Despite increasing macro-economic pressures, Hrvatski Telekom closed the H1 2022 with a solid financial and commercial performance, reflected in our revenues and EBITDA AL growth.
In H1 2022, Organic revenue increased by 0.5% to HRK 3.5 billion, driven by the strong mobile business.
In the first six months, Organic EBITDA AL grew by 3.2% to HRK 1.3 billion, on the back of solid commercial momentum and positive impact of operating model transformation. However, the growth is slowing down, as the impact of rising inflation and energy prices having put pressure on our operating expenses in second quarter.
Organic net profit grew strongly in H1, up by 80.3% to HRK 301 million. Apart from the EBITDA growth, we are seeing a positive contribution of depreciation which returned to its usual level after the peak in the first half of 2021.
Organic investments amounted to HRK 773 million, up 12.7% compared to the same period of last year.
The best and fastest mobile and fixed broadband network
Hrvatski Telekom strengthened its position as the leading network in Croatia by winning both “Best in Test” awards for the best and fastest mobile and fixed broadband networks. The awards are the result of constantly improving first-hand user experiences, both in mobile and fixed broadband and reflect the all-time high customer satisfaction.
In line with this, we continue to focus on building the fiber-optic infrastructure across Croatia, expanding further the already biggest FTTH coverage in Croatia by a notable 28% YoY. We additionally increased the 5G coverage to almost 100 cities, covering over 2 million population with 5G as of June available to our postpaid and prepaid customers.
Investments in the critical infrastructure that we are building are essential for the new cycle of economic growth and broader social development. This is why we in the challenging business environment remain committed to our investment plans.
Driving the sustainability agenda
We continued driving the sustainability agenda across our whole ecosystem, delivering against our ambitious ESG goals. Our efforts are evidenced by the fact that we are recognized as one of the climate leaders in Europe in the large-scale research focusing on the activities in environmental protection, social engagement and governance, conducted by the Financial Times and Statista among 4,000 companies from 33 European countries. Thus, Hrvatski Telekom reduced its total greenhouse gas emissions in the analysed period by 68.5%, which represents the third-best achievement in the entire European telecommunications industry.
Changes to the Management Board
In July 2022, HT announced Daniel Daub, Member of the Management Board of HT d.d. and Chief Financial Officer, will be leaving the company with effect as of 1 August 2022, and will be taking over the role of Senior Vice-President for Finance in Deutsche Telekom Europe.
Matija Kovačević has been appointed Management Board Member and Chief Financial Officer effective as of 1 August 2022. Prior to this appointment, he was Controlling, Transformation and Investor Relations Sector Director in HT.
Strong shareholders remuneration in H1 2022
Our capital allocation strategy clearly demonstrates Hrvatski Telekom’s strong focus on shareholder returns and our intention to return value to our shareholders.
On 25 April 2022, the General Assembly confirmed the joint proposal by the Management Board and the Supervisory Board for the distribution of net profit for 2021. The amount of HRK 638 million represents a ratio of the dividend payment in relation to the realized profit of the Company of 95.8%.
As we saw an opportunity to create additional value for our shareholders, in H1 2022 we executed the highest ever Share Buyback in our corporate history, purchasing additional 963,530 Company shares on the Zagreb Stock Exchange, within the ongoing Share Buyback Programme. Hrvatski Telekom paid an equivalent value of HRK 177.6 million for the acquisition of the Company’s shares in the reporting quarter, which represents growth of 179.1% YoY.
In July 2022, the Management Board withdrew 1,271,667 acquired Company shares without nominal value, purchased within Share Buyback Programme. Thereby, the total number of shares has decreased from 80,047,509 shares to 78,775,842 shares without nominal value, without the share capital of the Company being decreased while the remaining share participation in the share capital is being increased.
Revised outlook for the year-end
As we enter second half of the year, we expect deterioration of macroeconomic environment, with inflationary pressures and energy prices reaching record highs, bringing additional headwinds on disposable income of customers, our industry and Croatian economy. Taking into account new challenges, we have adjusted our outlook for the year-end.
On a full year basis, we keep our revenue ambition unchanged. Given the accelerating inflation and in particular high volatility in energy price increases, we see additional pressure on our cost base. We adjust our expectation for EBITDA AL, now aiming to remain stable around last year’s level. Our outlook on CAPEX AL and regional expansion remains unchanged.
We continue monitoring further macro development, aiming to mitigate for potential risk in our business and the country. However, given the highly volatile environment, we are also ready to adjust our outlook further if needed.
Commenting on the business results for H1 2022, Konstantinos Nempis, CEO of Hrvatski Telekom, stated: „We concluded the first six months of 2022 with a solid commercial performance, reflected in stable revenues, growing EBITDA and net profit, strengthening our network leadership position both in fixed and mobile, while customer satisfaction reached new all-time highs.
These achievements represent a continuation of our positive momentum, despite the challenges from the unprecedented energy prices and one of the highest inflation rates in Croatia's history, with the effects of inflation on our profitability expected to become even more visible in the second half of the year. Challenges that are demanding from all to adjust to the unpredictable and volatile macroeconomic environment.
At the same time, we remain committed to our investment plans and supporting the country’s priorities. Our investments around fiber and 5G expansion will play a key role in the economic and social development, effectively providing the platform for future progress.”