Budapest Business Journal 2720

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 20

NOVEMBER 4 – NOVEMBER 14, 2019

SPECIAL REPORT Telecoms

SPECIAL REPORT

Fifth-generation Service Arrives in Hungary Vodafone Hungary has officially launched the first 5G service in the country, despite the fact that 5G auctions are still ongoing, using the 3600 MHz frequency it won back in 2016. 13 SPECIAL REPORT

Hungary Plans to Take the Lead in 5G Worldwide As the world readied for the introduction of 5G technology, Hungary decided not just to await events, but to stake a claim in spearheading introduction of the technology in order to reap its benefits.  18

SOCIALITE

Time to Upgrade the Business Model

Tokaj Wineries Happy With This Year’s Vintage Although Tokaj’s terroir has been progressively turned to making dry wine with increasingly impressive results, the botrytized sweet stuff that is Tokaji Aszú still remains the icing on the Tokaj cake. The 2019 vintage appears to be on its way to becoming a stellar vintage for the region as a whole.  23

NEWS

Labor Market Shows no Sign of Slowdown According to the government, the latest unemployment figures do not suggest that the Hungarian economy is about to slow down anytime soon; however, Moody’s did not give an upgrade to the sovereign debt rate of Hungary in its latest scheduled review. 3

NE BUSI

SS

Some of the most influential business leaders in Hungary have been told to realign their business models, minimizing negative effects and keeping the positives for society as high as possible. The more positive the impact, the higher the entrepreneurial return, René Schmidpeter told the Business Councill for Sustainable Development BUSINESS in Hungary.6

Business Meets Government: A Direct Link The fifth AmCham Business Meets Government Summit was held at the Budapest Marriott Hotel recently. The Budapest Business Journal went along to see how lines of communication are maintained.  8

News

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Budapest Business Journal | November 4 – November 14, 2019

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester

Eddy, Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14, Building A, 8th floor. Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

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BBJ-PARTNERS

Back in September 2004, I was driving on a motorway through the Hungarian countryside when I came up behind a police convoy escorting a vehicle with diplomatic plates. I knew it must be a “high value principal”, as they say, from the way the half a dozen or so police escort vehicles kept swapping position. They did not look like they would appreciate the idea of me overtaking, so I dropped my speed to match theirs and simply held station.

Quite soon after, another car came up at pace behind me and did try to pass the convoy. One of the police cars simply moved further out into the fast lane, blocking the way, and the driver backed off and left at the next junction. A little while later, the police convoy pulled off and, to my surprise, the driver of the last car waved his thanks to me.

It was only when I got to my destination I realized the convoy must have been that of German Chancellor Gerhard Schröder, who was making a two-day visit to the country meeting, among others the German-Hungarian Chamber of Industry and Commerce (then led by Elek Straub, CEO of what was then still called Matáv, rather than Magyar Telekom), the outgoing Socialist-backed Prime Minister Péter Medgyessy, who announced his resignation earlier that August (following a government coalition crisis prompted in part by the revelation of his past as a spy for the Hungarian secret services), as well as his nominated Socialist successor, Ferenc Gyurcsány. Those name makes it all seem a very long time ago.

But what struck me was how discreet this was; a small convoy moving through Hungary with little fanfare. I am writing this on Wednesday afternoon (October 30), just ahead of our print deadline. On my way in along the M3 motorway this morning, I passed a massive police convoy heading in the opposite direction, presumably taking the welcoming committee out to Budapest Ferenc Liszt International Airport to greet President Vladimir Putin. The convoy was huge, the biggest I have yet seen in Hungary, though given that I also had to concentrate on driving, I soon lost count.

Since the M0 to the M3 were linked up, by far the quickest route into Budapest from the airport is along that northeastern corridor.

You can always tell when a foreign dignitary is visiting; from where the two motorways meet (midway between Fót and Rákospalota) all the way into Budapest, every junction has at least one police vehicle, every bridge is patrolled by at least two policemen on foot. Official visits consume a small fortune in policing costs alone nowadays.

Hungary and Russia have a complex relationship, marked by (depending on whose language you find more appropriate) liberation, occupation, revolution and repression. But Hungary lacks the size of Poland, say, which has a shared history, and has to be mindful of its large eastern neighbor.

Russian Minister of Health Veronika Skvortsova said recently that Moscow considers Hungary an important partner in Central Europe, and noted that annual bilateral trade between the two countries had risen by 30% in the past two years to USD 7 billion, according to nepszava.hu.

Hungary would certainly like to do more business, but is being frustrated in that aim. At the recent Inspiring Hungary conference organized by the Hungarian Investment Promotion Agency, Minister of Foreign Affairs and Trade Péter Szijjártó complained of EU hypocrisy that had seen trade between the Visegrád Four states and Russia held back by sanctions introduced following Russia’s actions in Ukraine, while he said France and Germany had actually increased their share.

