Hrvatski Telekom (Reuters: HT.ZA; Bloomberg: HTRA CZ), Croatia's leading telecommunications provider, announces its audited consolidated results for the year ended 31 December 2017.
The annual results also include Crnogorski Telekom which was acquired beginning of 2017, and the impact of H1 Telekom d.d. upon the completion of the merger process of H1 Telekom d.d. into OT – Optima Telekom d.d.
Revenue generated in 2017 amounts to HRK 7.756 billion, which is an 11% increase compared to 2016. Excluding Crnogorski Telekom’s contribution, revenue increased by 2% compared to the previous year. Excluding the impact of H1 Telekom, revenue grew by 1.5 %.
Hrvatski Telekom maintained its leading position in all segments of the telecommunications market. The main contributors to revenue growth of Hrvatski Telekom were mobile communications revenue and system solutions growth.
EBITDA before exceptional items amounts to HRK 3.138 billion, which is an 11.2% increase compared to 2016, along with a strong EBIDTA margin of 40.5%, which is 0.1 percentage point above the previous year.
Excluding Crnogorski Telekom’s contribution, EBITDA before exceptional items increased by 3.4% to HRK 2,918 million, with an EBITDA margin of 41%. Excluding the impact of H1 Telekom, EBITDA before exceptional items increased by 2.8 %.
Net profit in 2017 amounts to HRK 863 million, which is a 7.5 % decrease compared to 2016. Excluding Crnogorski Telekom’s contribution, realised net profit decreased by 10.8%. Net profit realisation is impacted by higher depreciation and amortisation driven by increased infrastructure investments and increased asset and receivables write-down.
More than HRK 1.7 billion of investment in infrastructure and innovative services
Compared to 2016, Capex realisation in 2017 increased by 17.2%, including Crnogorski Telekom’s contribution. Excluding the latter, Capex realisation increased by 8.5% compared to 2016, amounting to HRK 1,745 million.
Investment in the fixed network resulted in fibre optic access for 374 thousand households. Next Generation Access speeds were enabled in total for 879 thousand Croatian households, which means that HT Group alone will achieve 70% of the European Digital Agenda 2020 targets for Croatia.
In the mobile segment, 4G network capacities were increased by 34%, and mobile Internet speeds were increased on average by 38%, with speeds of up to 350 Mbit/s. The end of the year was marked by the independent international P3 certificate awarded to HT for the best mobile network in Croatia and one of the best mobile Internet services in Europe.
As a result of increased capacities of IP core network, aggregation network modernisation, and increase in mobile Internet bitrates, we supported a 330% visitors’ data traffic increase during the tourist season, resulting from the new roaming regulation.
In the next three years, HT will invest HRK 210 million in business and digital transformation, which started in May 2017. This transformation will include major interventions in HT's systems and service portfolio in order to position HT as a front-runner in the customer experience area.
The PanTera network of the future pilot project was implemented in a limited area of Croatia. It provides customers with superior internet speeds of 1 Gbit/s and 4K TV content.
The unique concept of service offering on the telecommunications market, Magenta 1, launched in H1 2016, has been accepted by more than 118 thousand households, and this number is steadily rising.
More than half of the profit for dividend distribution
The Management Board and the Supervisory Board have made a proposal to the General Assembly that dividend be distributed in the amount of HRK 6 per share, to be paid out of the 2017 net profit, which results in a total amount of HRK 490,020,384.00 earmarked for dividend payment, which is payment of 58.25% of distributable profits earned in the preceding year, while the remaining part of net profit will be allocated to retained earnings.
HT will, at the beginning of the year, announce a minimum target dividend for each year, which will be within the Dividend Policy range. For the financial year 2018, the Management Board currently expects the payment of dividends to a minimum amount of HRK 6.00 per share.
In July 2017, a Share Buyback Programme (“Programme”) was launched, with 2.5 million shares scheduled for acquisition, and the maximum amount assigned to the Programme amounts to HRK 500 million. The Buyback Programme comes as a continuation of the current dividend distribution policy, which further shows the Company’s intention to return part of the generated value to its shareholders.
By 31 December 2017, the Company acquired a total of 216,005 own shares at the Zagreb Stock Exchange, representing 0.26 % of the share capital, for which an equivalent value amounting to HRK 37.6 million was produced.
Entering the growth phase with the major regional step forward in Montenegro
In early January 2017, Hrvatski Telekom acquired a 76.53% stake in Montenegro's Crnogorski Telekom, for a purchase price of EUR 123.5 million. This transaction is part of HT's growth strategy through expansion into regional markets.
Synergy effects are beginning to be felt in the area of sales operations in Crnogorski Telekom, in the reduction of direct costs, and in the increase of customer satisfaction. Despite the market and regulatory challenges and trends of fixed-to-mobile technology substitution, Crnogorski Telekom maintained its leading position with a 40.3% market share in the postpaid mobile segment, as well as the leading position on the fixed broadband access and voice service market, regardless of the drop in revenue in the fixed segment and revenue growth in the mobile segment and in system solutions.
In 2018, focus on growth, new digital experience, and expansion of operations
Commenting on the 2017 business results and plans for 2018, Davor Tomašković, President of the Management Board of Hrvatski Telekom, said: “We look back at another successful year and HT’s convincingly leading position in all segments of the telecommunications market. By acquiring Crnogorski Telekom, we have made a major regional step forward, while the Optima-H1 merger has contributed to market stability. We have fully replaced our TV platform, and at the end of the year, 250,000 of our TV customers enjoy watching the TV of the future. We have launched new hybrid tariff plans and hybrid internet access, and Magenta 1 now has 120,000 users who enjoy the world of benefits. We ended the year with the P3 award for the best mobile network in Croatia and one of the best mobile internet services in Europe. I am proud that we are developing into a modern company, focused on the future and growth across all business segments.”