Magyar Telekom Távközlesi Nyilvánosan Müködö Reszvenytársaság : Q1 2024 Financial Report

Rékasi Tibor

Dodonova Daria Aleksandrovna

MAGYAR TELEKOM

QUARTERLY FINANCIAL REPORT

ANALYSIS OF THE FINANCIAL STATEMENTS FOR THE

FIRST QUARTER ENDED MARCH 31, 2024

Budapest - May 15, 2024 - Magyar Telekom (Reuters: MTEL.BU and Bloomberg: MTELEKOM HB, hereinafter: Company), the leading Hungarian telecommunications service provider, today reported its consolidated financial results for the first quarter of 2024, in accordance with IFRS Accounting Standards as adopted by the EU (hereinafter: quarterly financial report). The quarterly financial report contains unaudited figures.

		TABLE OF CONTENTS
1.	HIGHLIGHTS	3
2.	MANAGEMENT REPORT	5
	2.1.	Consolidated IFRS Group Results	5
	2.1.1	Group Profit and Loss	5
	2.1.2	Group Cash Flows	7
	2.1.3	Consolidated Statements of Financial Position	8
	2.1.4	Related party transactions	9
	2.1.5	Contingencies and commitments	9
	2.1.6	Material events	10
	2.2.	Segment reports	10
	2.2.1	MT-Hungary	11
	2.2.2	North Macedonia	12
3.	APPENDIX	14
	3.1.	Basis of preparation and initial application, interpretations and amendments of standards	14
	3.2.	Macroeconomic environment and critical accounting estimates, climate disclosures	14

3.3. Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income - quarterly year-on-year

comparison	15
3.4.	Revenue breakdown - quarterly year-on-year comparison	16
3.5.	Operating expenses breakdown - quarterly year-on-year comparison	16
3.6.	Interim Consolidated Statement of Financial Position - Assets	17
3.7.	Interim Consolidated Statement of Financial Position - Liabilities and Equity	18
3.8.	Interim Consolidated Statement of Cash Flows	19
3.9.	Net debt reconciliation to changes in Statement of Cash Flows	20
3.10.	Interim Consolidated Statement of Changes in Equity	21
3.11.	Exchange rate information	22
3.12.	Segment information	22
3.13.	Fair value of financial instruments - financial assets	23
3.14.	Fair value of financial instruments - financial liabilities	23
3.15.	EBITDA reconciliation	24
3.16.	Adjusted profit attributable to owners of the parent reconciliation	24
3.17.	Capex from Interim Consolidated Statement of Cash Flows	24
3.18.	Capex from Interim Consolidated Statement of Financial Position	24
4. DECLARATION	25

2

Company name:	Magyar Telekom Plc.	Company address:	H-1097 Budapest Könyves Kálmán krt. 36.
		E-mail address:	[e-mail]
IR contacts:	Position:	Telephone:	E-mail address:
Diána Párkányi-Várkonyi	Capital Market Relations Hub Lead	[phone]	[e-mail]
Rita Walfisch	Investor Relations manager	[phone]	[e-mail]
Gabriella Pászti	Investor Relations manager	[phone]	[e-mail]

1.	HIGHLIGHTS
		1-3 months 2023	1-3 months 2024	Change
	(HUF millions, except ratios)			(%)
	Revenue	195,870	224,229	14.5%
	Operating profit	24,447	49,340	101.8%
	Profit attributable to:
	Owners of the parent	10,519	33,679	220.2%
	Non-controlling interests	1,256	1,337	6.4%
		11,775	35,016	197.4%
	Adjusted profit attributable to owners of the parent	12,131	38,054	213.7%
	Gross profit	114,087	135,458	18.7%
	EBITDA	58,029	84,593	45.8%
	EBITDA AL	50,821	76,967	51.4%
	Free cash flow	(10,725)	(904)	91.6%
	Free cash flow excl. spectrum licenses	(10,725)	(904)	91.6%
	Capex after lease	23,522	19,739	(16.1%)
	Capex after lease excl. spectrum licenses	23,522	19,739	(16.1%)
	Number of employees (closing full equivalent)	6,660	6,749	1.3%
		Dec 31, 2023	Mar 31, 2024	Change
				(%)
	Net debt	430,640	427,517	(0.7%)
	Net debt / EBITDA	1.50	1.36	n.a.