Diplomatic sources say there isn’t actually much to discuss on this visit, one describing it more as an exercise in checking in with one another. Clearly, Russia matters to Hungary. Given its place in Central Europe, the EU and NATO, Hungary holds more strategic significance for Russia than its size might otherwise indicate.

Robin Marshall Editor-in-chief

Photo: MTI/Tamás Sóki

Photo: Fortepan.hu

VISIT US ONLINE: WWW.BBJ.HU

VLADIMIR PUTIN CHECKS-IN WITH VIKTOR ORBÁN

THEN & NOW

Right, the tyres of a car are changed in a garage in Pécs, in preparation for the coming winter season. The black and white picture at left from the Fortepan.hu public archive shows a family attempting the same maintenance work in 1935 in an unidentified area of Hungary. Evidently it could be mucky work for the uninitiated.

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Budapest Business Journal | November 4 – November 14, 2019

News///macroscope

Labor Market Shows no Sign of Economic Slowdown

According to the government, the latest unemployment figures do not suggest that the Hungarian economy is about to slow down anytime soon; however, some international institutions are still not convinced about the sustainability of the current growth rate: Moody’s did not give an upgrade to the sovereign debt rate of Hungary in its latest scheduled review.

Development of the Unemployment Rate in Hungary (September 2016-September 2019) Number of Employed and Unemployed (July-September 2019) Number of Employed

4.521 million

Hungary’s three-month rolling average jobless rate was 3.5% in July-September, up slightly from 3.4% in the preceding threemonth period, but still down from 3.8% in the corresponding months in 2018, the Central Statistical Office (KSH) said.

The indicators for women improved significantly, while unemployment practically stagnated among men. The jobless rate in the 15-24 age group stood at 11.4%, up 0.7 of a percentage point yearon-year, with this age group accounting for almost one-quarter of the total.

The unemployment rate in the 25–54 age group, i.e. people belonging to the “best working age”, decreased

by

0.4

of a percentage point to 3%, while the jobless rate among people aged 55–74 decreased by 0.5 of a percentage point to 2.2%.

As for a regional breakdown, the unemployment rate stagnated or decreased slightly in most regions of Hungary, with the largest change occurring in Budapest, where the rate declined by 1.4 pp to 2.1%.

The average number of employed people was 4,521,000 in July–September, some

162,500

The number of people in employment has set another record, with 4. 521 million people now working in Hungary, while the rate of employment has increased to its highest ever level of 70.3%, he added.

In spite of the optimistic analysts’ opinion, and with several international institutions having raised their growth projections for the Hungarian economy, it seems that all this had not convinced one of the larger international rating agencies.

Moody’s Investors Services’ last review for this year was scheduled for October 28, but the agency decided to leave Hungary’s sovereign rating unchanged at “Baaa3” with stable outlook. Moody’s also left the rate unchanged at its earlier review in May. The last time the agency did update Hungary’s rating was in

November

2016,

when it was changed from “Ba1” to the current level, lifting Hungary above the investment grade threshold.

Other rating agencies seem to have more trust in the Hungarian economy though: at the beginning of the year, both S&P and Fitch decided to upgrade Hungary to “BBB” with a stable outlook.

Numbers to Watch in the Coming Weeks Source: KSH / MTVA Sajtóadatbank / MTI

34,200, or 0.8%, more than a year earlier.

The increase in the domestic primary labor market was 49,200 (up 1.2%), while the number of those working abroad rose by 13,800 (up 13.1%). The number of people declaring work in public employment schemes decreased by 28,700 (down 21%).

No Slowdown ZSÓFIA CZIFRA

Number of Unemployed

Another Record

There are no signs of an economic slowdown on the labor market, analysts said in reacting to the fresh data. While in other areas, such as on the construction market or in the retail sector, some early signs of such slowdown might be detected, it will only become clear further in the future whether the slowing economies of Western Europe will have an effect on the Hungarian employment market, they claim.

According to Péter Virovácz, head analyst with ING Bank, while surveys show that companies might cut back on employment later, that is not indicated in the latest figures. As for the rest of the year, he thinks that the unemployment rate is unlikely to fall further, and it will most probably stagnate in 2020 as well.

Takarékbank head analyst András Horváth said that further expansion of the labor market is halted by the stretched employment rate; the latter, according to him, could be improved by about 4 pp compared to the main rivals in the European Union.

Erste Bank analyst Orsolya Nyeste said that latest data shows that the Hungarian economy is still in a state of full employment. According to her, the main question in the coming months is whether the possible negative effects of the slowing Western European

economies will lead to a deterioration in the tight Hungarian labor market.

