Despite macroeconomic challenges, inflationary pressures and unprecedented energy prices, Hrvatski Telekom recorded solid business results.
In 9M 2022, Organic revenue increased by 2.8% to HRK 5.5 billion, driven by continued growth momentum in core fixed and mobile services, both in Croatia and Montenegro.
In Q3 2022, organic EBITDA AL decreased by 2.2% due to higher energy costs and inflationary pressures on operating expenses. Still, in 9M 2022 organic EBITDA AL increased by 1.1% to HRK 2.2 billion, due to strong performance in the first half of 2022.
In Q3 2022, organic Net Profit decreased by 17.6%, as a result of lower EBITDA AL and increased depreciation, compared to the same period last year. In 9M 2022 organic Net Profit grew by 19.7% to HRK 525 million, primarily reflecting depreciation returning to usual levels after a peak in the first half of 2021.
Organic investments reached HRK 1.1 billion, down 4.6% compared to the same period last year, mainly due to different seasonality of network rollout, still representing by far the largest industry investments.
The best mobile and fixed and the fastest 5G network
Hrvatski Telekom strengthened its position as the leading network in Croatia by winning both “Best in Test” umlaut awards for the best mobile and fixed broadband networks. The quality of the HT mobile network was further confirmed by winning the Ookla Speedtest Award for the fastest 5G network. The awards reflect constantly improving first-hand customer experiences, both in mobile and fixed broadband and the best customer satisfaction in the market.
HT remains focused on investments in the development of network infrastructure, especially in fiber and 5G, which are the backbone of the digitalization of Croatian society and economy. In line with this, HT’s 5G network covers almost 100 cities throughout Croatia and more than 2 million people. HT also achieved 17% YoY growth rate of its, by far the largest, FTTH network, providing fiber connectivity for a half million households.
New Collective Agreement signed
Hrvatski Telekom, Croatian Telecommunications Union and the Republican Union of Workers signed the new Collective Agreement, valid from October 2022 until end of 2023. With the new Collective Agreement, HT confirmed the status of the most desirable employer in the telecommunication industry, ensuring its employees the highest level of social and material rights. Within the new Collective Agreement, which also includes the implemented measures of the Government of the Republic of Croatia, HT increased the average monthly income of each employee by a total of HRK 1,000 net. The Collective agreement also has a social component, with the employees with the lowest net salaries, who are most affected by inflation, receiving the highest average income increase.
Term Sheet for the first corporate vPPA in Croatia concluded
Hrvatski Telekom and Liburana d.o.o., 100% owned by Professio Energia d.d. have concluded a Term Sheet for the first ever corporate renewable energy Virtual Power Purchase Agreement (vPPA) in Croatia. The agreement is set to be for a 10-year period, pending signing of the contract. Upon the agreement, Liburana/Professio Energia d.d. will build a dedicated wind power plant ‘Mazin Gračac’, which shall produce electricity as renewable energy in volumes of 50 GWh yearly and which should start operations in last quarter of 2024. The first ever corporate PPA in Croatia, marks a great structural energy transition as it is an important step in HT’s ensuring a substantial volume of renewable energy for its business operations, with it also to directly contributing to HT meeting its’ ambitious ESG targets.
Driving the sustainability agenda
HT continued driving the sustainability agenda across its whole ecosystem, delivering against the ambitious ESG goals, winning for the second year in a row the Croatian Sustainability Index 2022 award, for the Company’s contributions to society and dedication to sustainable development. HT has been running 100% on electricity from renewable sources for almost two years and is also operating its network in a more energy efficient way, driving sustainability in line with the measures recommended by the Croatian government, as well as the guidance issued by the EU on reducing the energy consumption. The Company’s goal is to continue making a positive impact on all ESG fronts, both in terms of direct contributions as well as in managing the whole value chain.
Changes to the Management Board
In September 2022, Marijana Bačić was appointed a new Management Board Member and Chief Operating Officer Business (COO Business), after previously holding the role of Vice President for Corporate customers and ICT in HT.
Strong shareholders remuneration in 9M 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 9M 2022 we executed the highest ever Share Buyback in our corporate history, purchasing additional 974,376 Company shares on the Zagreb Stock Exchange, within the ongoing Share Buyback Programme. Hrvatski Telekom paid an equivalent value of HRK 179.5 million for the acquisition of the Company’s shares in the reporting quarter, which represents growth of 105.8% 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.
Maintained Outlook for the year-end
Although the environment remains uncertain, we confirm our 2022 outlook. We expect a stable revenue and EBITDA AL and a mid-single digit decrease in CAPEX AL compared to 2021. Our regional expansion outlook remains the same as we continue to monitor and evaluate potential M&A activities.
Commenting on the business results for 9M 2022, Konstantinos Nempis, CEO of Hrvatski Telekom, stated: “Despite the challenging macroeconomic environment driven by the inflationary pressures and unprecedented energy prices, Hrvatski Telekom recorded solid business results.
In the first nine months of 2022, we strengthened further our customer experience and network leadership and remained committed to our investments, building our fiber and 5G networks across Croatia, supporting the country's and businesses' growing need for digitization.
Looking ahead, we expect the challenging environment and inflation pressures persisting in the last quarter of the year, and to have an effect on our profitability, with us closing the year at the similar levels to those from 2021. However, based on our strong foundations we will navigate through this turbulent and volatile environment, creating value for the economy, the society and our shareholders.“