Have sales of Hungary's Magyar Telekom halved or doubled in Q1?

• Magyar Telekom will publish its Q1 2018 results after the closing bell on the BSE on Tuesday.
• Analysts expect the group’s revenues to be up 5.3% at HUF 147.9 bn, EBITDA to have risen 9.3% to HUF 41.9 bn, and after-tax profit to be 45.4% higher in annual terms at HUF 7 bn.
• EBITDA margin is also seen higher both on an annual and on a quarterly basis.
• But let’s stop for a second at the after-tax profit. MTel posted HUF 14.3 bn after-tax profit in Q1 2017. If we compare the current estimate of HUF 7.0 bn to that, it means the profit halved. However, MTel has sold its share in its Montenegrin subsidiary since then, and so its HUF 9.5 bn profit is accounted as discontinued operation, and the profit of continuing operations came to HUF 4.8 bn. In other words, if we compare the estimated Q118 after-tax profit to the HUF 14.3 bn, we have a 49% yr/yr contraction, whereas a comparison to HUF 4.8 bn gives us a jump of 45% for the first quarter. It is a matter of taste really, but we believe that the Q118 profit should be compared to the profit stemming from continuing operations, i.e. HUF 4.8 bn.

In order to put the numbers into perspective: the 5.3% estimated revenue growth would be downright robust in view of the fact that the management guidance of cc. HUF 600 bn for the whole year would correspond to a 1.8% yr/yr decrease. Not to mention that the quarterly EBITDA growth was probably also much larger than what management project for the whole year. So, why are the analysts that upbeat? They likely believe that the positive trends observed in H2 2017 will continue, and that

• mobile data revenue will climb further;
• equipment sales will keep on growing;
• there will be growth in the number of customers and ARPU at TV services;
• revenues from fixed-line broadband Internet services will be up.

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• quarterly,
• earnings report,
• magyar telekom