The Hungarian government also emphasized that no worrying signs can be read from the latest labor market data.

“The number of people in employment has increased by

more than

811,000

since 2010, of which the increase within the private sector exceeded 700,000 people; this has contributed significantly to fact that the Hungarian economy is performing outstandingly even at European level,” Minister of Finance Mihály Varga commented on the latest figures.

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The beginning of November will see two interesting macro figures: first, on November 6, we will find out how the retail sector performed in September.

Two days later, on November 8, the Central Statistical Office (KSH) will shed light on the September performance of the Hungarian industry; the latter figure showed a slight slowdown at the end of the summer. Also on November 8, consumer prices for October will be published. In mid-November, we will discover whether the weaker construction sector was able to come back to life in the first month of the fall.

Even more interesting is how the economy performed in the third quarter: a flash estimate will be released by KSH on November 14.

4|1

News

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Budapest Business Journal | November 4 – November 14, 2019

News///in brief Polt to Remain Chief Prosecutor for Another Term Chief Prosecutor of Hungary Péter Polt has been nominated for another nine-year term by the President János

Áder, according to a report by news wire Bloomberg. The report notes that Polt has been criticized by corruption watchdog Transparency International for not pursuing cases related to the government and businesses with

close ties to Prime Minister Orbán and governing party Fidesz. Polt has dismissed the criticism, saying that he works independently. The appointment is expected to be a formality as the government has the two-thirds parliamentary majority needed for approval.

Third of 7th Graders Keen on Getting Degree About 35% of Hungarian seventhgraders plan on earning a higher

Illustration: pexels.com

10 Skate Parks to be Built Across Hungary for HUF 500 mln

Hungary’s central government is covering half of the cost of building 10 skateparks with a combined value of more than HUF 500 million in the capital and other

cities around the country within the framework of the National Skatepark Program.

The government has offered local councils up to HUF 30 mln for the construction of skateparks, provided each council covers half of the cost of the investment and promises to maintain its park for a period of at least five years, Minister of Human Capacities Miklós Kásler announced on October 28. Local councils must also open the skateparks to the public free of charge to take advantage of the funding.

The 10 skateparks will be built in Districts III, X, XVII and XXII of Budapest, and in the cities

of Baja, Debrecen, Győr, Komló, Hajdúböszörmény, and Szeged.

Máriusz Révész, the government’s commissioner for encouraging active lifestyles, stressed that Hungary’s skateboarding association would be involved in the design of the parks in order to ensure they conform to the demands of skateboarders, daily Magyar Nemzet reported. Noting that skateboarding has become an Olympic sport, he said the facilities should be suitable for both Olympic training and competition.

Magyar Nemzet noted that, initially, the councils of settlements with populations of over 20,000 were able to apply for funding.

education degree, according to a survey by the Economy and Business Research Institute (GVI) of the Hungarian Chamber of Commerce and Industry (MKIK). The survey of 9,239 seventhgraders showed 32% want to pass a matriculation examination and learn a profession. Around 88% of the seventh-graders said they had already weighed the question of continuing education. Eight out of 10 spoke about the possibilities with their parents, and two-thirds discussed the issue with their form teachers.

About 71% of the respondents said that remuneration was the most important factor for them when picking a profession.

Industry Accounts for 24.8% of Hungary’s GVA Industry remained the largest economic activity in Hungary in terms of output generated in 2018, according to the EU’s statistical body Eurostat. In Hungary, industry accounted for about 24.8% of the Gross Value Added (GVA), a rate significantly above the EU average of 19.1%. The second most significant activity was wholesale and retail trade, transport, accommodation and food services, accounting for some 19% of GVA. The third-largest activity was public administration, defense, education, human health and social work activities, responsible for approximately 18.6%, Eurostat says.

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Wing to Enter the Polish Market Wing is set to become a majority stakeholder in the Polish investor and developer, Echo Investment and, through it, aims to become what the Hungarian developer describes as a “significant” player in the region.

GARY J. MORRELL

“Wing will enter Echo as a strategic investor to support their long-term growth program. The transaction will become effective upon approval by the Polish competition authority, and make Wing, a Hungarian company, a significant property business also at a regional level,” the company said in a press statement.

Under the sale and purchase agreement, Wing will acquire a 100% stake in Lisala, which in turn owns a

55.96% stake

in Echo Investment, a company listed on the Warsaw Stock Exchange (GTW).

“Following its successes in Hungary, as a long-term, value driven, financially stable strategic investor, Wing set regional expansion as a strategic goal and identified the Polish market as the most attractive target destination,” says Noah Steinberg, Chairman and CEO of the company.

