pessimismo di jpmorgan sulla prossima cedola magyar telecom
Invitel reported weak Q113 results; however,the surprisinglylow €5m reported
EBITDA appears distorted by the Q113 allocation of the full 2013 utility tax.
We still believe it is unlikely the company will be able to pay itsnext €16m coupon
payment in July as no FCF was generated this quarter and cash on balance amounts
to €14m as at 31 March. On the conference call management indicated it needsc.
€5m cash to run the company, implying it needsto generate at least €7m during
Q213.
The €40m (-6.9% yoy; JPMe€38m) revenues this quarter were impacted by the
continuing poor macroeconomic and intense competitive environment. Invitel still
experiences significant line churn and less consumer spending. Residential Voice
decline slowed to -15% (from -19% for Q412) on an easier comp. Residential
Internet (+1%) and Cable (+2%) showed stable revenues as forecasted. The Business
segment (-2% yoy) suffered from competitive pressure on new contract renewals and
Wholesale (-20% yoy) saw decreasing revenues from small bandwidth leased lines.
We note Invitel increased prices by c. 4% in February on both residential and
corporate packages.
Reported EBITDA was €5m (JPMe €11m), down 67% yoy. However, this was
mainly attributable to the 2013 utility tax charge of €7m fully charged to this quarter.
If we spread this cost evenly over the year, EBITDA would have been €10m, closer
to our €11m forecast. From a cash flow perspective the tax is payable in two
installments in March and September, however,management received a deferral on
the March 2013 payment from the Hungarian tax authority and can now pay the
amount in six monthly payments during the second half of the year. Next to the
utility tax, Invitel recorded €1.4m of other tax expenses (in the opex line) during the
quarter. Please refer to our 2013 Outlook for more detail on the Hungarian taxes
relevant for Invitel (link).
As expected, management didn’t provide any additional insights with regards to
a potential debt restructuring. In February 2013 the company announced it will
perform a “strategic review ofthe Group's capital structure in light of the new tax
legislation and the weak Hungarian macro environment" with the aid of Houlihan
Lokey. Additionally, a noteholder identification process identified 71% of the bond
holders and should facilitate engagement between the two sides.
A group of Invitel’s largest bondholders formed a committee advised by Moelis &
Company. These investors have also signed an agreement with the company so they
can receive confidential information to support their analysis.
Invitel
Q113 results review
(David Caldana, CFAAC)
(Frances Houweling)
(Andrew Webb)
(Sergei Kopsov)
Recommendation: Underweight
9.50% €2016 Sr Sec Nts, mid
48.25 (39.8%, z+3,592)
at 10 May, midday
Sector: Telecoms
Andiamo bene 
