FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

Report on Form 6-K dated February 13, 2007

Magyar Telekom Plc.

(Translation of registrant’s name into English)

Budapest, 1013, Krisztina krt. 55, Hungary

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x   Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o   No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-       

 

Magyar Telekom
	Contacts:		Szabolcs Czenthe, Magyar Telekom IR
			+36-1-458-0437
			Krisztina Förhécz, Magyar Telekom IR
			+36-1-457-6029
			Rita Walfisch, Magyar Telekom IR
			+36-1-457-6036
			investor.relations@telekom.hu

 

2006 full year results: solid performance, public targets met

 

Budapest – February 13, 2007 – Magyar Telekom (Reuters: NYSE: MTA.N, BSE: MTEL.BU and Bloomberg: NYSE: MTA US, BSE: MTELEKOM HB), the leading Hungarian telecommunications service provider, today reported its consolidated financial results for 2006, in accordance with International Financial Reporting Standards (IFRS). As of the second quarter of 2005, the consolidated income statement includes the results of Crnogorski Telekom (formerly known as Telekom Montenegro Group), while the company’s balance sheet has been consolidated in Magyar Telekom’s accounts since March 31, 2005. As of September 15, 2006, the financial statements include the results of KFKI (Hungarian IT & system integration company).

Highlights:

·                  Revenues grew by 9.1% to HUF 671.2 bn (EUR 2,539.8 m) in 2006 compared to 2005. The higher mobile, internet, and system integration & IT-related revenues compensated for lower outgoing fixed-line traffic revenues. The EDR (unified digital radio network) revenues of Pro-M and the consolidation impact of the acquired companies also boosted top line growth during the period under review.

·                  EBITDA grew slightly by 0.9% to HUF 258.6 bn, with an EBITDA margin of 38.5%. Group EBITDA excluding investigation-related costs (HUF 4.1 bn) was HUF 262.7 bn with an EBITDA margin of 39.1%.

·                  Since the majority of the EDR investments of the Hungarian mobile business is accounted for as sale of network elements under finance lease, EDR investments of HUF 18.0 bnwere reported as sale and cost of network elements constructed for sale in 2006. In the income statement, other mobile revenues and cost of telecom equipment sold include this amount. In addition, HUF 2.2bn of service revenues and HUF 0.5 bn interest income related to the EDR service were accounted for in 2006.

·                  Magyar Telekom has reassessed the accounting of value added services and changed to a net disclosurein case of certain mediated services. This had a negative impact on Hungarian fixed and mobile value added and other service revenues, as well as on other operating expenses and payments to other network operators. The total reduction in revenues and expenses was HUF 5.6 bn and HUF 6.1 bn in 2005 and 2006, respectively, while the change had no impact on EBITDA.

·                  Magyar Telekom has voluntarily changed its accounting policy with regard to the classification of the local business tax considering the decision of the European Court of October 3, 2006 in the case of the Italian local tax, as well as in light of the IFRIC rejection wording issued in March 2006. Accordingly, this tax charge has been reclassified to the income tax line of the profit and loss statement instead of other operating expenses. This results in lower other operating expenses and higher income tax compared to previous reports. There is no impact on net income. Local tax amounted to HUF 8.4 bn in 2005 and HUF 8.5 bn in 2006.

·                  Gross additions to tangible and intangible assets were HUF 90.9 bn. The portion relating to the fixed line segment reached HUF 49.7 bn with mobile at HUF 41.2 bn. Within the mobile segment, HUF 9.4 bn was spent on UMTS-related investments.

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·                  Fixed line segment: external revenues (after elimination of inter-segment revenues) increased by 4.5% to HUF 343.9 bn. An increase in internet and system integration & IT-related revenues offset the decline in outgoing traffic revenues. EBITDA amounted to HUF 118.7 bn and the EBITDA margin on external revenues was 34.5%.

·                  Mobile segment: external revenues increased by 14.5% to HUF 327.3 bn, driven by voice revenues and the EDR project. EBITDA amounted to HUF 139.9 bn with the EBITDA margin on external revenues reaching 42.8%.

