Hrvatski Telekom (Reuters: HT.ZA; Bloomberg: HTRA CZ), Croatia's leading telecommunications provider, announces its audited results for the year ended 31 December 2018.
In 2018, revenue was generated in the amount of HRK 7.783 billion, which is by 0.4% above the results of 2017. Excluding Crnogorski Telekom’s contribution, revenue has increased by 0.6% as compared to the previous year.
EBITDA before exceptional items amounts to HRK 3.186 billion, which is a 1.5% increase compared to 2017, along with a strong EBITDA margin of 40.9%, which is 0.5 percentage points more than in the previous year. Excluding Crnogorski Telekom’s contribution, EBITDA has increased by 1.2% as compared to the previous year.
2018 net profit amounts to HRK 1.061 billion, a 22.9% increase compared to 2017.
More than HRK 1.8 billion of investment in infrastructure and innovative services
In 2018, Hrvatski Telekom invested HRK 1,826 billion in infrastructure and development of innovative services. Investment in the fixed network resulted in fibre optic access for 400 thousand households. HT continued increasing access speeds for customers, resulting in NGA speeds enabled for 58.2% of Croatian households.
4G network indoor coverage in the mobile network is at 82.0%, while outdoor coverage has reached 98.5%. In early 2018, Hrvatski Telekom initiated modernisation of the radio access network across the entire Croatian territory. This network will enable the introduction of 5G technology as soon as the required radio frequency spectrum is allocated to it. Completion of this project is planned for the end of 2019, and in the course of last year, the project was successfully completed at almost 1000 locations in the areas of Istria and Zagreb, Kvarner and Dalmatia.
The end of the year was marked by HT's win of the independent international P3 Certificate for the best mobile network in Croatia and one of the best mobile Internet services worldwide. In this measurement, Hrvatski Telekom has achieved the best result in the P3 measurement history in Croatia, and with as much as 948 out of the possible 1000 points, it has reinforced its position as a provider of the highest quality service.
Stabilisation of operations of Crnogorski Telekom and increased profitability
Crnogorski Telekom, governed by HT, also achieved good business results in the previous year. The implemented transformation programmes, expansion of broadband access, reduction of direct costs and increase of employee satisfaction have reversed the trends in operations and contributed to the profitability of Crnogorski Telekom. For the first time after a number of years, despite a 1.9% revenue decrease compared to 2017 (2017/2016: -7.1%), Crnogorski Telekom saw a 5.8% EBITDA increase compared to the year 2017 (2017/2016: -5.2%), and a 40.7% net profit increase compared to 2017 (2017/2016: -45.5%).
More than half of the profit for dividend distribution, along with an additional payment out of retained earnings from previous periods
The Management Board and the Supervisory Board have made a proposal to the General Assembly that dividend be distributed in the amount of HRK 10 per share. HRK 7 per share shall be paid out of the year-end profit of 2018, in the amount of HRK 568,536,829.00. In addition, HRK 3 per share shall be paid out of retained earnings from previous periods, in the amount of HRK 243,658,641.00.
The remaining part of year-end profit of 2018, in the amount of HRK 422,123,890.00, has been proposed for allocation to subscribed share capital, by increase of the subscribed share capital of the Company without issuing new shares, by proportionate increase of participation of all issued shares in the Company’s subscribed share capital.
The final decision shall be adopted by the General Assembly. This proposal for dividend distribution is based on the Company's excellent financial results in 2018. The proposal has been made under the conditions of improved economic and investment environment in Croatia. The decision of Croatia's Government to reduce fees for the radio frequency spectrum has had a particularly positive impact on the telecommunications sector.
HT will continue to apply its Dividend Policy, which remains unchanged for the year 2019 and according to which dividends shall range from 50% to 100% of the Company’s distributable profits earned in the immediately preceding year. Any annual dividend shall depend on the overall financial position of the Company and its working capital needs in the relevant period, including but not limited to the Company’s business prospects, cash requirements, financial performance, and other factors, including tax and regulatory considerations, payment practices of other European telecommunications operators, and general economic climate.
At the beginning of each year, HT announces a minimum target dividend for the year concerned, within the Dividend Policy range. For the financial year 2019, the Management Board currently expects the payment of dividends to a minimum amount of HRK 6 per share. HT will be monitoring impacts of the above-mentioned measures, development of results achieved, increased investment needs for fibre optics and the 5G network, potential opportunities for acquisitions, and the general economic and investment climate.
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 Share 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. Company shares acquired in 2017, for which an equivalent value of HRK 37.6 million was given, which is 0.26% of share capital, were withdrawn in March 2018 without reducing the share capital, so that the total number of shares was reduced from 81,888,535 to 81,670,064 shares without nominal value, thus the remaining shares’ participation in the share capital was increased. In the course of 2018, HT acquired an additional 450,517 Company shares, which is 0.55% of share capital. For this acquisition of Company shares, an equivalent value of HRK 71,062,380.96 was given.
Commenting on the business results of 2018, Davor Tomašković, President of the Management Board of Hrvatski Telekom, said: “Hrvatski Telekom looks back at another successful business year in which it reinforced its leading position in all segments of the telecommunications market. I am particularly pleased that, for the second year in a row, we have won the P3 – Best in Test Certificate for our mobile network, which is the best in Croatia and among the best worldwide. Good financial results were also generated by Crnogorski Telekom, governed by HT. Along with the growth of key financial indicators, the previous year was also marked by a strong investment cycle. The operations of Hrvatski Telekom as one of the leading Croatian investors were also positively influenced by changes of the investment climate, where the decision of the Government to reduce fees for the radio frequency spectrum was particularly important for the telecommunications sector. Further improvement of the investment environment forms a basis for providing additional impetus to new investment, which is important for the digitalisation of Croatia”.