and through its subsidiaries is Hungary's largest mobile telecom provider. Matav also holds a majority stake in Stonebridge Stonebridge or StoneBridge may refer to:
This press-release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, our Annual Report on Form 20-F for the year ended December December: see month. 31, 2001 filed with the U.S. Securities and Exchange Commission. For detailed information on Matav's 1H 2002 results please visit our website: (http://www.matav.hu/english/investor relations) or the website of the Budapest Stock Exchange Budapest Stock Exchange Established in 1864, the major securities market of Hungary. (www.bse.hu Listed Securities/ Issuer's news).
June 30,
2001 -
MATAV Dec 31, June 30, June 30, June 30,
Consolidated 2001 2001 2002 2002
Balance Sheets - IAS (Audited) (Unaudited) (Unaudited) % change
(HUF million) Restated
ASSETS
Current assets
Cash and
cash equivalents 10 117 9 385 16 391 74,7%
Financial investments 327 1 082 404 (62,7%)
Receivables 88 079 84 305 94 299 11,9%
Inventories 13 297 11 302 12 499 10,6%
Assets held for disposal 0 0 2 100 n.a.
--------------------------------
Total current assets 111 820 106 074 125 693 18,5%
Property, plant
and equipment 654 298 643 056 642 110 (0,1%)
Intangible assets 306 029 293 415 299 657 2,1%
Associates and other
long term investments 13 199 14 610 8 795 (39,8%)
--------------------------------
Total fixed assets 973 526 951 081 950 562 (0,1%)
Other non
current assets 18 850 19 175 13 730 (28,4%)
----------------------------------
Total assets 1 104 196 1 076 330 1 089 985 1,3%
==================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Loans and
other borrowings 33 607 77 371 45 866 (40,7%)
Trade and
other payables 122 126 84 902 97 337 14,6%
Deferred revenue 3 430 3 492 2 967 (15,0%)
Provisions for
liabilities
and charges 3 320 6 499 3 717 (42,8%)
----------------------------------
Total current
liabilities 162 483 172 264 149 887 (13,0%)
Loans and
other borrowings 419 763 187 558 386 041 105,8%
Deferred revenue 7 101 8 300 6 001 (27,7%)
Provisions for
liabilities and charges 0 0 0 n.a.
Deferred tax
liability 1 763 2 796 3 264 16,7%
Other non
current liabilities 4 617 7 252 3 915 (46,0%)
----------------------------------
Total non current
liabilities 433 244 205 906 399 221 93,9%
Minority interests 48 169 38 946 54 011 38,7%
Shareholders' equity
Common stock 103 736 103 736 103 736 0,0%
Additional paid
in capital 22 955 22 955 22 955 0,0%
Treasury stock (163) (160) (163) 1,9%
Retained earnings 333 772 532 683 360 338 (32,4%)
----------------------------------
Total shareholders'
equity 460 300 659 214 486 866 (26,1%)
----------------------------------
Total liabilities and
shareholders' equity 1 104 196 1 076 330 1 089 985 1,3%
==================================
MATAV 6 months ended June 30,
Consolidated 2001 2002 %
Income Statements - IAS (Unaudited) (Unaudited) change
(HUF million) Restated
Revenues
Subscriptions, connections
and other charges 47 841 49 881 4,3%
Domestic traffic revenue 61 827 59 862 (3,2%)
Other usage 8 717 7 729 (11,3%)
--------------------------
Domestic telecommunications
services 118 385 117 472 (0,8%)
International traffic revenues 16 203 13 593 (16,1%)
Mobile telecommunications
services 64 475 83 228 29,1%
Revenues from international
activities 27 116 32 238 18,9%
Leased lines and data transmission 14 827 16 457 11,0%
Other services 22 309 24 501 9,8%
Total revenues 263 315 287 489 9,2%
Employee related expenses (35 812) (39 529) 10,4%
Depreciation and amortization (57 469) (57 933) 0,8%
Payments to other
network operators (34 279) (39 631) 15,6%
Cost of telecommunications
equipment sales (20 720) (20 207) (2,5%)
Other operating expenses (60 998) (66 439) 8,9%
--------------------------
Total operating expenses (209 278) (223 739) 6,9%
--------------------------