·                  Profit attributable to equity holders of the company (net income) fell by 2.2%, from HUF 78.4 bn (EUR 316.1 m) to HUF 76.7 bn (EUR 290.1 m). Despite the slight EBITDA growth, net income declined, primarily due to higher depreciation and amortization expenses.

·                  Net cash from operating activities fell to HUF 186.0 bn. The slight growth in EBITDA was offset by the increased working capital requirement, which is due to the EDR project, and by the higher income tax paid, driven by the decrease in corporate tax receivable. Net cash utilized in investing activities decreased to HUF 119.4 bn. This was driven by lower capital expenditure on tangible and intangible assets and higher proceeds from real estate disposals, as well as the sale of financial assets. Cash spent on the purchase of subsidiaries remained broadly stable (with the Montenegrin acquisition in 2005 and the acquisitions of MakTel treasury shares, KFKI, Dataplex and Orbitel in 2006). Net cash flows from financing activities reflect the absence of a dividend payment in 2006.

·                  Net debt decreased by HUF 68.7 bn to HUF 227.9 bn compared to the end of 2005. The net debt ratio (net debt to net debt plus total equity) fell to 27.7% at end-December 2006 (33.2% at end-December 2005). This is due to the fact that the Company has not paid dividends for 2005 earnings in 2006, although shareholders’ equity reflects the dividend decision of the EGM held on December 21, 2006.

Christopher Mattheisen, Chairman and CEO commented:“Operationally, 2006 saw a number of positive developments for Magyar Telekom. Despite strong competition in all areas, we preserved our leading position in our key businesses. Both revenue growth and EBITDA in forint terms were comfortably in line with our full year targets.  The gross additions to tangible and intangible assets to revenues (capex to sales) ratio was 13.5%, in line with our goal of keeping the ratio below 15% in 2006. In the Hungarian fixed line business, we made several acquisitions and successfully integrated these investments into our existing portfolio. We developed a strong position in the growing IT, SI and telco-outsourcing market. The number of broadband connections has increased by 60% during 2006 and we launched IPTV service at the end of the year. We continued to focus on customer retention through our flat rate offers.  As a result, access, internet and IT related revenues increased, offsetting the continued erosion of traffic revenues. In 2006 we saw the initial positive impacts of the fixed-mobile merger, whilst also recording some one-off costs related to this complex process.  As part of the integration, we fully unified our store network, which now provides complete services to our customers. In the Hungarian mobile market, we maintained our clear market leadership. We were the first in Hungary to fully introduce the super-fast HSDPA service in the market, supporting a successful mobile broadband rollout. The country-wide EDR (unified digital radio) network rollout has also now been completed. Finally, international operations in Macedonia and Montenegro showed an excellent performance, making a considerable contribution to our profitability.

Looking forward to 2007, we are targeting stable revenue and EBITDA in forint terms over 2006 reported figures.  Our target for gross additions to tangible and intangible assets to revenues (capex to sales) ratio is below 14% in 2007. Regarding our strategy going forward, I can confirm that we intend to maintain the direction that the Group is currently following.  I would, however, like to underline three areas to which we intend to give stronger impetus: firstly, excellence through a stronger customer focus and significantly improved service quality, secondly, greater efficiency through improvements in operational cost structure,

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headcount productivity and leveraging new, integrated revenue opportunities. Last but not least, our goal remains to seek growth in the form of value-creating acquisitions in the future, both in Hungary and in our region.”

Hungarian fixed line operations: revenue growth driven by internet and SI/IT services

Revenues before elimination grew to HUF 78.9 bn in Q4 2006, up 6.6% compared to the same period last year. EBITDA margin for the quarter was 27.0%. Excluding the HUF 0.9 bn cost of the investigation and the modifications related to the Universal Telecommunication Support Fund (decreasing other operating expenses in Q4 2005 and increasing in Q4 2006 by HUF 0.7 bn), EBITDA was HUF 22.9 bn, down by 5.6%. EBITDA margin was 29.0% in Q4 2006. Internet revenues showed a 27.1% increase thanks to the significant growth in the number of installed ADSL lines. The total number of broadband connections (mainly ADSL and cable) exceeded 570,000 at end-2006. Mainly driven by acquisitions of KFKI and Dataplex, system integration & IT revenues grew from HUF 2.1 bn to HUF 11.8 bn in the Q4 2006 compared to the same quarter last year. Domestic and international traffic revenues combined declined by 29.4% reflecting mobile substitution and competition driven average price decline. Strong mobile substitution and number portability resulted in a 4% decline in the total number of fixed lines at end-2006 compared to a year ago. Customised tariff packages at the parent company represented over 83% of the total number of lines at the end of 2006.

