Magyar Telecom B.V. Announces Financial Results for the Period Ended September 30, 2013 and Investor Call

LONDON--(BUSINESS WIRE)--Magyar Telecom B.V. (“Matel B.V.”) announced today that on November 15, 2013 (at 14:00 UK time, 15:00 CET, 9:00 AM ET), Matel B.V. will host a conference call to discuss financial results for the nine months period ended September 30, 2013.

RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

The results for the nine months ended September 30, 2013 reflect the consolidated financial results of Magyar Telecom B.V. and its subsidiaries (collectively, the “Company”) in accordance with International Financial Reporting Standards, as adopted by the E.U. (“IFRS”).

The reporting currency is euro (“EUR”), however the functional currency of operations is the Hungarian forint (“HUF”), being the currency of the primary economic environment in which the Company operates.

When comparing the financial results for the nine months ended September 30, 2013 to the financial results for the nine months ended September 30, 2012, the reported results in euro have been affected by the difference between the average HUF/EUR exchange rates. The Hungarian forint depreciated against the euro by 2% with an average HUF/EUR exchange rate of 296.70 during the nine months ended September 30, 2013 compared to the average HUF/EUR exchange rate of 291.36 during the nine months ended September 30, 2012.

The Company’s revenue was EUR 119.0 million for the nine months ended September 30, 2013 which represents a 7% decrease compared to the nine months ended September 30, 2012. Segment gross margin decreased by 10% from EUR 104.6 million for the nine months ended September 30, 2012 to EUR 94.6 million for the nine months ended September 30, 2013. General operating expense increased by 7% from EUR 60.4 million for the nine months ended September 30, 2012 to EUR 64.5 million for the nine months ended September 30, 2013, mainly as a result of new taxes introduced by the government. Income / loss from operations decreased to a loss of EUR 7.2 million for the nine months ended September 30, 2013 from an income of EUR 2.1 million for the nine months ended September 30, 2012. Net result for the nine months ended September 30, 2013 was a loss of EUR 35.1 million compared to a loss of EUR 34.9 million for the nine months ended September 30, 2012.

Residential Voice – Residential Voice segment gross margin was EUR 21.4 million for the nine months ended September 30, 2013, representing a decrease of 15% compared to the nine months ended September 30, 2012. The decrease was mainly due to the decrease in the number of Residential Voice customers.

Residential Internet & TV – Residential Internet & TV segment gross margin was EUR 17.5 million for the nine months ended September 30, 2013, representing a decrease of 10% compared to the nine months ended September 30, 2012. This decrease was mainly due to decrease in Residential Internet gross margin due to lower ADSL ARPU, which is partly offset by a slight increase in Residential TV gross margin mainly as a result of the increase in the number of IPTV customers.

Cable - Cable segment gross margin was EUR 9.4 million both for the nine months ended September 30, 2013 and 2012, indicating successful stabilization of this business.

Corporate – Corporate segment gross margin was EUR 32.8 million for the nine months ended September 30, 2013, representing a decrease of 5% compared to EUR 34.4 million for the nine months ended September 30, 2012. This decrease was mainly due to the decrease in Corporate voice revenue as a result of decrease in traffic and price erosion on contract renewals due to competition.

Wholesale – Wholesale segment gross margin was EUR 13.5 million for the nine months ended September 30, 2013, representing a decrease of 17% compared to EUR 16.3 million for the nine months ended September 30, 2012, which is primarily attributable to the decrease of revenue of the sub 2M lines and decreasing prices of wholesale voice transit services.

Segment gross margin is a non-IFRS financial measure, which is used by management to evaluate the performance of the business segments. The following table represents the reconciliation of segment gross margin to income / (loss) from operations as per the Consolidated Statement of Comprehensive Income / (Loss) in the unaudited interim condensed consolidated financial statements of the Company:

	Nine months ended September 30,
(euro in millions)	2013	2012
Residential Voice	21.4	25.1
Residential Internet & TV	17.5	19.4
Cable	9.4	9.4
Corporate	32.8	34.4
Wholesale	13.5	16.3
Segment gross margin	94.6	104.6
Network operating expenses	(14.1)	(15.2)
Direct personnel expenses	(7.5)	(8.2)
Selling, general and administrative expenses	(42.9)	(37.0)
Depreciation and amortization	(36.1)	(39.6)
Cost of restructuring	(1.2)	(2.5)
Income (loss) from operations	(7.2)	2.1

Net cash provided by operations, which includes interest paid but excludes capital expenditure and debt repayments, was EUR 33.4 million for the nine months ended September 30, 2013.

The Company intends to make a non-material amendment to the explanatory statement dated October 28, 2013 (the “Explanatory Statement”) in relation to which it will instruct the Information Agent to send an addendum to the Explanatory Statement to noteholders through the clearing systems and to make such addendum available to the noteholders via the Information Agent’s website.

CONFERENCE CALL

On November 15, 2013 (at 14:00 UK time, 15:00 CET, 9:00 AM ET), Matel B.V. will host a conference call to discuss financial results for the nine month period ended September 30, 2013.

You can participate in the conference call by dialing 0800-756-3429 (UK toll free), [phone] (International) or [phone] (U.S. toll free) and referencing “Matel B.V.”.

A webcast of the call and the presentation materials will be available on Invitel’s website at http://invitel.hu/english under “Press/Investor Relations”. The webcast will be available for replay until February 17, 2014. In addition, a replay of the call will be available until November 29, 2013 at 11:59 PM ET. To access the replay of the call, please dial [phone] (U.S. toll free) or internationally dial [phone] and enter the conference ID (13572484).

ABOUT MAGYAR TELECOM B.V.

Magyar Telecom B.V., through its subsidiary, Invitel is one of the leading service providers in the Hungarian telecommunications market, offering a broad portfolio of services for residential and business customers. Residential products include a variety of multimedia and entertainment services such as interactive, digital and High Definition television, fast internet offerings and telephony services. Business solutions include the most up-to-date ICT and cloud-based IT solutions, in addition to voice and data services, all using Invitel's nationwide fiber-optic backbone network. Invitel is headquartered in Budaörs, with customer touch points throughout Hungary.

Magyar Telecom B.V.
Financial Highlights
(in millions of euro)
Statement of Operations
	Nine months ended September 30, 2013	Nine months ended September 30, 2012
Residential Voice	23.6	27.9
Residential Internet & TV	23.8	23.9
Cable	13.0	12.6
Corporate	42.2	43.0
Wholesale	16.4	20.0
Total Revenue	119.0	127.4
Segment Cost of Sales	24.4	22.8
Income (Loss) from Operations	(7.2)	2.1
Interest Expense	27.6	29.8
Foreign Exchange Gains (Losses), net	(0.1)	(1.4)
Gains (Losses) on Derivative Financial Instruments	0.3	(0.6)
Net Income (Loss) for the Period	(35.1)	(34.9)

Magyar Telecom B.V.
Financial Highlights
(in millions of euro)
Balance Sheet
	September 30,	December 31,
	2013	2012
Current Assets	50.5	48.7
Property, Plant and Equipment, net	216.6	235.9
Total Assets	293.7	314.0
2009 Notes due December 2016	327.1	-
Other Current Liabilities	61.5	48.7
Total Current Liabilities	388.6	48.7
Long Term Debt	-	326.6
Total Shareholders’ Equity	(106.3)	(65.1)
Total Liabilities and Shareholders’ Equity	293.7	314.0