Operating profit 54 037 63 750 18,0%
Net interest and other charges (181) (11 737) 6 384,5%
Share of associates' results
before income tax 1 328 589 (55,6%)
--------------------------
Profit before income tax 55 184 52 602 (4,7%)
Income tax expense (7 000) (9 109) 30,1%
--------------------------
Profit after income tax 48 184 43 493 (9,7%)
Minority interest (4 038) (5 752) 42,4%
---------------------------
Net income 44 146 37 741 (14,5%)
===========================
MATAV 6 months ended
June 30,
Consolidated 2002
Cash Flow Statement - IAS (HUF million) (Unaudited)
Cash flow from operating activities
Operating profit 63 750
Depreciation and amortization of fixed assets 57 933
Change in working capital (21 198)
Amortization of deferred income (1 574)
Interest paid (12 258)
Commissions and bank charges (1 361)
Net income tax paid (2 977)
Other items 859
Net cash from operating activities 83 174
Cash flow from investing activities
Capital expenditure on tangible
and intangible assets (48 658)
Purchase of investments (1 828)
Purchase of subsidiaries 0
Cash acquired 317
Interest received 770
Dividends received 815
Net change in financial assets (77)
Proceeds from disposal of fixed assets 750
---------------
Net cash flow utilized in investing activities (47 911)
Cash flow from financing activities
Dividends paid to shareholders
and minority interest (11 406)
Net repayments of borrowings (17 526)
Net cash used for treasury stock transactions 0
Other 0
----------------
Net cash flow utilized in financing activities (28 932)
Translation differences on cash and cash equivalents (57)
Change in cash and cash equivalents 6 274
Cash and cash equivalents at beginning of year 10 117
Cash and cash equivalents at end of year 16 391
-----------------
Change in cash and cash equivalents 6 274
Summary of key operating statistics
----------------------------------------------------------------------
1H2001 1H2002 % change
----------------------------------------------------------------------
EBITDA margin 42,3% 42,3% n.a.
Operating margin 20,5% 22,2% n.a.
Net income margin 16,8% 13,1% n.a.
----------------------------------------------------------------------
ROA 8,7% 6,9% n.a.
----------------------------------------------------------------------
Net debt to total capital 26,7% 43,4% n.a.
----------------------------------------------------------------------
----------------------------------------------------------------------
Number of closing lines
Residential 2 208 508 2 103 995 (4,7%)
Business 303 546 291 084 (4,1%)
Payphone 37 157 37 326 0,5%
ISDN channels 385 734 492 794 27,8%
----------------------------------------------------------------------
Total lines 2 934 945 2 925 199 (0,3%)
----------------------------------------------------------------------
----------------------------------------------------------------------
Digitalization of
exchanges with ISDN 85,2% 86,2% n.a.
Penetration 39,1% 39,0% n.a.
----------------------------------------------------------------------
----------------------------------------------------------------------
Fixed line employees
(closing full
equivalent) 9 790 9 192 (6,1%)
Total no of employees
(closing full
equivalent) 16 669 16 283 (2,3%)
Lines per fixed
line employees 300 318 6,1%
----------------------------------------------------------------------
----------------------------------------------------------------------
Traffic in minutes
(thousands) at Matav Rt.
Domestic 5 154 102 4 824 123 (6,4%)
International
outgoing 84 185 77 528 (7,9%)
----------------------------------------------------------------------
----------------------------------------------------------------------
Emitel line numbers incl.
ISDN channels 80 483 n.a.
Emitel domestic traffic
(thousand minutes) 95 302 n.a.
Emitel international outgoing
traffic (thousand minutes) 1 272 n.a.