International fixed line operations: solid EBITDA margin in Macedonia, headcount reduction in Montenegro

Revenues before elimination grew by 5.5% to HUF 16.6 bn in Q4 2006, reflecting the favorable exchange rate impact and the strong revenue increase of the Montenegrin operations. EBITDA fell to HUF 3.3 bn with an EBITDA margin of 19.7%.  This was due to the headcount reduction related expenses of HUF 2.5 bn in Montenegro and the increasing role of lower margin international wholesale and alternative operations. MakTel’s fixed line revenues decreased by 2.1%, as a decline in outgoing traffic revenues (by 11.9%) was only partially compensated by international wholesale and internet-related revenues. EBITDA increased by 20.0% to HUF 4.1 bn, supported by the impact of the headcount reduction in Q4 2005. EBITDA margin was 38.4% in the fourth quarter. Fixed line operations in Montenegro contributed HUF 4.7 bn to Group revenues in the fourth quarter of 2006 (HUF 4.1 bn in Q4 2005). The growth was fuelled by favorable FX movements and higher wholesale and internet revenues. Due to the headcount reduction related expenses, EBITDA was HUF -0.6 bn (against HUF 0.8 bn in Q4 2005).

Hungarian mobile operations: clear market leadership maintained, EDR revenues

Revenues before elimination grew by 21.9% to HUF 82.6 bn in Q4 2006 as a result of EDR-related revenues (within other revenues), higher enhanced service and equipment sales revenues. EBITDA was HUF 28.8 bn, up by 15.3% over Q4 2005, mainly due to the modifications related to the Universal Telecommunication Support Fund, increasing other operating expenses in Q4 2005 and decreasing by HUF 1.1 bn in Q4 2006. Average acquisition cost per customer continued to fall, reflecting reduced subsidies in both prepaid and postpaid segments. When calculating subscriber acquisition cost, we include the connection margin (SIM card cost less the connection fee) and the sales-related equipment subsidy and agent fee. Although the introduction of new, flat-rate packages generated higher usage, the discounts and bundled free minutes offered, as well as the extensive use of closed user group offers, combined with the change in disclosure of enhanced services, resulted in a slight erosion of ARPU (monthly average revenue per user). MOU (monthly average minutes of use per subscriber) grew to 149 in Q4 2006, indicating strong price elasticity.

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International mobile operations: strong revenue and EBITDA growth at both companies

Revenues before elimination grew by 15.2% to HUF 13.1 bn in Q4 2006 due to the strong performance of both companies and also helped by the favorable exchange rate effect. EBITDA was HUF 6.4 bn with an EBITDA margin of 49.0%. T-Mobile Macedonia reported 14.8% revenue growth thanks to the increasing customer base and usage, partly offset by the continuously decreasing tariffs. EBITDA was HUF 5.6 bn with an EBITDA margin of 55.3%. T-Mobile Crna Gora contributed revenues of HUF 3.0 bn (up 16.4%) and an EBITDA of HUF 0.8 bn in Q4 2006 (against HUF 0.3 bn in Q4 2005).