• Group revenue increased by 14.5% year-on-year in Q1 2024, owing to continued growth in mobile data and fixed broadband service uptake and the positive effects of inflation-based fee adjustments in the Hungarian operation.
• Gross profit improved in line with revenue trends, growing 18.7% year-on-year in Q1 2024.
• Indirect costs were lower by 9.3% year-on-year in Q1 2024, reflecting of more favorable energy costs coupled with the positive impact from the elimination of the utility tax which together offset the increases in employee related expenses, and the supplementary telecommunication tax.
• EBITDA AL, consequently, increased by 51.4% year-on-year in Q1 2024, with majority of the improvement stemming from the growth in gross profit performance that was coupled with positive impact of the repeal of the utility tax.
• Net income in Q1 2024 amounted to HUF 33.7 billion, against HUF 10.5 billion in Q1 2023, reflecting EBITDA growth partly mitigated by higher D&A and income tax expense.
• Adjusted net income was HUF 38.1 billion in Q1 2024, representing a HUF 25.9 billion increase year-on-year, in line with improvements in underlying profitability.
• Capex after lease excluding spectrum licenses was down 16.1% year-on-year, amounting to HUF 19.7 billion in Q1 2024, driven by different within-year dynamic of the annual CPE procurements in Hungary and the absence of accelerated investments to RAN modernization and seasonally lower TV content capitalization costs in North Macedonia.
• Free cash flow, excluding spectrum license fees, amounted to cash outflow of HUF 0.9 billion in Q1 2024, representing an improvement of HUF 9.8 billion year-on-year. Improvements driven by the profitability growth was partially mitigated by higher working capital needs related to the expanding revenue base and different vendor outpayment dynamics.

3

Tibor Rékasi, Magyar Telekom CEO, commented:

"I am pleased to report a strong first quarter of 2024 for Magyar Telekom, both financially and operationally. Revenue increased by 14.5% year-on-year, while EBITDA AL grew by 51.4% thanks to a strong top line performance and the positive impact of the termination of the utility tax. Operationally, we continued to progress our key strategic initiative, the Digitization of Hungary, adding new gigabit- capable access points to our fixed network to reach over 3.7 million households and businesses with this technology. We also made good progress in the radio network modernization of our mobile network, reaching an 82% readiness by the end of March 2024. Our focus on offering seamless connectivity and an outstanding customer experience is paying off and we were able to satisfy our customers' growing demand for mobile data and fixed broadband services.

Looking ahead, we remain committed to maintaining our solid market positions and operational momentum, allowing us to meet our public targets for Revenue and EBITDA AL. Whilst with regards to adjusted net income we now target to reach ca. HUF 140 billion and with regards to the free cashflow to reach ca. HUF 130 billion thanks to the more favorable than anticipated yield environment and the lower deterioration in working capital."

Public targets

	2023 Actual	Guidance for 2024	Updated guidance for 2024
Revenue	HUF 849.4 billion	5%-10% growth	5%-10% growth
EBITDA AL	HUF 257.9 billion	20%-25% growth	20%-25% growth
Adjusted net income	HUF 93.6 billion	ca. HUF 130 billion	ca. HUF 140 billion
FCF1	HUF 86.8 billion	ca. HUF 120 billion	ca. HUF 130 billion
1 Excluding spectrum licenses