News | 5

at EUR 2.7 billion as of the first half year, according to JLL figures. Around 290,000 sqm of retail space was delivered to the Polish retail market up to September, bringing the total modern retail stock to 14.5 million sqm according to Cushman & Wakefield.

Total office stock in Warsaw stands at 5.5 million sqm with 850,000 sqm under construction. In Krakow, the office stock stands at 1.3 million sqm with 270,00 sqm under construction.

Echo Investment is one of the largest developers in Poland with operations across the residential, retail and office segments. The company is focused on seven major Polish cities: Warsaw, Krakow, Łódź, Wrocław, Katovice, Gdansk and Poznan. To date it has developed almost 1.7 million sqm.

“During the last four years we successfully turned the company from a long-term holder of completed assets to a pure developer in line with the Strategy of Profitable Growth,” comments Nicklas Lindberg, CEO of Echo Investment.

“Echo Investment is well prepared to continue growth of development activity in Poland in residential, office and the urban destination projects. Currently, Echo Investment has almost

90

Liberty by Wing.

“Wing sought to invest in a platform, a profitable operating company with longterm growth potential. Wing and Echo will mutually strengthen each other on multiple levels and lead to further opportunities for development for both companies. With our acquisition of Echo, we will establish [ourselves as] a market-leading regional player in CEE,” he adds From the perspective of development and supply, Poland benefits from the overall size of the country and the fact that it has several large regional cities with

established office, retail and industrial development and investment markets.

Front-runner

Poland remains the clear Central European front-runner with almost 50% of the CEE 2019 investment volume

projects

in the pipeline, with a total estimated usable area of circa 1.3 million sqm. We are convinced that with the support of a new, long-term investor also being a developer, Echo Investment will continue its growth and strengthen its market position,” he adds.

Wing operates across all market segments in Hungary as both an investor and developer. Over the past 20 years, it has developed properties with a total floor space of around one million sqm according to Wing. The company started its international expansion in 2018 by purchasing two office buildings in Sofia.

ExxonMobil Signs for 27,000 sqm at GTC Pillar In what is described by developer GTC as the largest deal in an office building that is under construction in Budapest to date, ExxonMobil has signed a 27,000 sqm prelease for the whole of the Pillar office center, located close to the Váci út corridor in District XIII. GARY J. MORRELL

ExxonMobil, as the sole tenant for the building, was involved in both the design and construction phases of the LEED “Gold” accredited project, designed by Budapestbased ZDA-Zoboki Design Architects’ Studio.

Regular consultations between the parties ensures that Pillar is tailored to the tenant’s needs, ranging from environmentally conscious green solutions through electric vehicle charging facilities, restaurants according to Bori Gedai, deputy country manager of GTC Hungary.

“After having celebrated our 15th anniversary earlier in 2019, we have

now signed the lease agreement for a great new office building, which will enable ongoing growth and confirms ExxonMobil’s long-term commitment to Hungary,” comments Romke Noordhuis, managing director of ExxonMobil Global Business Center Hungary.

“With Pillar, we will provide a modern, state-of-the-art work environment for our employees, from where we will be powering ExxonMobil’s global business,” he adds.

stands at about 6.5%, the lowest on record, according to CBRE, which represented ExxonMobil in the Pillar transaction.

“New supply has remained conservative against buoyant demand, which has resulted in the lowest citywide vacancy rate on record,” said the consultancy.

Development activity is accelerating; Cushman & Wakefield has traced around 250,000 sqm of space under construction,

although as much as 60% of space due to be delivered this year is already preleased.

Regional developer GTC completed the 21,500 sqm, LEED “Platinum” certified White House on Váci út last year and the fully let complex was subsequently sold to the German closed-end fund, WarburgHIH RE. GTC is also planning the 37,000 sqm Twist office complex. Pillar is due for delivery in the first quarter of 2022.

Record Low

Total modern office stock in Budapest currently stands at a little more than 3.5 million sqm, and the current vacancy rate

GTC Pillar office complex.

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Budapest Business Journal | November 4 – November 14, 2019

Business

Sustainability and Positivity Trump Profitability: Schmidpeter Creating sustainable values and having a positive impact on society are just as important, if not more so, than profitability, Professor Dr. René Schmidpeter told delegates at a Business Council for Sustainable Development in Hungary business lunch that focused on climate adaptation and water.

ROBIN MARSHALL

“Executives of the world’s largest companies are fundamentally questioning the former ‘corporate value/shareholder value’ business paradigm,” said Schmidpeter, director of the Center for

“Companies have to realign their business models, minimizing any negative effects and keeping the positive effects for society as high as possible.

The more positive the impact, the higher the entrepreneurial return.”

Winners of this year’s BCSDH “For a Sustainable Future” Awards.

Advanced Sustainable Management, and general secretary of the World Institute of Sustainability and Ethics (WISE).