As previously disclosed, the Company is still investigating certain contracts to determine whether they were entered into in violation of Company policy or applicable law or regulation. In the course of conducting their audit of our 2005 financial statements, PricewaterhouseCoopers Könyvvizsgáló és Gazdasági Tanácsadó Kft. (“PwC”) identified certain contracts the nature and business purposes of which were not readily apparent.  PwC notified the Audit Committee of the Supervisory Board (the “Audit Committee”) and advised them to retain independent counsel to conduct an investigation into these contracts. Our Audit Committee retained the law firm of White & Case LLP (“White & Case”), as its independent legal counsel, to conduct the investigation. Based on the documentation and other evidence obtained by it, the White & Case investigation has preliminarily concluded that it was unable to determine a proper business purpose for four consulting contracts entered into by the Company and two of its subsidiaries in 2005, and further found that certain employees had destroyed evidence that was relevant to the investigation. We have taken and are taking remedial measures to address weaknesses in our control environment that were revealed by the investigation. The investigation delayed the finalization of our 2005 financial statements, and as a result we and some of our subsidiaries have failed and may fail to meet certain deadlines prescribed by applicable laws and regulations for preparing and filing audited annual results and holding annual general meetings. We have to date been fined HUF 13 m as a consequence of these delays and additional fines could be imposed in the future. See our press release dated December 21, 2006 for further details on this investigation. Magyar Telekom (“MT”) incurred HUF 4.1 bn expenses relating to the investigation in 2006, which are included in other operating expenses — net in the Hungarian fixed line operations as part of the Headquarters costs. Although the investigation has not been finalized, based on the independent investigators’ findings and conclusions to date, the contracts under investigation were entered into without full compliance with internal company procedures regarding the entry of such contracts. Moreover, sufficient evidence could not be obtained that adequate value was received under these contracts. In its preliminary 2005 results announcement Magyar Telekom capitalized HUF 1.1 bn payments made related to two of these contracts. As a result of the findings of the investigation, Magyar Telekom has changed the accounting treatment of these contracts and expensed this amount, as well as the related HUF 0.2 bn potential tax obligation, increasing other operating expenses by HUF 1.3 bn.

About Magyar Telekom

Magyar Telekom is the principal provider of telecom services in Hungary. Magyar Telekom provides a broad range of services including traditional fixed line and mobile telephony, data transmission and value-added services. Magyar Telekom owns the majority of the shares of MakTel, the sole fixed line operator and its subsidiary T-Mobile Macedonia, the leading mobile operator in Macedonia. Magyar Telekom has a majority stake in Crnogorski Telekom. This Group provides fixed, mobile and Internet services in Montenegro. Key shareholders of Magyar Telekom as of December 31, 2006 include MagyarCom Holding GmbH (59.21%), owned by Deutsche Telekom AG. The remainder, 40.79% is publicly traded.

This investor news contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should not have undue reliance placed upon them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, our Annual Report on Form 20-F for the year ended December 31, 2004 filed with the U.S. Securities and Exchange Commission.

For detailed information on Magyar Telekom’s 2006 results please visit our website:

(www.magyartelekom.hu/english/investorrelations/main.vm) or the website of the Budapest Stock Exchange (www.bse.hu).

4

MAGYAR TELEKOM

Consolidated

Income Statements - IFRS

		Year ended December 31,				%
(HUF million)		2005		2006		change
		(Unaudited)		(Unaudited)
Revenues
Subscriptions		90 550		93 387		3.1	%
Domestic outgoing traffic revenues		87 497		69 724		(20.3	)%
International outgoing traffic revenues		11 155		10 267		(8.0	)%
Value added, cable voice and other services		8 477		8 902		5.0	%
Voice - retail revenues		197 679		182 280		(7.8	)%
Domestic incoming traffic revenues		9 530		9 125		(4.2	)%
International incoming traffic revenues		16 049		19 566		21.9	%
Voice - wholesale revenues		25 579		28 691		12.2	%
Voice revenues total		223 258		210 971		(5.5	)%
Internet broadband		29 773		42 034		41.2	%
Internet narrowband, content and other		10 010		7 699		(23.1	)%
Internet revenues total		39 783		49 733		25.0	%
Data		26 792		27 121		1.2	%
System Integration/Information Technology		9 023		24 679		173.5	%
Multimedia		15 037		17 506		16.4	%
Equipment sales		5 205		4 249		(18.4	)%
Other revenues		10 108		9 607		(5.0	)%
Total fixed segment revenues		329 206		343 866		4.5	%
Network usage and access		225 003		240 284		6.8	%
Enhanced services		36 539		40 258		10.2	%
Equipment sales and activation fee		23 472		25 280		7.7	%
Other revenues		834		21 507		2 478.8	%
Total mobile segment revenues		285 848		327 329		14.5	%
Total revenues		615 054		671 195		9.1	%
Employee-related expenses		(92 783	)	(95 253	)	2.7	%
Depreciation and amortization		(114 686	)	(122 249	)	6.6	%
Payments to other network operators		(88 587	)	(93 154	)	5.2	%
Cost of telecommunications equipment sales		(37 221	)	(59 714	)	60.4	%
Other operating expenses - net		(140 023	)	(164 435	)	17.4	%
Total operating expenses		(473 300	)	(534 805	)	13.0	%
Operating profit		141 754		136 390		(3.8	)%
Net financial expenses		(31 501	)	(25 410	)	(19.3	)%
Share of associates’ profits		330		703		113.0	%
Profit before income tax		110 583		111 683		1.0	%
Income tax		(21 858	)	(23 013	)	5.3	%
Profit for the period		88 725		88 670		(0.1	)%
Attributable to:
Equity holders of the Company (Net income)		78 415		76 659		(2.2	)%
Minority interests		10 310		12 011		16.5	%
		88 725		88 670		(0.1	)%