----------------------------------------------------------------------
----------------------------------------------------------------------
Westel 0660 RPCs
(Revenue Producing
Customers) 60 054 33 215 (44,7%)
Westel RPCs (Revenue
Producing Customers) 2 035 913 2 967 616 45,8%
----------------------------------------------------------------------
Total cellular RPCs 2 095 967 3 000 831 43,2%
----------------------------------------------------------------------
----------------------------------------------------------------------
Westel's MOU 150 121 (19,3%)
Westel's ARPU
(Average Traffic
Rev./RPC/Month) 7 006 5 820 (16,9%)
Westel's overall churn 14,4% 15,1% n.a.
----------------------------------------------------------------------
----------------------------------------------------------------------
Managed leased lines
(FLEX-Com connections) 10 270 12 539 22,1%
Internet subscribers 110 384 141 630 28,3%
Cable television
customers 285 596 316 257 10,7%
----------------------------------------------------------------------
Analysis of the Financial Statements for the six months ended June 30, 2002 Basis of presentation On December 21, 2001 Matav completed the purchase of the remaining 49% of Westels. At the time of exercising the Westel option, 59% of Matav Rt.'s share capital and 49% of the Westels' share capital were owned by Deutsche Telekom. As the transaction was carried out between entities under common control, Matav Rt. has restated its financial statements for the years 2000 and 2001, and included the Westels in the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge as if they had been wholly owned by Matav Rt. from March 2000. The restatements relate to goodwill and brandname taken over from Deutsche Telekom's consolidated accounts at historic values, allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as to customer base and the related amortization and deferred tax. In addition, from this date 100% of the Westels' results have been included in Matav Group's restated results. The previously published results effectively only included 51% of the Westels' results after the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of 49% minority interest. During 2001 Matav has reviewed the classification of its data transmission products and based on this review, the leased lines and data transmission category has been redefined effective January January: see month. 1, 2002. International incoming revenues relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc data transmission products, reported in international traffic revenues earlier, have been reclassified into data transmission. Cable television revenues, reported in data transmission earlier, have been reclassified into other services. Various ISDN charges, reported in data transmission in prior year reports, have been reclassified into subscriptions, connections and other charges. We have reclassified our prior period revenue lines as well according to these new definitions. Exchange rate information The Euro appreciated by 0.4% against the Hungarian Forint “HUF” redirects here. For the airport, see Terre Haute International Airport. The forint (currency code HUF) is the currency of Hungary. It is divided into 100 fillér, although fillér coins have not been in circulation since 1999. year on year (from 243.59 HUF/EUR on June 30, 2001 to 244.67 HUF/EUR on June 30, 2002). From the year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2001, the Euro depreciated Depreciated may refer to:
The U.S. Dollar depreciated by 14.2% against the Hungarian Forint year on year (from 287.39 HUF/USD on June 30, 2001 to 246.72 HUF/USD on June 30, 2002). From the year-end 2001 to June 30, 2002, the U.S. Dollar depreciated by 11.6% against the Hungarian Forint (from 279.03 HUF/USD on December 31, 2001 to 246.72 HUF/USD on June 30, 2002). Analysis of group income statements Revenues Revenues from subscriptions, connections and other charges increased by 4.3% in the first half of 2002 compared to the same period in 2001. This growth resulted mainly from subscription fee increases from February February: see month. 