An internationally acknowledged expert on CSR, ethics and sustainability, Schmidpeter is a regular guest professor at Nanjing University of Finance and Economics in China. He is also an associate professor at Murdoch University in Perth, and an honorary professor at Metropolitan University in London.

Much of what he spoke about required applying a different way of thinking about information we already have. He asked his audience what the breaks on a car were for.

When he got the expected responses of for

BCSDH: Sustainable Water Management Recommendations “Given the fact that climate change is one of the biggest global challenges and many of its impacts will occur through water, the development of companies’ water management practices can make a significant contribution to climate adaptation processes. There is no company that does not depend on this natural resource,” said Attila Chikán Jr., president of the BCSDH, introducting the council’s three-point recommendation to the business sector for promoting sustainable water management. These are: 1. Elaborate climate adaptation strategies in which water is

“It is important that CSR is developed from inside-out; this means every economic area has to develop its own understanding and a concept of sustainability which fits to its own cultural background,” he said.

considered a valuable resource and a risk factor of significant relevance; 2. Implement circular water management practices to reduce the water footprint; 3. Create partnerships in the value chain and operational environment to increase water efficiency and water renewal.

More than 80 CEOs, civil and scientific experts took part in the preparation and wording of the recommendation, Chikán said, looking for solutions for both the business sector and its stakeholders that can positively impact sustainable water management.

safety and slowing down, he suggested they were actually there to help the car go faster overall, and quoted Ferdinand Porsche as saying “Our cars must have the best brakes.”

He said it was now well accepted that sustainable companies could see a financial return on investment, but argued there was still a need for a mental shift.

“Given the current global social and economic challenges, we need to think about the future as consistently as we did after World War II,” he challenged his influential audience. The BCSDH has 90 member companies that contribute approximately 30% of Hungary’s GDP “Companies have to realign their business models, minimizing any negative effects and keeping the positive effects for society as high as possible.

The more positive the impact, the higher the entrepreneurial return. More and more top executives are realizing that these far-reaching environmental and social changes are leading to unpredictable risks but, at the same time, are also creating unforeseen business opportunities.”

For once, though, the Old Continent seems ahead of the pack. “Europe could be a global leader in this field,” Schmidpeter said, and claimed that American leaders are coming to Europe to learn how to create an “eco-social” market economy.

CSR was largely bought to Hungary by the multinationals operating here importing their own best practice.

The Budapest Business Journal asked the professor if this poses problems with cementing the idea of CSR in a local society?.

“Of course, large corporations are important for international economic developments, but at the same time local small- and medium-sized enterprises play a key role when it comes to national economic transformations. It is important that large enterprises and SMEs cooperate and develop sustainable value chains and innovative products and services together.

CEOs and decision makers are playing an important role to change the current paradigm of management. It is all about thinking beyond mere profit maximization by fostering purpose of business as well as driving positive impact on our societies,” Schmidpeter added.

Sustainable Future Prize For the third year the “For a Sustainable Future” prizes were also awarded at the BCSDH business lunch.

“The goal of the prize is to set an example, and moreover, to promote and increase the contribution of business to meeting the [U.N.’s] Sustainable Development Goals,” Irén Márta, managing director of BCSDH and member of the awards jury, explained.

Change Leader Award: László Ilics (Generali Insurance Co.) Leading Women Award: Nóra Horváth-Magyary (K&H Bank); Krisztina Petrényiné Szabó (MOL Group); and Hajnalka Széll (Auchan Hungary).

Best Business Solution prize-winners: Future FM, for implementing a sustainable water management program operated in cooperation with building stakeholders; and Heineken for its “Hoping for a better future project”, a program that promotes domestic, locally sourced production of hops and boosts employment in rural areas.

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Budapest Business Journal | November 4 – November 14, 2019

PROMOTIONAL FEATURE

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Business | 7

The end of year season is just around the corner and for SBGK Attorneys at Law and Patent Attorneys it means not just evaluating the calendar year 2019, but also SBGK’s 50th anniversary year, which is coming to its end. The history of SBGK goes back to 1969, when three patent attorneys and two attorneys at law decided to establish the legal predecessor of SBGK. Five decades later, this year they were in an exceptional position to be one of the first private legal service providers in Hungary to celebrate its 50th anniversary.

This extraordinary situation brought SBGK not only the opportunity to celebrate, but also countless work. More self-organized events, public appearances, lectures, publications and articles were produced than ever before. In addition, SBGK was proud sponsor of the most significant events in the IP industry: the International Trademark Association’s (INTA) conference in Boston and the International Association for the Protection of Intellectual Property’s (AIPPI) conference in London. The Rubik’s Cube present, bearing SBGK’s official logo, symbolized not only the greatness of a Hungarian invention but also the long-standing relationship between Ernő Rubik and the firm.