 

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MAGYAR TELEKOM

Consolidated

Balance Sheets - IFRS

(HUF million)		Dec 31, 2005		Dec 31, 2006		% change
		(Unaudited)		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		46 060		79 128		71.8	%
Other financial assets		1 817		2 692		48.2	%
Trade and other receivables		95 956		104 016		8.4	%
Current income tax receivable		1 679		6 735		301.1	%
Inventories		8 414		10 460		24.3	%
Assets held for disposal		2 302		6 825		196.5	%
Total current assets		156 228		209 856		34.3	%
Non current assets
Property, plant and equipment - net		580 736		550 900		(5.1	)%
Intangible assets - net		319 797		331 740		3.7	%
Associates		5 020		5 771		15.0	%
Deferred taxes		14 966		10 503		(29.8	)%
Other financial assets		6 201		23 753		283.1	%
Total non current assets		926 720		922 667		(0.4	)%
Total assets		1 082 948		1 132 523		4.6	%
LIABILITIES
Current liabilities
Loans from related parties		74 648		74 000		(0.9	)%
Loans and other borrowings - third party		43 602		29 605		(32.1	)%
Trade and other payables		119 464		200 589		67.9	%
Current income tax payable		1 472		1 736		17.9	%
Deferred revenue		918		234		(74.5	)%
Provisions for liabilities and charges		6 817		8 414		23.4	%
Total current liabilities		246 921		314 578		27.4	%
Non current liabilities
Loans from related parties		212 000		185 432		(12.5	)%
Loans and other borrowings - third party		14 215		20 697		45.6	%
Deferred revenue		267		170		(36.3	)%
Deferred taxes		3 189		5 368		68.3	%
Provisions for liabilities and charges		3 141		3 344		6.5	%
Other non current liabilities		5 521		8 560		55.0	%
Total non current liabilities		238 333		223 571		(6.2	)%
Total liabilities		485 254		538 149		10.9	%
EQUITY
Shareholders’ equity
Common stock		104 281		104 277		(0.0	)%
Additional paid in capital		27 382		27 380		(0.0	)%
Treasury stock		(1 926	)	(1 504	)	(21.9	)%
Cumulative translation adjustment		(420	)	(1 474	)	251.0	%
Retained earnings and other reserves		398 250		398 567		0.1	%
Total shareholders’ equity		527 567		527 246		(0.1	)%
Minority interests		70 127		67 128		(4.3	)%
Total equity		597 694		594 374		(0.6	)%
Total liabilities and equity		1 082 948		1 132 523		4.6	%

 