1, 2002 for analog lines A wire (cable) that carries an analog signal. See analog. (4%) and ISDN lines. The average number of lines including ISDN channels decreased by 0.6% in 1H2002 compared to 1H2001. Increase in subscription revenues was partially offset by decline in revenues from connection fees, which resulted from the lower number of gross additions as well as lower connection fees due to marketing campaigns. Other charges increased as a result of wider usage of televoting Televoting is a method of opinion polling usually conducted by telephone, which incorporates deliberative democratic principles. A televote is initiated by random sampling of a population by means of random digit dialling. services. Domestic traffic revenue in 1H2002 amounted to HUF 59.9 bn, compared to HUF 61.8 bn in 1H2001. This decrease mainly resulted from the 4.6% decline in domestic usage at group level, partly offset by increasing proportion of fixed to mobile network calls with higher per minute prices. Revenues from other usage for the first half of 2002 decreased by 11.3% compared to the same period in 2001. This decrease was mainly attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower fees paid to Matav by other domestic operators and, to a lesser extent, to lower traffic between the mobile service providers and Matav. A new interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. agreement on the basis of the provisions of the Act on Communications was concluded between Matav and Vivendi
VIVENDI® is a software package for care management and staff organisation published by the German software company CONNEXT and introduced in 1995. on December 21, 2001 and between Matav and Pantel on April 8, 2002. Matav's Reference Interconnection Offer has been approved by the Communications Arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the on July July: see month. 18, 2002. The tariffs This is a list of tariffs and trade legislation:
adj. 1. Looking back on, contemplating, or directed to the past. 2. Looking or directed backward. 3. Applying to or influencing the past; retroactive. 4. modified according to the approved Reference Interconnection Offer tariffs. Other usage revenue in the first half of 2002 was calculated based on interconnection rates that closely approximate the tariffs that were approved by the regulator regulator, n the mechanical part of a gas delivery system that controls gas pressure that allows a manageable flow of drug vapor to escape. regulator see reducing valve. . International traffic revenues decreased to HUF 13.6 bn for the six months ended June 30, 2002, compared to HUF 16.2 bn for the same period in 2001. Both outgoing and incoming international revenue show a decrease mainly because of traffic decreases. Outgoing international traffic measured in minutes decreased by 7.9% at Matav Rt., while incoming international minutes decreased by 10.8% due to wider use of VOIP (Voice Over IP) A digital telephone service that uses the public Internet as well as private backbones instead of the traditional telephone network. Many companies, including Vonage, 8x8 and AT&T (CallVantage), typically offer calling within the country for a and leased line services. In addition, international traffic charges decreased by 15% in nominal terms from February 1, 2001, therefore 1H2001 results include one month of higher traffic charges, which also contributed to the revenue decrease in 1H2002. Revenues from mobile telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. amounted to HUF 83.2 bn for the first half of 2002, compared to HUF 64.5 bn for the six months ended June 30, 2001 (a 29.1% increase). The growth mainly resulted from the 48.4% higher Westel average customer base. Within the Westel customers, the prepaid group shows a more significant, 73.9% increase. Prepaid customers accounted for approximately 90.3% of gross additions in the first half of 2002 and represent 72.5% of total Westel customers at June 30, 2002. Increases in the mobile customer base were partly offset by decreased usage per subscriber. Westel's usage per customer per month measured in MOU decreased from 150 minutes in 1H2001 to 121 minutes in 1H2002. The decreasing MOU is due to the increasing proportion of the prepaid customer base, which has lower minutes of usage than regular subscribers. Westel's average revenue per user ("ARPU") decreased by 16.9%, from HUF 7,006 in 1H2001 to HUF 5,820 in 1H2002 due to the dilution of customer base as the ARPU of the newly acquired prepaid customers is relatively low. Within mobile telecommunications services enhanced services show the highest increase, which represents 8.4% of the ARPU in 1H2002. This revenue includes primarily short message service ("SMS"). The liberalization lib·er·al·ize v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es v.tr. To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . of the fixed line telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market in December 2001 is expected to have an effect on the mobile telecommunications industry as well. It is expected that government regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. fees and interconnection prices will significantly change and these changes will impact the operations of Westel. The extent and timing of this change is not known yet. Revenues from international activities show revenues of MakTel, our subsidiary acquired in 2001. Note that MakTel has been