Just as in the previous decades SBGK is at the forefront in legal and regulatory developments, so this year, the law firm started to organize a business seminar series for clients, partners and the press, mostly in the field of IP. In April, as one of the professional partners of Startup Safari

Photos by vegeldaniel.com

Dedication to legal profession for half of a century

Budapest and an enthusiastic supporter of R&D activity in Hungary and beyond, SBGK hosted two breakfasts: speakers discussed some aspects of intellectual property protection and the relationship between industry 4.0 and inventors. In May, lawyers from SBGK summarized the modification of the data protection legislation in Hungary, the related developments since GDPR came into force, and the latest case law from the National Authority for Data Protection and Freedom of Information (NAIH). In September innovation activity and the constantly changing legal environment was in the focus, with guests coming from mainly the higher education sector. In October, during a round-table discussion that formed part of Design Week 2019, panelists from the design industry were talking about the everyday pitfalls for designers.

One of the hottest summer days provided the opportunity for SBGK staff to be together. During SBGK’s Family Day, colleagues not only got to know each other and their relatives better, but also had the opportunity to greet employees who works for the office for decades.

One of the keys of SBGK’s success is that many colleagues have strengthened the team for years, and some of them

spend there their whole professional career. Their knowledge, expertise and helpfulness are essential. Team spirit is also important on the football field, so it should not be a surprise that the SBGK team won the Football Lawyer Cup 2019.

SBGK also hosted a glass art exhibition from September 10-24, 2019. SBGK has been able to showcase the outstanding works of a branch of industrial and fine arts, created by artists Zsuzsanna Kóródi, Dóra Varga, Péter Botos, György Gáspár, László Lukácsi and Balázs Sipos. The opening ceremony of the exhibition was honored by the presence of more than 30 clients and was opened by the former president of the Hungarian Intellectual Property Office (HIPO). As dedicated supporters of the arts, SBGK is pleased to have had the opportunity to host this exhibition.

Not only most of the staff, but also a significant number of their clients have been loyal to the office for decades.

Of course, the firm is also pleased to welcome those who have hired SBGK in the recent past. On October 4, SBGK welcomed them all at the Hungarian Heritage House. More than 200 guests were present at the anniversary gala, where pianist Mihály Boros and

clarinetist Dániel Ali Lugosi, from Virtuózok, ballet dancers Alexandra Likovics and Csaba Faragó, and the Attila Juhász Jazz Quartet provided high quality entertainment.

During the event, President János Bánáti presented the “De Justitia Bene Meritis” medal to SBGK on behalf of the Hungarian Bar Association. As the president stated in his speech, the bar association’s board had awarded the firm for its five decades of exemplary, high-quality professional service, including first-rate legal assistance, legal education, scientific research, publication and high-profile public professional activities.

But this was not the only award this year for the firm. The Jedlik Ányos Prize was founded by what was then the Ministry of Industry and Trade in 1996 and is given every year to five individuals based on the recommendations of HIPO, as well as by external organizations. This year one of the honored individuals was SBGK partner Dr. Gabriella Sasvári for her highly successful and quality work in IP rights protection. SBGK also maintained its top position in every ranking: Chambers & Partners, Legal500, IAM Patent 1000, WTR 1000, IP STARS ranked the office in the first category, acknowledging its performance in intellectual property.

Katalin Szamosi, as one of the most prominent representatives of the Hungarian legal community, is ranked as a leading individual, together with her colleagues, patent attorneys Zsolt Szentpéteri and Katalin Dónusz Mészárosné and attorneys-at-law Dr. Péter Lukácsi and Dr. Gabriella Sasvári.

With its 40 lawyers, patent attorneys and counsel, SBGK will continue providing efficient legal solutions, creative management suggestions and innovative advice to the greatest satisfaction of its clients. That is why it strives to get to know its clients as thoroughly as possible, why its experts educate themselves every day, and why they strive to be at the forefront of the ever-growing competition among legal offices. The support from clients and partners provides not just an on-going confirmation of satisfaction, but it also strengthens SBGK, even in the middle of problematic situations.

Even though SBGK’s anniversary year is coming to an end, the firm is sure that the future will bring many new opportunities.

As President of SBGK Katalin Szamosi said, “The last five decades have been about building solid foundations. If we complement this structure with the right answers to the challenges of the 21st century, technological innovations and openness towards the next generation, this office will drive the legal market for another half a century.”

sbgk.hu/en

8|2

Business

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Business Meets Government: A Direct Communication Link The fifth AmCham Business Meets Government Summit was held at the Budapest Marriott Hotel on October 16. The Budapest Business Journal went along to see how lines of communication are maintained.