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MAGYAR TELEKOM

Consolidated

Cashflow Statements - IFRS

		Year ended Dec 31,				%
(HUF million)		2005		2006		change
		(Unaudited)		(Unaudited)
Operating profit		141 754		136 390		(3.8	)%
Depreciation and amortization		114 686		122 249		6.6	%
Change in working capital		(1 588	)	(13 204	)	731.5	%
Interest paid		(31 078	)	(29 876	)	(3.9	)%
Bank and other finance charges paid		(3 157	)	(3 604	)	14.2	%
Income tax paid		(11 479	)	(19 392	)	68.9	%
Other cashflows from operations		(7 802	)	(6 557	)	(16.0	)%
Net cashflows from operating activities		201 336		186 006		(7.6	)%
Cashflows from investing activities
Purchase of tangible and intangible assets		(103 587	)	(96 992	)	(6.4	)%
Purchase of subsidiaries and business units		(35 927	)	(35 367	)	(1.6	)%
Cash acquired through business combinations		1 866		379		(79.7	)%
Interest received		2 195		2 002		(8.8	)%
Dividends received		1 729		157		(90.9	)%
Purchase of financial investments - net		(371	)	3 551		n.m.
Proceeds from disposal of non current assets		2 529		6 798		168.8	%
Proceeds from disposal of subsidiaries		0		115		n.a.
Net cashflows from investing activities		(131 566	)	(119 357	)	(9.3	)%
Cashflows from financing activities
Dividends paid to shareholders and minority interest		(84 551	)	(77	)	(99.9	)%
Net proceeds of loans and other borrowings		20 734		(35 564	)	n.m.
Other		1 969		491		(75.1	)%
Net cashflows from financing activities		(61 848	)	(35 150	)	(43.2	)%
Effect of foreign exchange rate changes on cash and cash equivalents		1 259		1 569		24.6	%
Change in cash and cash equivalents		9 181		33 068		260.2	%
Cash and cash equivalents, beginning of period		36 879		46 060		24.9	%
Cash and cash equivalents, end of period		46 060		79 128		71.8	%
Change in cash and cash equivalents		9 181		33 068		260.2	%

 

7

Summary of key operating statistics

GROUP		Dec 31, 2005		Dec 31, 2006		% change
EBITDA margin		41.7	%	38.5	%	n.a.
Operating margin		23.0	%	20.3	%	n.a.
Net income margin		12.7	%	11.4	%	n.a.
ROA		7.4	%	6.9	%	n.a.
Net debt		296,588		227,914		(23.2	)%
Net debt to total capital		33.2	%	27.7	%	n.a.
Number of employees (closing full equivalent)		11,919		12,341		3.5	%

 

FIXED LINE SEGMENT		Dec 31, 2005		Dec 31, 2006		% change
Hungarian fixed line operations
Fixed line penetration		35.6	%	34.2	%	n.a.
Digitalization of exchanges with ISDN		100.0	%	100.0	%	n.a.
Number of closing lines (1)
Residential		1,981,876		1,902,011		(4.0	)%
Business		248,955		236,019		(5.2	)%
Payphone		22,112		20,517		(7.2	)%
ISDN channels		500,696		485,290		(3.1	)%
Total lines		2,753,639		2,643,837		(4.0	)%
Traffic in minutes (thousands) (1)
Local		3,282,575		3,284,852		0.1	%
Long distance		1,096,685		1,157,640		5.6	%
Fixed to mobile		747,195		594,743		(20.4	)%
Domestic outgoing traffic		5,126,455		5,037,235		(1.7	)%
International outgoing traffic		113,315		98,723		(12.9	)%
Internet (2)		1,953,968		1,044,782		(46.5	)%
Total outgoing traffic		7,193,738		6,180,740		(14.1	)%
Data products
ADSL lines		329,314		512,810		55.7	%
Number of Internet subscribers
Dial-up		80,938		31,401		(61.2	)%
Leased line		751		656		(12.6	)%
DSL		218,954		336,181		53.5	%
W-LAN		1,467		1,175		(19.9	)%
CATV		26,425		57,587		117.9	%
Total Internet subscribers		328,535		427,000		30.0	%
Market share in the dial-up market (estimated)		42	%	39	%	n.a.
Managed leased lines (Flex-Com connections) (1)		10,289		9,165		(10.9	)%
Cable television customers		403,631		414,286		2.6	%
Total broadband Internet access (3)		357,957		572,228		59.9	%
International fixed line operations
Macedonian fixed line penetration		26.0	%	23.9	%	n.a.
Number of closing lines
Residential		467,559		430,082		(8.0	)%
Business		48,252		42,780		(11.3	)%
Payphone		2,063		2,087		1.2	%
ISDN channels		41,262		42,200		2.3	%
Total Macedonian lines		559,136		517,149		(7.5	)%
Macedonian traffic in minutes (thousands)
Local		1,368,786		1,196,762		(12.6	)%
Long distance		201,206		176,964		(12.0	)%
Fixed to mobile		139,203		123,032		(11.6	)%
Domestic outgoing traffic		1,709,195		1,496,758		(12.4	)%
International outgoing traffic		31,557		27,455		(13.0	)%
Internet		207,213		179,338		(13.5	)%
Total outgoing Macedonian traffic		1,947,965		1,703,551		(12.5	)%
Data products (Macedonia)
ADSL lines		7,798		16,462		111.1	%
Number of Internet subscribers
Dial-up		83,930		109,096		30.0	%
Leased line		137		141		2.9	%
DSL		7,798		16,462		111.1	%
Total Internet subscribers		91,865		125,699		36.8	%
Market share in the dial-up market (estimated)		81	%	94	%	n.a.