4

2.	MANAGEMENT REPORT
2.1.	Consolidated IFRS Group Results
2.1.1Group Profit and Loss
		Q1 2023	Q1 2024	Change	Change
					(%)
	(HUF millions)
	Mobile revenue	112,306	130,909	18,603	16.6%
	Fixed line revenue	63,084	72,571	9,487	15.0%
	SI/IT revenue	20,480	20,749	269	1.3%
	Revenue	195,870	224,229	28,359	14.5%
	Direct costs	(81,783)	(88,771)	(6,988)	(8.5%)
	Gross profit	114,087	135,458	21,371	18.7%
	Indirect costs	(56,058)	(50,865)	5,193	9.3%
	EBITDA	58,029	84,593	26,564	45.8%
	Depreciation and amortization	(33,582)	(35,253)	(1,671)	(5.0%)
	Operating profit	24,447	49,340	24,893	101.8%
	Net financial result	(8,655)	(7,805)	850	9.8%
	Share of associates' and joint ventures' results	-	-	-	-
	Profit before income tax	15,792	41,535	25,743	163.0%
	Income tax	(4,017)	(6,519)	(2,502)	(62.3%)
	Profit for the period	11,775	35,016	23,241	197.4%
	Profit attributable to non-controlling interests	1,256	1,337	81	6.4%
	Profit attributable to owners of the parent	10,519	33,679	23,160	220.2%

Total revenue increased by 14.5% year-on-year to HUF 224.2 billion in Q1 2024. This improvement was driven by strong growth in mobile data revenues and increases in fixed broadband revenue, both reflecting the underlying business growth whilst the positive impact of the inflation-basedfee adjustment in Hungary led to higher subscription fee revenues across all service lines. These increases were now coupled with higher revenues from mobile and fixed equipment sales as well.

• Mobile revenue rose by 16.6% year-on-year to HUF 130.9 billion in Q1 2024, driven by the continued growth in mobile data revenue and higher equipment sales.
• • Voice retail revenue increased by 10.1% year-on-year to HUF 32.5 billion in Q1 2024, reflecting the positive impact of the expanding subscriber base and the Hungarian fee adjustment which offset reductions stemming from lower usage levels.
  • Voice wholesale revenue decreased by 35.0% year-on-year to HUF 1.9 billion in Q1 2024, as a result of the reduction in the Hungarian mobile termination rates effective from January 1, 2024. The rates were cut from HUF 1.6461 /minute to HUF 0.7678/minute in line with EU regulations.
  • Data revenue rose by 25.0% year-on-year to HUF 51.7 billion in Q1 2024, as the continued growth in subscriber numbers and usage levels in both Hungary and North Macedonia were further amplified by the Hungarian fee adjustment impacts.
  • SMS revenue was higher by 9.0% year-on-year, amounting to HUF 6.8 billion in Q1 2024, primarily reflecting the effect of the inflation-based fee adjustment.
  • Mobile equipment revenue rose by 17.0% year-on-year, amounting to HUF 32.7 billion in Q1 2024. The increase was thanks to higher sales volume in both operations driven by seasonal promotions as well as higher revenues from third party export sales whilst also reflecting lower installment sales related present value discount in Hungary in the current period in line with the decline in interest rates.
  • Other mobile revenue rose to HUF 5.4 billion in Q1 2024, driven by higher visitor revenue in both countries and the increased interest revenue in relation to prior periods' equipment installment sales.

5

• Fixed line revenue increased by 15.0% year-on-year, to HUF 72.6 billion in Q1 2024, thanks primarily to increases in fixed broadband and TV revenue driven by the customer base expansions as well as the favorable impact of the inflation-basedfee adjustment applied to the Hungarian subscription fees.
• • Voice retail revenue was up by 1.2% year-on-year to HUF 8.9 billion in Q1 2024, as the decline in the Hungarian customer base and usage level was offset by the fee adjustment effects.
  • Broadband retail revenue increased by 22.5% year-on-year to HUF 25.8 billion in Q1 2024, driven by the positive impact of continued customer base expansion coupled with the further increases in the ARPU levels at both operations.
  • TV revenue was up by 13.5% year-on-year to HUF 19.3 billion in Q1 2024, driven by the further expansion of the Hungarian IPTV subscriber base coupled with the positive impacts of the fee adjustment.
  • Fixed equipment revenue was higher by HUF 1.4 billion year-on-year, amounting to HUF 5.2 billion in Q1 2024, reflecting higher average equipment prices, increase in sales volumes and lower installment sales related present value discount.
  • Data retail revenue was up by 11.5% year-on-year, amounting to HUF 3.8 billion in Q1 2024, thanks to the continued increase in leased line fixed internet service revenue.
  • Wholesale revenue increased by 3.5% year-on-year, to HUF 5.2 billion in Q1 2024, driven by higher infrastructure service related and wholesale IP and data revenues in Hungary that outweighed the lower voice wholesale revenues witnessed in both countries of operation.
  • Other fixed line revenue rose by 9.5% year-on-year to HUF 4.3 billion in Q1 2024, reflecting higher fixed device rental revenue.
• System Integration and IT ('SI/IT') revenue remained broadly stable year-on-year, amounting to HUF 20.7 billion in Q1 2024, reflecting the year-on-yearsimilar customer demand developments on our key markets.

