-- Total revenue in HUF terms increased 9% to HUF 49.1 billion for the
year ended 31 December 2006 compared to the same period of last year. In
Euro, total revenue for the period was EUR 185.6 million compared to EUR
181.3 million in 2005.
-- Gross margin was HUF 34.0 billion for the year ended 31 December 2006,
up 3% compared to the previous year. Gross margin percentage remained
strong at 69%. In Euro, gross margin for the year decreased by 3% to EUR
128.5 million.
-- Recurring EBITDA was HUF 20.3 billion for the year ended 31 December
2006 compared to HUF 20.5 billion in the same period of 2005. In Euro,
recurring EBITDA for the year ended 31 December 2006 decreased to EUR 76.7
million from EUR 82.4 million in 2005.
-- The average exchange rate for the year ended 31 December 2006 was
264.66 HUF/EUR while the average exchange rate for the year ended 31
December 2005 was 248.32 HUF/EUR.
-- The total number of broadband Internet customers including Euroweb was
over 100 000 as of 31 December 2006.
-- Mass Market out of concession voice customer contracts increased from
82 379 as of 31 December 2005 to 161 423 as of 31 December 2006.
-- Gross margin of total business segment was HUF 9.0 billion for the
period ended 31 December 2006, up 9% compared to the previous year.
-- Business voice customer growth is accelerating. The number of voice
contracts grew to a total of 2 898, representing a year on year increase of
102%.
-- Free cash flow before debt service, excluding the purchase of Euroweb,
was EUR 49.2 million for the period ended 31 December 2006.
-- Cash and cash equivalents after the acquisition of Euroweb totaled EUR
13.6 million at 31 December 2006.
-- The capex to revenue ratio for the year ended 31 December 2006 was
13%, driven by growth in new customer acquisitions.
Mass Market Voice revenues for the year ended 31 December 2006 amounted to
HUF 20.5 billion (EUR 77.4 million) compared to HUF 22.1 billion (EUR 89.1
million) for the year ended 31 December 2005. This decrease is attributable
to competition in our historical concession areas and mobile substitution,
partially offset by the increase in out of concession revenue arising from
continuously increasing the number of customers.
Mass Market Internet revenues were HUF 6.4 billion (EUR 24.4 million) for
the year ended 31 December 2006 compared to HUF 5.0 billion (EUR 20.0
million) for the year ended 31 December 2005, an increase of 30% year on
year. This performance was due to the increase in the number of DSL
contracts, in line with the continued expansion of the Hungarian broadband
Internet market.
Business revenues for the year ended 31 December 2006 increased by 30% to
HUF 14.5 billion (EUR 54.6 million) compared to HUF 11.1 billion (EUR 44.8
million) for the year ended 31 December 2005. This increase is due to the
decrease in churn to mobile service providers, increase in our out of
concession business voice contracts as well as the inclusion of the results
of Euroweb.
Wholesale revenues for the year ended 31 December 2006 increased to HUF 7.7
billion (EUR 29.2 million) from HUF 6.8 billion (EUR 27.4 million) for the
year ended 31 December 2005.
On 9 January 2007, HTCC announced that it had signed an agreement to
acquire 100% of the shares in Matel Holdings NV (and thereby indirectly
99.98% of the shares of Invitel) for a total consideration of EUR 470
million or 6.1x Invitel EBITDA for LTM 30 September 2006. Martin Lea will
assume the role of Chief Executive Officer of the enlarged company and
Robert Bowker that of Chief Financial Officer. The transaction is subject
to the approval of the Competition Office which is expected to be received
in the first half of 2007.
Martin Lea, CEO of Invitel, commented, "Overall, we are pleased with the
results for 2006 which are very positive, in all respects. We feel that the
increase both in revenues and gross margin compared to last year reflects
well on the performance of the whole Invitel team, particularly in light of
quite challenging trading conditions. We continue to see signs of stability
in our traditional in concession voice business, whilst at the same time
have demonstrated our ability to strongly grow our Internet business, as
well as our out of concession corporate and residential business and the
higher margin elements of our wholesale business. We have also benefited
from the inclusion of Euroweb, which has now been fully integrated with the
Invitel business in Hungary.