 

8

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Montenegrin fixed line penetration		31.2	%	31.4	%	n.a.
Number of closing lines
PSTN lines		175,122		173,248		(1.1	)%
ISDN channels		18,750		21,288		13.5	%
Total Montenegrin lines		193,872		194,536		0.3	%
Montenegrin traffic in minutes (thousands)
Local		301,927		313,854		4.0	%
Long distance		126,024		126,676		0.5	%
Fixed to mobile		42,206		39,090		(7.4	)%
Domestic outgoing traffic		470,157		479,620		2.0	%
International outgoing traffic		12,662		13,138		3.8	%
Internet		385,264		361,201		(6.2	)%
Total outgoing Montenegrin traffic		868,083		853,959		(1.6	)%
Data products (Montenegro)
ADSL lines		1,085		6,639		511.9	%
Number of Internet subscribers
Prepaid		25,594		25,669		0.3	%
Leased line		117		121		3.4	%
DSL		1,085		6,639		511.9	%
Total Internet subscribers		26,796		32,429		21.0	%
Market share in the dial-up market (estimated)		96	%	98	%	n.a.

 

(1)          Magyar Telekom Plc. + Emitel (100% owned by Magyar Telekom Plc.)

(2)          Internet minutes include traffic both on analog lines (reported earlier as local traffic) and on ISDN lines (not reported earlier as traffic minutes)

(3)          Includes ADSL lines operated by Magyar Telekom Plc. and Emitel plus T-Online Hungary’s broadband customers (other than the ADSL purchased from Magyar Telekom)

MOBILE SEGMENT		Dec 31, 2005		Dec 31, 2006		% change
Hungarian mobile operations
Mobile penetration		92.4	%	99.0	%	n.a.
Market share of T-Mobile Hungary		45.0	%	44.5	%	n.a.
Number of customers (RPC)		4,193,855		4,431,136		5.7	%
Postpaid share in the RPC base		31.6	%	34.9	%	n.a.
MOU		127		142		11.8	%
ARPU		4,832		4,800		(0.7	)%
Overall churn rate		18.5	%	17.9	%	n.a.
Postpaid		10.4	%	9.9	%	n.a.
Prepaid		22.0	%	21.9	%	n.a.
Enhanced services within ARPU		621		667		7.4	%
Average acquisition cost (SAC) per customer		7,062		6,234		(11.7	)%
International mobile operations
Macedonian mobile penetration		61.3	%	68.3	%	n.a.
Market share of T-Mobile Macedonia		69.2	%	66.5	%	n.a.
Number of customers (RPC)		877,142		944,530		7.7	%
Postpaid share in the RPC base		15.9	%	18.8	%	n.a.
MOU		63		72		14.3	%
ARPU		3,065		3,206		4.6	%
Montenegrin mobile penetration		78.6	%	129.8	%	n.a.
Market share of T-Mobile Crna Gora		42.7	%	41.2	%	n.a.
Number of customers (RPC) (4)		208,094		331,616		59.4	%
Postpaid share in the RPC base		15.0	%	14.6	%	n.a.
MOU		127		127		0.0	%
ARPU		3,745		3,858		3.0	%

 

(4)          In October 2006, prepaid voucher lifecycle was extended from 3 to 11 months in Montenegro, resulting in increase in the number of prepaid RPC

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