Direct costs were up by 8.5% year-on-year at HUF 88.8 billion in Q1 2024, driven by higher equipment costs, parallel to the increase in sales and an increase in bad debt expenses, reflecting primarily the higher revenue base.

• Interconnect costs declined by 21.6% year-on-year to HUF 4.3 billion in Q1 2024, reflecting the cut in the Hungarian mobile termination rates, effective from January 1, 2024.
• SI/IT service-relatedcosts remained broadly stable year-on-year, amounting to HUF 15.1 billion in Q1 2024, in line with the related revenue developments.
• Impairment losses and gains on financial assets and contract assets (bad debt expenses) was higher by HUF 1.3 billion or 64.2% year-on-year,amounting to HUF 3.4 billion in Q1 2024, in line with the higher revenue base, including increase in instalment sales revenue and also reflecting less favorable aging structure of the customer receivables at the Hungarian operation.
• Telecom tax was broadly unchanged year-on-year, amounting to HUF 6.3 billion in Q1 2024, as lower overall fixed voice usage and decline in mobile voice traffic generated by business customers were offset by higher voice minutes used by the expanding residential subscriber base.
• Other direct costs were up by 12.5% year-on-year at HUF 59.6 billion in Q1 2024, primarily driven by higher equipment costs, in line with higher related sales volumes, and an increase in TV content fees.

Gross profit improved by 18.7% year-on-year to HUF 135.5 billion in Q1 2024, thanks to higher service revenues partly mitigated by increase in the equipment sales related costs and bad debt expenses.

Indirect costs were lower by 9.3% year-on-year, at HUF 50.9 billion in Q1 2024, primarily driven by the elimination of the utility tax in Hungary.

• Employee-relatedexpenses increased by 10.9% year-on-year, amounting to HUF 21.8 billion in Q1 2024, reflecting primarily the wage increase in effect from July 1, 2023 at the Hungarian operation.
• Utility tax was repealed effective from January 1, 2024, resulting in a HUF 7.8 billion improvement year-on-year, as in previous years, utility tax for the full year had to be accounted for in the first quarter in line with relevant IFRS accounting rules.
• Supplementary telecommunication tax was up by HUF 1.6 billion, amounting to HUF 8.9 billion in Q1 2024, reflecting the revenue increase.
• Other operating expenses (excluding the utility tax and the supplementary telecommunication tax) decreased by 4.2% year- on-year to HUF 21.1 billion in Q1 2024, driven by lower energy costs that could offset inflation-driven cost pressures on other expenses.
• Other operating income was HUF 0.9 billion in Q1 2024, in line with earlier trends.

6

EBITDA increased by 45.8% year-on-year to HUF 84.6 billion in Q1 2024 driven by the improvement in gross profit coupled with the positive impact of the elimination of the utility tax. EBITDA AL was up by 51.4% year-on-year to HUF 77.0 billion in Q1 2024.

Depreciation and amortization ('D&A') expenses were up by 5.0% year-on-year, amounting to HUF 35.3 billion in Q1 2024, reflecting increases in IFRS 16 right-of-useasset related depreciation expenses coupled with temporarily higher depreciation related to software licenses.

Profit for the period rose by 197.4% or HUF 23.2 billion year-on-year to HUF 35.0 billion in Q1 2024. Improvement was driven by the strong growth in EBITDA.