"Also, we are very pleased to have signed the agreement with HTCC," added
Mr. Lea. "We believe that the combination of the two companies will create
a stronger number two player in the Hungarian fixed line telecommunications
market and that the combined businesses will create new and bigger
opportunities, through broader geographic coverage as well as a more
diversified service portfolio."
Robert Bowker, CFO of Invitel, stated, "Our total gross margin for the year
ended 31 December 2006 was HUF 34.0 billion showing a 3% increase compared
to the prior year. We were able to keep our operating costs under control,
which contributed to us achieving a recurring EBITDA margin of 41%. This
contributed to us maintaining our net third party debt to recurring EBITDA
ratio at the level of 3.1x. Despite strong growth in new customer
acquisition our capex to revenue ratio remained at around 13%."
Mr. Bowker also noted that the Company's balance sheet is strong with EUR
13.6 million in cash and cash equivalents at 31 December 2006.
"The results for 2006 were in line with our expectations," concluded Ian
McKenzie, Executive Chairman of the Board. "We are pleased to see the
trends both in our in concession and out of concession areas. We also
believe that the agreement concluded with HTCC at the beginning of 2007 was
a significant step forward for the company that will add further
competitive strengths to the new combined entity and will enable it to
increase market share both in and out of concession areas in the corporate,
wholesale and Internet businesses."
A summary of Magyar Telecom B.V.'s financial results for the year ended 31
December 2006, which includes further information regarding our financial
performance and also includes qualification of some of the terms used in
this press release, is available on the Invitel website
(www.invitel.hu/investors) and should be read in conjunction with this
press release.
Conference Call Information
On 8 March 2007 (at 14:00 UK time, 15:00 CET, 9:00 AM EST), Invitel will
host a conference call to discuss financial results for the year 2006. You
can participate in the conference call by dialling +44-145-256-0299 (UK),
+1-706-679-0560 (International) or +1-877-270-4109 (US) and referencing
"Matel" or "Invitel". You can access a web cast of the call on the Invitel
web site at www.invitel.hu/investors. In addition, a replay will be
available two hours after the call has ended and through 15 March 2007. To
access the replay of the call, in the UK please dial +44-145-255-0000 and
enter conference ID number 9443593; in the US please dial +1-800-642-1687
or internationally dial +1-706-645-9291 and enter conference ID number
8897906. An archived replay of the conference web cast will also be
available on the Invitel web site, www.invitel.hu/investors.
About Invitel (previously Vivendi Telecom Hungary)
Founded in 1994, Invitel offers telephony, Internet, and data services to
residential and business customers in Hungary. Invitel is the incumbent
operator in 9 out of 54 primary service areas, where it has stable cash
generative core telephony business. In the rest of Hungary, which
represents a significant growth opportunity following the liberalisation of
the telecom market, Invitel is an alternative telecom operator with a
national backbone, metropolitan networks and point-to-multi-point access
system.
This press release contains forward-looking statements. These statements
reflect the current belief of Invitel's management as well as assumptions
made by, and information available to, Invitel. Forward-looking statements
are not guarantees of future performance and involve risks and
uncertainties. Actual future results and developments could differ
materially from those set forth in these statements due to various factors.
These factors include, among others, changes in the general economic and
competitive situation, particularly in Invitel's businesses and markets.
In addition, future results and developments could be affected by the
performance of financial markets, fluctuations in exchange rates and
changes in national and supranational law, particularly with regard to tax
regulations. The company assumes no obligation to update forward-looking
statements.
Contact Information: Contacts: Invitel Rt. Robert Bowker, CA(SA), CFA Chief Financial Officer Tel: +36 1 801 1374 Email: bowkerr@invitel.co.hu The Global Consulting Group Kathy Price Investor Relations 22 Cortland Street, 14th Floor New York, NY 10007 Tel: +1-646-284-9430 Email: kprice@hfgcg.com Invitel Rt. Péter Beterédy, ACCA Treasury Manager Tel: +36 1 801 1343 Email: bezeredyp@invitel.co.hu Invitel Rt. Andrea Rába, ACCA Financial Reporting Manager Tel: +36 1 801 1651 Email: rabaa@invitel.co.hu