consolidated in Matav's financial statements since January 15, 2001, thus its results for 2001 exclude the first two weeks of January. Revenues from international activities reached HUF 32.2 bn for the six months ended June 30, 2002. The 18.9% increase was due to increase in domestic traffic revenues and revenues from mobile telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. services. Fixed line subscribers increased by 7.7%, mobile customers increased by 111.1% year over year. Revenues from leased lines and data transmission grew to HUF 16.5 bn for 1H2002, compared to HUF 14.8 bn for the same period in 2001. This strong growth was due to the increase in the number of managed leased lines, ADSL and Internet subscribers. The number of managed leased lines increased by 22.1% to 12,539, the number of ADSL subscribers grew to 18,781 (from 1,433 at the end of June, 2001) and the number of ISDN channels grew to 492,794 by June 30, 2002 (increase of 27.8%). The number of Internet connections grew by 28.3% to 141,630 at period-end. These volume increases were partially offset by price discounts. Revenues from other services amounted to HUF 24.5 bn for the first six months of 2002, compared to HUF 22.3 bn for the same period in 2001. Other services include equipment sales, construction, maintenance, cable television, audiotex A voice response application that allows users to enter and retrieve information over the telephone. See IVR. , telex telex: see telegraph. telex International telegraphic message-transfer service consisting of a network of teleprinters. Subscribers to a telex service can exchange textual communications and data directly with one another. , telegraph telegraph, term originally applied to any device or system for distant communication by means of visible or audible signals, now commonly restricted to electrically operated devices. Attempts at long-distance communication date back thousands of years (see signaling). and miscellaneous revenues. The increase in this category is mainly due to the subsidy receivable from the Universal Service Financing Fund to cover access deficits. These increases were partly offset by a 22.6% decrease in revenues from equipment sales at Westel due to lower average phone prices in 1H2002 compared to a year earlier. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Employee-related expenses for the first half of 2002 amounted to HUF 39.5 bn, compared to HUF 35.8 bn for the same period in 2001 (an increase of 10.4%). Employee related expenses increased mostly at Matav Rt., Westel and MakTel, resulting from wage rate increases. At Matav Rt. wages increased by 9% on average effective April 1, 2002, which was partly offset by headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reductions. As a result, group average headcount figures slightly decreased year over year to 16,501 in 1H2002. Depreciation and amortization remained stable in 1H2002, compared to 1H2001. Investment in fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → did not change significantly. Payments to other network operators for 1H2002 reached HUF 39.6 bn, compared to HUF 34.3 bn for the same period in 2001. The increase was mainly due to the higher mobile traffic, partly offset by lower international traffic. The cost of telecommunications equipment sales for the first half of 2002 was HUF 20.2 bn, compared to HUF 20.7 bn for the same period in 2001. This decrease is mainly due to the significantly lower average cost of mobile handsets at Westel, partly offset by 19.2% increase in gross additions. Cost of telecommunications equipment sales increased significantly at MakTel due to the 111.1% growth in their mobile customer base. Other operating expenses increased by 8.9% to HUF 66.4 bn for the six months ended June 30, 2002 compared to the same period in 2001. Other operating expenses include materials, maintenance, marketing, service fees, outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. expenses, energy and consultancy. The increase in other operating expenses mainly relate to higher agency fees of Westel, marketing expenses, local taxes as well as contributions payable to the Universal Service Financing Fund. These increases were partly offset by a significant decrease of provision for receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed at Matav Rt. Operating Profit Operating margin for the six months ended June 30, 2002 was 22.2%, while operating margin for the same period in 2001 was 20.5%. Net Interest and Other Charges Net interest and other charges were HUF 11.7 bn for 1H2002, compared to HUF 0.2 bn for 1H2001. Net interest and other charges increased significantly due to the HUF 5.3 bn decrease in net foreign exchange gain. This change in net foreign exchange gain resulted mainly