• Net financial result improved from a loss of HUF 8.7 billion in Q1 2023 to a loss of HUF 7.8 billion in Q1 2024. Improvement in net interest expense was driven by lower overall loan balances more and favorable liquidity positions leading to lower related costs. The unfavorable change in other finance expense primarily reflects the different quarterly movements of the HUF during the period resulting in higher FX losses in Q1 2024 vs Q1 2023. These were partially offset by unrealized gains on derivative positions.
• Income tax expenses were up by 62.3% or HUF 2.5 billion year-on-year at HUF 6.5 billion in Q1 2024, reflecting the year-on- year higher profit levels resulting in higher trade and income taxes as well.

Profit attributable to non-controlling interests increased by 6.4% year-on-year to HUF 1.3 billion in Q1 2024, reflecting the improvement in the operational result of the North Macedonian subsidiary.

Adjusted net income (profit attributable to owners of the parent) was HUF 38.1 billion in Q1 2024, representing a HUF 25.9 billion increase year-on-year,in line with improvements in underlying profitability. Adjustments to reported net income of HUF 4.4 billion in Q1 2024 are driven by unrealized FX losses coupled with some realized gains on those CCIR swap positions that related to those loans which were refinanced during Q1 2024 to achieve a more balanced debt maturity structure.

2.1.2Group Cash Flows

HUF millions	1-3 months 2023	1-3 months 2024	Change
Net cash generated from operating activities	32,314	42,094	9,780
Net cash used in investing activities	(41,243)	(18,090)	23,153
Less: (Payments for) / Proceeds from other financial assets	6,512	(15,684)	(22,196)
Investing cash flow excluding Payments for / Proceeds
from other financial assets - net	(34,731)	(33,774)	957
Repayment of lease and other financial liabilities	(8,308)	(9,224)	(916)
Free cash flow	(10,725)	(904)	9,821
(Payments for) / Proceeds from other financial assets - net	(6,512)	15,684	22,196
Proceeds from / (Repayment of) loans and other borrowings - net	13,752	(21,657)	(35,409)
Dividends paid to Owners of the parent and Non-controlling interests	(1)	(1)	-
Treasury share purchase	-	-	-
Exchange differences on cash and cash equivalents	(305)	266	571
Change in cash and cash equivalents	(3,791)	(6,612)	(2,821)

Free cash flow (FCF) amounted to HUF 0.9 billion cash outflow in Q1 2024 (Q1 2023: HUF 10.7 billion cash outflow) mainly due to the reasons described below.

Operating cash flow

Net cash generated from operating activities significantly improved to a cash inflow of HUF 42.1 billion in Q1 2024, compared to cash inflow of HUF 32.3 billion in Q1 2023, attributable to the reasons outlined as follows:

• HUF 26.6 billion positive impact due to higher EBITDA in Q1 2024.
• HUF 6.2 billion negative change in active working capital, mainly as a result of:
• • different project seasonality led to unfavorable changes in SI/IT inventory (negative impact: ca. 0.9 billion) and SI/IT trade
    receivables balances (negative impact: ca. HUF 3.0 billion) in Q1 2024 compared to Q1 2023 in Hungary,

7

• • unfavorable change in the balance of telecommunication customer related trade receivables in Hungary (negative impact: ca. HUF 4.5 billion) mainly driven by higher third-party export sales in Q1 2024, and the impact of the inflation-based fee adjustment, implemented in March 2024, was partially offset by more favorable timing of customer payments,
  • unfavorable change in the trade receivables balances in North Macedonia (negative impact: ca. HUF 3.4 billion) mainly caused by different SI/IT project seasonality boosted by the significant effect of the weakening of the HUF vs MKD in Q1 2024 compared to the strengthen of the HUF vs MKD in Q1 2023,
  • favorable change in handset inventory balances in Q1 2024 compared to Q1 2023 (positive impact: ca. HUF 7.2 billion) mainly due to different within-year procurement dynamics.
• HUF 8.3 billion negative change in passive working capital, primarily driven by:
• • higher decrease in handset supplier balances (negative impact: ca. HUF 12.7 billion) in line with lower inventories and higher outpayments,
  • higher payments of SI/IT services in Q1 2024 compared Q1 2023 (negative impact: ca. HUF 2.4 billion) due to different project seasonality,
  • favorable changes in contract liabilities aggregate balances in Q1 2024 compared to Q1 2023 (positive impact: ca. HUF 3.8 billion) mainly driven by deferred net revenue,
  • favorable change of liabilities to employees (positive impact: ca. HUF 2.7 billion) driven by the absence of one-off compensation paid in Q1 2023.
• HUF 0.6 billion negative change in interest and other financial charges paid in Q1 2024 compared to Q1 2023, mainly reflecting the different timing in interest payment related to the loan portfolio.
• HUF 0.9 billion positive change in interest received in Q1 2024 compared to Q1 2023 due to changing market environment.
• HUF 2.1 billion negative change in other non-cashitems, mainly due to more significant foreign exchange rate movements leading to FX losses in Q1 2024 versus gains in Q1 2023.
  Investing cash flow excluding payments for / proceeds from other financial assets - net

