"Hungary’s mobile carrier Pannon has set ambitious goals in its 2009 earnings report published on Wednesday.1. Pannon aims for market leadership in mobile broadband from the current 29.4% market share
2. Cost savings and increased efficiency were set as a key priority for growth investments in new value-for-money products and services
3. Pannon’s CEO encourages the government to embrace Digital Hungary vision and announces Long Term Evolution (LTE) trial to further enhance customer experience.
The company’s Q4 revenues are far from being nice, but Pannon managed to improve its efficiency further and its 12-month trailing EBITDA rose to a new high.
Pannon, part of the Telenor Group, the 6th largest global mobile provider, has announced its full year financial results for 2009 today.
Following a massive decline in Q3, Pannon’s revenues dropped a never-before-seen 9% yr/yr in Q4.
"Against a background of rising unemployment and pressure on consumer spending, total revenue declined by HUF 11.3 bn reflecting the long term trend of lower mobile termination charges and handset revenues, but also a temporarily decline in retail voice revenues reflecting current harsh economic environment," Pannon said in a statement.
The revenue erosion comes as no surprise, given that telecom service providers are facing tough challenges as retail and corporate clients are cutting spending.
Pannon’s ARPU (average revenue per user) dropped in Q4 2009, both in annual and quarterly terms.
"Margin levels improved due to resilient financial performance driven by strict control of capital and operating expenditure despite lower sale volume for 2009 at HUF 177 bn, down by HUF 11.3 bn," Pannon said.
The figures confirm the company’s rigorous cost control: Q4 EBITDA was in fact a tad larger than in the base period, thanks to which the 12-m trailing number rose to an all-time high.
With regards to profitability, the fourth quarter is traditionally a relatively weak period for telcos, which is attributable to Christmas discounts, as well as bonus payments and lay-offs-related expenses.
Responding to extremely tough economic conditions, Pannon accelerated its transformation from a voice and text based business to an innovative 3G mobile voice, data and internet leader with Mobile Broadband revenues rising 87% yr/yr.
Management made it clear at a press conference today that it cannot aim for anything less than to become a market leader in broadband mobile.
To this end it has announced a growth strategy involving investment into high performance networks, customer friendly and transparent price plans, enhanced customer service, cost control and inspiring market communication.
"Spearheading this drive towards Mobile Broadband leadership, Pannon announced a Long Term Evolution (LTE) pilot to take place in Budapest this April with ZTE Corporation as part of its strategy to implement 4G mobile communications technology, which will further enhance the mobile broadband access experience," it said.
Capital expenditure last year was down 27.7% yr/yr to HUF 12.9 bn with investment focussed on high-growth segments of value-added data services and M2M communications.
Further HUF 3 bn to be saved
Anders Jensen, Chief Executive Officer of Pannon said: "In response to tough economic conditions Pannon is undergoing a step-change in its journey to become Hungary’s favourite mobile voice and data provider."
"Early, proactive decisions to reduce costs, maximise productivity and refocus investment on high-growth mobile services mean we begin 2010 in a competitive and confident mood."
"But Pannon still needs to become more agile, leaner and competitive while increasing our ability to satisfy customers."
"By seeking out new efficiencies and reducing our cost base by a further 3 billion HUF in 2010, we will be able to invest in new product and services and pass on greater value-for-money packages, such as this week’s Call Tariff Package initiative, to our 3.6mn customers."
"We remain cautious about the short term economic prospects but optimistic about long term trends for mobile technology in Hungary. Embracing digital technology can help drive the economic recovery, something Pannon will continue to champion in 2010 and beyond."
Although Pannon’s market share dwindled in 2009 on the mobile market, it is way ahead of its rivals with respect to the ratio of post-paid subscriptions."
Source: Portfolio Online Financial Journal
11.02.2010