from the less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality of the HUF in the intervention A procedure used in a lawsuit by which the court allows a third person who was not originally a party to the suit to become a party, by joining with either the plaintiff or the defendant. band. In addition, the net finance expense relating to the fair valuation of the swap positions was a loss of HUF 2.4 bn in 1H2002, as opposed to a net gain of HUF 1.2 bn in 1H2001. Interest expenses denominated in foreign currencies increased as a result of the 95% higher average loan balance. Total loans and other borrowings increased to HUF 431.9 bn at June 30, 2002, mainly because of the loan taken from Deutsche Telekom AG to finance the acquisition of the remaining 49 stake in Westels. Net interest and other charges include HUF 4.0 bn net FX gain, HUF 12.2 bn interest expense, HUF 2.4 bn swap related expenses, HUF 2.0 bn commissions and other charges and HUF 0.9 bn interest and financial income. Share of associates' results Share of associates' results amounted to HUF 589 million for the first half of 2002, compared to HUF 1,328 million for the same period in 2001, reflecting decreased financial results of Hunsat. In addition, Emitel has been excluded from associates in 1H2002 resulting from the acquisition of its remaining 50% stake and its subsequent consolidation in Matav's financial statements starting in July 2001. Income tax Income tax expense increased from HUF 7.0 bn for 1H2001 to HUF 9.1 bn for 1H2002, mainly due to Westel, which lost its 60% tax holiday resulting in tax rates of 18% as opposed to 7.2% applicable during 2001. This increase was partly offset by income tax decrease at Rt. Minority Interest Minority interest for the first six months of 2002 was HUF 5.8 bn, compared to HUF 4.0 bn for the same period in 2001, reflecting the improved performance of MakTel. Analysis of segmented income statements The sum of the financial results of the three segments presented below does not equal the group financial results because of intersegment eliminations. Fixed line segment Fixed line segment includes Matav Rt. and its consolidated subsidiaries, other than MakTel, Stonebridge, Telemacedonia, Westel and Westel 0660. ---------------------------------------------------------------------- HUF millions 1H2001 1H2002 Change (%) ---------------------------------------------------------------------- Revenues 164,920 167,990 1.9 ---------------------------------------------------------------------- EBITDA 63,486 65,646 3.4 ---------------------------------------------------------------------- Operating profit 30,510 30,611 0.3 ---------------------------------------------------------------------- Profit after income tax 28,490 17,191 (39.7) ---------------------------------------------------------------------- Minority interest 30 34 13.3 ---------------------------------------------------------------------- Net income 28,520 17,225 (39.6) ---------------------------------------------------------------------- Revenues from the fixed line segment remained stable year over year, but its composition changed. Leased line and data transmission services increased by 15.0% in the first six months of 2002 compared to the same period of 2001. Leased line and data transmission revenue growth was driven by strong volume increases in managed leased lines, ADSL, and Internet customers. Matav's domestic fixed voice business experienced a moderate, 0.9% decline. International revenues declined by 15.9% due to lower outgoing and incoming traffic as well as decreased international tariffs. Operating profit of the fixed line segment increased by 0.3%. Within operating expenses employee related expenses and depreciation and amortization increased, but these increases were offset by decreases in payments to other network operators and in cost of equipment sales. Mobile segment Mobile segment includes Westel and Westel 0660 and the goodwill amortization arising from their consolidation. ---------------------------------------------------------------------- HUF millions 1H2001 1H2002 Change (%) ---------------------------------------------------------------------- Revenues 92,487 110,032 19.0 ---------------------------------------------------------------------- EBITDA 34,213 40,049 17.1 ---------------------------------------------------------------------- Operating profit 14,355 22,955 59.9 ---------------------------------------------------------------------- Profit after income tax 13,629 17,256 26.6 ---------------------------------------------------------------------- Net income 13,629 17,256 26.6 ---------------------------------------------------------------------- Revenues in the mobile segment increased by 19.0% in the first six months of 2002 compared to the same period in 2001 due to strong increases in the number of mobile customers. Westel's customer base surged A cloud which rolls out from the bottom of the column produced by a subsurface burst of a nuclear weapon. For underwater bursts the surge is, in effect, a cloud of liquid droplets which has the property of flowing almost as if it were a homogeneous fluid. 