Net cash used in investing activities amounted to HUF 33.8 billion in Q1 2024, compared to HUF 34.7 billion in Q1 2023, with the lower cash outflow driven mainly by the following:

• HUF 1.0 billion positive change in payments for PPE and intangible assets mainly driven by the following:
• • HUF 3.7 billion positive change mainly driven by lower level of CPE procurement dynamics in Hungary and seasonally decrease in TV content capitalization in North Macedonia,
  • HUF 2.7 billion negative change reflecting to higher outpayments to Capex creditors due to different seasonality.

Repayment of lease and other financial liabilities

Repayment of lease and other financial liabilities deteriorated to HUF 9.2 billion in Q1 2024 from HUF 8.3 billion in Q1 2023, primarily driven by HUF 1.5 billion higher outflow related to trade payables with extended payment term in Q1 2024, partially offset by HUF 0.8 billion lower lease payment in Q1 2024.

Cash and cash equivalents deteriorated by HUF 2.8 billion in Q1 2024 compared to Q1 2023. Besides the changes in FCF the improvement is attributable to the followings:

• Proceeds from loans and other borrowings improved by HUF 42.7 billion due to combined effect of the higher drawdown of DT Group loans and the decrease of proceeds from inhouse DT Group funds in Q1 2024 compared to Q1 2023.
• Repayments of loans and other borrowings deteriorated by HUF 78.1 billion due to the combined effect of the increase of repayments of DT Group loans and decrease of repayments of inhouse DT Group funds in Q1 2024 compared to Q1 2023.
• Exchange differences on cash and cash equivalents improved by HUF 0.6 billion due to the MKD/HUF foreign exchange rate movement during Q1 2024.

The financial and operating statistics are available on the following website:

http://www.telekom.hu/about_us/investor_relations/financial

2.1.3 Consolidated Statements of Financial Position

The most significant changes in the balances of the Consolidated Statements of Financial Position from December 31, 2023 to March 31, 2024 (see Appendix 3.8 and 3.9) can be observed in the following lines:

8

• Derivative financial instruments contracted with related parties (current and non-current assets combined)
• Other financial assets (current and non-current combined)
• Other intangible assets
• Financial liabilities to related parties (current and non-current liabilities combined)
• Trade payables
• Other liabilities (current and non-current combined)

Derivative financial instruments contracted with related parties (current and non-currentcombined) decreased by HUF 12.3 billion from December 31, 2023 to March 31, 2024 mainly related to accumulated fair value realized earlier on cross-currencyswaps where the underlying loans were repaid in Q1 2024.

Other financial assets (current and non-current combined) increased by HUF 8.4 billion from December 31, 2023 to March 31, 2024 mainly as a result of HUF 6.4 billion increase of in cash pool receivables.

Other intangible assets decreased by HUF 6.2 billion from December 31, 2023 to March 31, 2024, mainly as a result of HUF 4.0 billion change in concessions and licenses.

Financial liabilities to related parties (current and non-current combined) decreased by HUF 11.7 billion from December 31, 2023 to March 31, 2024 due to the combined effect of repayment and re-financing of DT Group loans.

Trade payables decreased by HUF 48.4 billion from December 31, 2023 to March 31, 2024, reflecting a decrease in outstanding balances to handset, SI/IT, Capex and OPEX suppliers.

