Continued growth trend with strong commercial performance in H1 2021
3.4% Net Revenue growth accompanied with 3.2% growth EBITDA AL , that grew for the third consecutive quarter
Continued investments into networks and infrastructure
All-time high customer and employee satisfaction
Hrvatski Telekom closed the first half of 2021 on a positive note with a strong commercial performance, with revenue growth translating into solid EBITDA AL growth. Maintaining the strong investment plan ensures continuation of positive trends and solid commercial momentum.
In H1 2021, Hrvatski Telekom achieved solid growth with total consolidated net revenue, increasing by HRK 118 million or 3.4% in H1 2021 compared to H1 2020. The revenue increase was mainly driven by stronger mobile revenue (HRK 120 million or 7.8%), and fixed revenue (HRK 62 million or 3.9%), with partial offset coming from System solutions due to absence of one-time deal in 2020 and different seasonality of customized solutions deals (HRK -64 million or -16.6%).
EBITDA AL was also up HRK 41 million or 3.2% in H1 2021 as a result of an increase reported in both HT Group in Croatia (3.3%) and Crnogorski Telekom (1.5%). The EBITDA AL margin was 36.9%. Noteworthy development is that EBITDA AL continued growing for the third consecutive quarter supported by the positive commercial momentum.
Net Profit contracted as improved EBITDA and lower taxation were insufficient to offset the increase in depreciation on yearly level, which stems from high investments during previous years, with investments amounting to over HRK 9 billion just over the last five years. However, on the quarterly level, depreciation decreased. Despite the challenging business conditions, and with digitalization being one of the biggest levers for economic recovery and return to accelerated growth, Hrvatski Telekom in 2021. remained focused on network and ICT services investment plan bringing significant benefits to the Croatian economy and society.
Although the environment remains uncertain, we confirm our 2021 outlook (including Optima Telekom until end-June 2021). We expect a mid-single digit decrease in revenue, and a low-single digit increase in EBITDA AL compared to 2020. Our CAPEX expectations are at around HRK 1.6 billion, down from the 2020 total of HRK 1.8 billion. In terms of regional expansion, we continue monitoring and evaluating potential acquisition opportunities.
Investments into 5G and fiber network remain in focus
By market leading investments, Hrvatski Telekom continued to focus on building its fiber-optic infrastructure and we expanded further the fixed network with FTTH coverage reaching more than 387,000 households, which represents a notable 29% increase compared to the same period last year. Overall, our fiber-based access network (FTTx) was with the end of second quarteravailable to 552,000 households (21% YOY growth).
At the same time, we more than quadrupled the number of cities covered with 5G, with a total 76 cities and 11 municipality centers being covered, and we almost doubled the population covered, now at a full 2 million. In the meantime, we have launched the first 5G roaming services, creating new opportunities for business and tourism.
Future spectrum assignments
On 27 May 2021, Croatian Regulatory Authority for Network Industries (HAKOM) initiated the public auction procedure for assignment of licences for using radiofrequency spectrum in 700 MHz, 3,6 GHz and 26 GHz frequency bands. On 16 June 2021, a notification was received from HAKOM that HT fulfils all conditions for participation in the public auction procedure, thus qualifying for participation in the bidding in the public auction procedure.
The bidding procedure has commenced on 12 July, while the decision on selection of one or more bidders and on issuing of licences for using radiofrequency spectrum is expected by end of August 2021.
Spectrum award in 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, and 2600 MHz frequency bands has been announced for 2022. Currently valid licences in these frequency bands expire in Q4 2024.
All-time high customer and employee satisfaction
We consider customer centricity a key differentiator and as a result further improving customer experiences is one of our key objectives for 2021. In first part of the year Hrvatski Telekom continued making significant progress in optimizing our network, product experiences, further accelerating digital touchpoints and going beyond customer expectations. Delivering on all these points has led our metrics to the highest levels ever in HT's history.
Essential to this success are HTs employees, with their engagement and satisfaction also being at an all-time high.
Optima sale process
In July Hrvatski Telekom d.d. and Zagrebačka banka d.d. signed an agreement with Telemach Hrvatska d.o.o. company owned by United Group (United Group B.V., The Netherlands) on the sale and purchase of the shares of the company Optima Telekom d.d.
The subject of the transaction is sale of total of 54.31% shares of Optima Telekom out of which 36.90% are owned by Zagrebačka banka, while 17.41% are owned by HT holding d.o.o., a company in 100% ownership of Croatian Telecom.
The closing of the transaction is subject to the regulatory approvals and other agreed contractual conditions and is expected by the end of 2021. Sale and share purchase agreement determines the value for 100% shares of Optima Telekom of HRK 639 million (enterprise value) which represents 5 times 2020 EBITDA before one-time items after leases.
Total expected proceeds for Croatian Telecom is yet to be determined based on predefined contractual parameters.
Dividend and SBB program provide attractive yield for investors
Our capital allocation strategy clearly demonstrates our strong focus on shareholder returns and our intention to return value to our shareholders. During H1 2021 HT paid dividend of HRK 8 or in the total amount of HRK 640.3 million. This amount represents a ratio of the dividend payment in relation to realized profit of 91.2%, which means that despite the challenges of the pandemic year, we further increased our high pay-out ratio.
The General Assembly of Hrvatski Telekom d.d. authorized the Management Board to buy back the Company's own shares for the period of 5 years, commencing a new Share Buyback Program from 29 April 2021 until 22 April 2026. The maximum volume of the new Share Buyback Program is HRK 600 million or 3 million shares for the entire duration of the Program, which is approximately 3.7% of the total number of shares. The Program will create added value to all shareholders of the Company in addition to dividends.
Since the introduction of new Program at the end of April 2021, we have purchased 136.144 shares (HRK 25.4 million) until 30 June 2021. Total number of shares purchased in H1 2021 (under old and new Program) is 341.787 (HRK 63.6 million).
In total, we have paid out HRK 703.9 million to our shareholders in H1 2021. This represents a total yield of 4.6% (based on last price in H1 2021), through a combination of dividends and share buybacks.
Commenting on the business results for H1 2021, Konstantinos Nempis, CEO of Hrvatski Telekom, stated: 'Regardless of the still present challenging macroeconomic environment, Hrvatski Telekom ended the first half of 2021 on a positive note, as continued revenue growth translated into solid EBITDA AL growth, which enabled us to develop our business further.
We remained true to maintaining strong, market leading investments. We expanded further our fixed network enabling over 387,000 households to enjoy the fiber giga speeds. We quadrupled the number of cities covered with 5G compared to 2020, almost doubling the population covered to 2 million. And we confirmed our leading network status. We continued supporting our customers, raising our service quality even further, helping them transform and become more resilient and agile, supporting their growing ambition.
The work we have done is clearly reflected in the best ever customer, and employee satisfactions in HT's history. And these are the foundations on which we will continue building.'