45.8% to 2,967,616 subscribers, including 2,151,096 prepaid customers by June 30, 2002. Average monthly usage per Westel subscriber decreased by 19.3% from 150 minutes in 1H2001 to 121 minutes in 1H2002. GSM mobile penetration reached 57.6% in Hungary and Westel accounts for 50.7% market share in the very competitive GSM market. Operating profit shows a 59.9% increase. While revenues grew 19.0%, operating expenses increased at a lower rate, 11.4% year over year. The majority of the increase in operating expenses relates to increased payments to other network operators, agency fees, employee related expenses, marketing expenses, fees and levies and consultancy fees consultancy fee n → honoraires mpl d'expert consultancy fee n → onorario di consulenza . These increases were partially offset by lower depreciation and amortization expense as well as lower cost of equipment sales. International segment International segment includes the operations of MakTel, Stonebridge, Telemacedonia, and the goodwill amortization arising from the consolidation of MakTel. ---------------------------------------------------------------------- HUF millions 1H2001 1H2002 Change (%) ---------------------------------------------------------------------- Revenues 27,143 32,285 18.9 ---------------------------------------------------------------------- EBITDA 13,807 15,988 15.8 ---------------------------------------------------------------------- Operating profit 9,172 10,184 11.0 ---------------------------------------------------------------------- Profit after income tax 6,065 9,046 49.2 ---------------------------------------------------------------------- Minority interest (4,068) (5,786) 42.2 ---------------------------------------------------------------------- Net income 1,997 3,260 63.2 ---------------------------------------------------------------------- MakTel has been a consolidated company of Matav beginning January 15, 2001. Revenues from the international segment increased by 18.9% year over year to HUF 32,285 million. MakTel's fixed line subscribers increased by 7.7%, reaching 573,926 at June 30, 2002. Mobile subscribers increased by a significant 111.1% to 291,213, and its Internet subscribers reached 26,944 by June 30, 2002 from 15,178 a year earlier. Total operating expenses increased by 23.0% mainly because of increases in employee related expenses, depreciation and amortization, payments to other network operators and cost of telecommunications equipment sales. Minority interest increased by 42.2% to HUF 5,786 bn in the first six months of 2002. It mainly represents the share of income accruing to the minority owners of MakTel and Stonebridge. Minority interest is not calculated on the amortization relating to the goodwill acquired by Matav Rt. Analysis of group balance sheets Total assets and total shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. and liabilities at June 30, 2001 were HUF 1,076.3 bn. Total assets and total shareholders' equity and liabilities amounted to HUF 1,090.0 bn as of June 30, 2002. Loans and other borrowings The current portion of loans and other borrowings decreased by 40.7% from June 30, 2001 to HUF 45.9 bn at June 30, 2002. This decrease in current loans and other borrowings reflects repayment of Westel's short term borrowings, as they fell due during the last twelve months. Non-current loans and other borrowing increased by 105.8% from June 30, 2001 to HUF 386.0 bn at June 30, 2002. This increase mainly reflects the loans received from Deutsche Telekom AG to finance the acquisition of the remaining 49 percent stake of Westels. At June 30, 2002, 23.5% of the loan portfolio was HUF denominated, while 76.5% was foreign currency denominated. At the end of the second quarter of 2002, 88.5% of the loans bore floating interest rates. The gearing ratio Gearing Ratio A general term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds. defined as net debt divided by net debt plus equity plus minority interest was 43.4% at June 30, 2002. To decrease the foreign exchange rate risk of the foreign exchange loan portfolio, Matav swapped the EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 301.5 million loan, which was taken to finance the acquisition of MakTel, to HUF as of February 4, 2002. The counterparty Counterparty The other participant, including intermediaries, in a swap or contract. in the transaction is Deutsche Telekom. The cross currency swap Currency Swap A swap that involves the exchange of principal and interest in one currency for the same in another currency. Notes: Currency swaps were originally done to get around the problem of exchange controls. agreement entitles Matav to receive EUR interest and principal payments and pay HUF interest and principal payments. The EUR loan is subject to floating rate interest based on 6 month EURIBOR EURIBOR Europe Interbank Offered Rate plus a margin of 30 basis points, while under the swap Matav is obliged o·blige v. o·bliged, o·blig·ing, o·blig·es v.tr. 1. To constrain by physical, legal, social, or moral means. 