Other liabilities (current and non-current combined) increased by HUF 7.7 billion from December 31, 2023 to March 31, 2024, reflecting mainly the growth of supplementary telecommunication tax liability.

There has not been any other material change in the items of the Consolidated Statement of Financial Position in the period from December 31, 2023 to March 31, 2024. The less significant changes in balances of the Consolidated Statements of Financial Position are largely explained by the items of the Consolidated Statement of Cash Flows for 2024 and the related explanations provided above in section 2.1.2 Group Cash Flows. The changes in Equity are disclosed in the Equity movement table in section 3.10 Consolidated Statements of Changes in Equity.

2.1.4 Related party transactions

The significant changes in the volume of related party transactions have been disclosed in sections 2.1.2 Group Cash Flows and 2.1.3 Consolidated Statement of Financial Position. There have not been any other significant changes in related party transactions since the most recent annual financial report.

2.1.5 Contingencies and commitments Contingent assets

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence of uncertain future events not within the control of the Group. These assets are not recognized in the statement of financial position. The Group has no contingencies where the inflow of economic benefits would be probable and material.

Contingent liabilities

No provision has been recognized for these cases as management estimates that it is unlikely that these claims originating from past events would result in any material economic outflows from the Group, or the amount of the obligation cannot be measured with sufficient reliability. Makedonski Telekom has a contingent liability in the amount of MKD 240.0 million (claimed amount) in respect to a court case for damage compensation against Makedonski Telekom for alleged abuse of the dominant position on the market for access to data transfer networks. Based on legal advice and strong legal arguments presented in the court procedure, management believes that it is not probable that the court procedure will result in liability of the claimed size.

Guarantees

Magyar Telekom is also exposed to risks that arise from the possible drawdown of guarantees that in aggregation amounted to a nominal amount of HUF 16.1 billion as at December 31, 2023. The guarantees were issued by banks on behalf of Magyar Telekom as collateral to secure the fulfillment of the Group's certain contractual or tender related obligations.

The Group has been doing its best to deliver on its contractual obligations and expects to continue to do so in the future. Even so disputes may emerge from time to time with our partners and sometimes these can result in the drawdown of the guarantees. These utilizations of the bank guarantees are not related and have no significant effect on the solvency of the Group.

9

Commitments

There has been no material change in the nature and amount of our commitments in 2024.

2.1.6 Material events

For any material event that occurred between the end of the quarter (March 31, 2024) and the date publishing of this quarterly financial report, please see our Investor Relations website:

http://www.telekom.hu/about_us/investor_relations/investor_news

2.2. Segment reports

The Group's segments are reported in a manner consistent with the internal reporting provided to the CODMs, the key management of Magyar Telekom Plc. From 2020 the Chief Executive Officer (CEO) and the other Chief Officers together (Chief Officers) fulfill the chief operating decision maker (CODM) function in the Group. The Chief Officers assess the performance of the Group and make their decisions. Magyar Telekom's operating segments are: MT-Hungary and North Macedonia.

The MT-Hungary segment operates in Hungary, providing mobile and fixed line telecommunications, TV distribution, information communication and system integration services to millions of residential and business customers under the Telekom brand. Residential, Small and Medium sized business as well as business customers (corporate and public sector customers) are now served by the unified Telekom brand. The MT-Hungary segment is also responsible for the wholesale of mobile and fixed line services within Hungary, and performs strategic and cross-divisional management, as well as support functions on behalf of the Group, including Procurement, Treasury, Real Estate, Accounting, Tax, Legal and Internal Audit. This segment is also responsible for the Group's points of presence in Bulgaria and Romania, where it primarily provides wholesale services to local companies and operators.

The North Macedonia segment is responsible for the Group's full-scale mobile and fixed line telecommunications operations in North Macedonia.

The following tables present financial information related to these reportable segments. Such information is regularly provided to the Company's Management and reconciled with the corresponding Group numbers. This information includes several key indicators of profitability that are considered for the purposes of assessing performance and allocating resources. It is the Management's belief that Revenue, EBITDA, EBITDA AL and Capex, Capex AL are the most appropriate indicators for monitoring each segment's performance and are most consistent with how the Group's results are reported in the statutory financial statements.

10