State Incentives

From left to right: Ferenc Pongrácz (Tungsram), Zoltán Marczinkó (Ministry of Finance), Sándor Baja (Randstad) , Magdolna Csath (National Competitiveness Council), Zoltán Maruzsa (Ministry for Human Capacities), Zoltán Szabó (BT). Photo by Lázár Todoroff direct the connection, the more rapidly the market can adapt to new challenges. Simply put, this is the idea behind the annual Business Meets Government Summit.

The American Chamber of Commerce in Hungary, together with the Hungarian Investment Promotion Agency (HIPA) launched the Business Meets Government Summit in 2015.

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long head-to-head discussion with U.S. President Donald Trump.

Answering a question, the state secretary elaborated on the energy independence of the country, noting that the gas supply is “a big concern” for the Hungarian government.

“The solution is coming, but is not easy, because this region is a pretty tricky region,” he said. Hungary could have imported gas from Romania, Croatia and Serbia, but “it is never easy to deal with these countries,” Kumin explained.

At the time of speaking, for example, Romania does not have a government, he pointed out. Hungary has done its homework and now the Romanian government and ExxonMobil must come up with a solution to start extracting and exporting gas from the Black Sea, Kumin concluded.

2019. 10. 10. 12:59:54

In his opening speech of the 2019 edition, AmCham’s second vice president, Kevin A. Murray described the event as a mutual effort “to spark a meaningful dialogue with the government with our common goal of making Hungary more competitive and a better place to invest and reinvest.”

A dialogue needs to be fueled by facts and AmCham had recently launched several initiatives aimed at creating value, Murray said.

One is the launch of the Career Orientation Program to support secondary schools and corporate volunteers by building a platform where they can easily organize career orientation visits all over the country, a development of the chamber’s earlier Career Ambassador program.

AmCham is also behind the new business sector project, BSS Hungary, a unique industry collaboration to promote the importance of – and career paths and opportunities in – of one of the most advanced and dynamically developing sectors, Murray said.

U.S. Relations

U.S. investments in Hungary are doing just fine, while other areas of cooperation have had their ups and downs, Ferenc Kumin, Deputy State Secretary for the Development of European and American Relations said. The three pillars of U.S.Hungary cooperation are: investment and trade; defense; and politics.

The first pillar shows excellent figures: there are 1,700 American enterprises in Hungary, responsible for creating 105,000 jobs, with the United States the second most important trade partner after the European Union.

In terms of Defense, the two countries earlier this year signed the Defense Cooperation Agreement (DCA), a significant step forward in the bilateral cooperation.

The third pillar had previously seen “some challenges” , as Kumin noted, but with the Trump administration, relations are gradually getting better. A cornerstone in the political cooperation was the official visit of the Hungarian Prime Minister to Washington DC in May this year, and a

Róbert Ésik, CEO of HIPA, presented the main elements that the Hungarian administration is focusing on in order to maintain its high GDP growth rate.

First, further lowering the social contribution tax on wages. This is a good example for predictability, as Hungary planned this measure for a period of six years, and now, halfway through it, the implementation is on the right course.

Another element is related to topping up the corporate income tax, an area previously addressed by AmCham. The elimination of the top up is an advantage to all businesses in Hungary, Ésik noted.

He also highlighted a new incentive, launched on October 1, where simple job creation is no longer a precondition for eligibility for government-funded VIP cash subsidies for asset-based investments.

The government has decided to expand the geographical areas under preferential conditions for cash subsidies. With Baranya County newly included, there are currently five counties under the preferential regime, where the threshold is EUR 5 million for eligibility in the case of an asset-based investment. This new asset-based investment approach will focus on technology and increasing productivity, Ésik indicated.

Following the keynote addresses, a panel discussion focused on the Hungarian labor market issues. An interactive discussion between the panelists and participants at the summit revealed some of the answers as to why is it so difficult to find candidates for jobs. The lack of a professional background, high salary expectations and the brain drain were the main reasons revealed.

As for solutions, there is a strong need to encourage mobility, with the construction of worker dormitories, panelists agreed. A recent development is that Hungarians working abroad are becoming more and more open to returning home, and this is an element that the government should put more emphasis on.

As for “importing” labor from neighboring non-EU countries, this can be a solution, but not to all problems. They will never become teachers in Hungarian schools, for example, and raising the level of Hungarian education is crucial for preparing the labor force of tomorrow.

A quick survey conducted within the audience revealed some of the shortcomings in active Hungarian employees: low levels of language, problem solving and digital skills. Those are exactly the skills that can be improved with a better education system, panelists agreed.