2. to pay an interest based on 6 month BUBOR plus a margin of 34 basis points. The HUF principal payment is fixed at a rate of one EUR to 244.36 HUF (HUF 73,675 million). The timing and the amount of the EUR payments to be received under the swap are matched with the underlying payment obligations on the EUR loan. The EUR 920 million loan, which was taken to finance the remaining 49 percent of Westel, was partially swapped to HUF effective April 18, 2002. The counterparty in the transaction is Deutsche Telekom. The cross currency swap agreement entitles Matav to receive EUR interest subject to 3 month EURIBOR plus a margin of 50 basis points and EUR 300 million principal amount, while Matav has the obligation to pay HUF interest subject to 3 month BUBOR plus a margin of 57 basis points and HUF 72,685 million principal amount. The HUF principal payment is fixed at a rate of one EUR to 242.28 HUF. The timing of the EUR payments to be received under the swap are matched with the timing of the EUR payment obligations relating to the EUR loan. Another EUR 50 million part of the EUR 920 million loan was swapped to HUF effective June 14, 2002. The counterparty in the transaction is Deutsche Telekom. The cross currency swap agreement entitles Matav to receive EUR interest subject to 3 month EURIBOR plus a margin of 50 basis points and EUR 50 million principal amount, while Matav has the obligation to pay HUF interest subject to 3 month BUBOR plus a margin of 57 basis points and HUF 12,075 million principal amount. The HUF principal payment is fixed at a rate of one EUR to 241.5 HUF. The timing of the EUR payments to be received under the swap are matched with the timing of the EUR payment obligations relating to the EUR loan. To increase the fix part of the HUF loan portfolio, the existing loan agreement with a disbursed amount of EUR 301.5 million (swapped to HUF 73,675 million as of February 4, 2002), and with a variable interest rate was partly replaced with a new fixed interest HUF loan, concerning a principal amount of (the HUF equivalent of) EUR 50 million as of July 15, 2002. Meanwhile we decreased the EUR notional amount The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional. of EUR 301.5 million swap and EUR 301.5 million loan by EUR 50 million so as the outstanding amount under both to be EUR 251.5 million as from the effective date of July 15, 2002. The counterparty in the transaction is Deutsche Telekom. The new HUF loan amount shall be charged interest at a fixed rate of 9.92% per annum Per annum Yearly. . This EUR 50 million part of the EUR 301.5 million loan has been converted into HUF 12,218 million, by using the fixed EUR/HUF exchange rate of one EUR to 244,36 HUF (which was applied in the EUR/HUF swap). Minority interest Minority interest increased by 38.7% from June 30, 2001 to HUF 54.0 bn at June 30, 2002. This increase was mainly due to the improved result of MakTel. Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. Retained earnings decreased by 32.4% from June 30, 2001 to HUF 360.3 bn at June 30, 2002. This decrease was mainly due to the equity impacts of accounting applied to the acquisition of Westels as described earlier. According to the relevant rules, the restated numbers as of June 30, 2001 are presented as though the Westels had been 100% owned by Matav at that date. As no real financing had to be used as of that date for the acquisition of the remaining 49% ownership, book value of the additional share of net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. (including goodwill and other intangibles) on acquisition was presented as an increase in retained earnings of HUF 252.4 bn. This remained part of the retained earnings until December 2001, when the acquisition was finalized See finalization. and financed from a loan from Deutsche Telekom. At that date, it was transferred from retained earnings to loans and other borrowings in an amount of HUF 238.8 billion. This causes the significant drop in the amount of retained earnings. Dividends of HUF 11.4 bn paid also decreased retained earnings. |
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