2

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Corporate Debt in Central Europe Non-financial corporations can typically use two types of debt funding – bank loans and debt securities (e.g. bonds). Choosing one of them, or the right mix, depends on a company’s maturity, the industry and its cyclicality, interest rates, and other factors, Les Nemethy and Sergey Glekov argue in their latest column.

By way of example, during the financial crisis of 2008-09, nonfinancial corporations in the eurozone reacted to tightening bank lending conditions by shifting their debt composition from bank loans towards debt securities.

At the same time, the cost of market debt rose together with and exceeded the cost of bank debt, as pointed out

by Fiorella De Fiore and Harald Uhlig in “Corporate Debt Structure and the Financial Crisis”.

The corporate debt ratio in the euro area increased considerably over the

The Corporate Finance Column

Composition of Corporate Debt at end of Q2 2019 Czech Republic

Hungary

Slovakia

Euro area

10%

the cost of borrowing for non-financial corporations lower and forming more attractive funding options.

In Hungary, debt financing is especially focused on the banking sector. Over time, it may be expected that Hungary will tend to converge towards European trends, with more financing to come from the corporate bond market.

Liquidity Injection

Poland

0%

Business | 9

20%

Dept securities

30% Loans

40%

50%

60%

70%

80%

Pension schemes liabilities

90%

100%

Trade credits*

almost

* Trade credits refer to trade credits (e.g. goods purchased on account) and advances of non-financial corporations, all maturities Source: European Central Bank.

last 15 years, rising to 109% of the euro area’s gross domestic product by Q2 2019, but down from a

peak of

115%

in the first quarter of 2015.

Total indebtedness of non-financial companies in the less developed countries of the EU is considerably lower: the corporate debt ratio in the Visegrád countries (the Czech Republic, Hungary, Poland and Slovakia) varies between 44% to 66% as of Q2 2019.

Although the composition of corporate debt varies among countries, bank loans are by far the more widely used instrument.

On average, 68% of total euro area corporate debt consists of bank loans.

Loans Dominate

In the Visegrád Four countries, loans dominate the composition of corporate debt to an even greater degree: debt securities (corporate bonds) have a relatively low share (9%) in the debt structure within the euro area (with an exclusion of France). In the Visegrád Four countries, the share of debt securities

In order to increase the liquidity of the corporate bond market, the National Bank of Hungary (Magyar Nemzeti Bank, or MNB for short) launched its Bond Funding for Growth Scheme (BGS) on July 1.

The MNB has committed a facility of HUF 300 billion (approximately EUR 90 million) whereby the central bank will purchase bonds with at least “B+” ratings issued by domestic non-financial corporations as well as securities backed by corporate loans.

On October 24, alternative energy company Alteo, to quote just one example, raised

is even below 9% of total corporate debt.

Indeed, in Hungary, debt securities account for

only

1%

of total corporate debt, the second lowest in the EU, ranking only slightly higher than Romania. One can only speculate that this might be due to a highly developed banking sector, and perhaps a dearth of potential Hungarian issuers.

There is a positive correlation between economic development and levels of outstanding bonds of nonfinancial corporations, as a percentage of GDP; in the more developed countries of the European Union, not only the total indebtedness of the companies, but also the volume of their funds raised on the bond market substantially exceeds that observed in the less developed countries.

A robust corporate bond market can act as a source of stability, especially in periods of financial instability, when the freezing up of bank credit is common.

Moreover, the corporate bond market can create competition for bank loans, pushing

HUF 9 billion

from the sale of corporate bonds issued under this program, according to portfolio. hu in its article “Közel 9 milliárd forintos kötvénykibocsátás az Alteonál” (“Alteo issues bonds of nearly HUF 9 bln”).

Bank interest rates for loans to corporations with an original maturity of more than two years are lowest in Hungary and Slovakia. The latter is the only member of the V4 that is also simultaneously a member of the eurozone.

Slovakian interest rates have been consistently lower than those of other Visegrád countries. This may be attributed to Slovakia belonging to the eurozone: a serious competitive advantage for Slovak corporations.

It goes to show that Hungary, Poland and the Czech Republic joining the eurozone could also serve to increase the competitiveness of corporations in those countries.

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.

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10 | 2

Business

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Booking Artists Online, Without the Administrative Burden

S TA R T U P S P O T L I G H T

BBJ: How many people make up your team?

ZT: Right now, 10 people are working on the project, which is evolving constantly.

Among them we have developers, project managers, creative and PR professionals, administrators.

The Budapest Business Journal talks with Koncertbooking.com CEO Zoltán Tabár about the concept behind his project, launched in October, which allows concert organizers to book a performer directly online for a selected place and time, cutting out the middleman in the process.

BENCE GAÁL

BBJ: How did the core idea for Koncertbooking come about?

Zoltán Tabár: Ever since dial-up internet appeared, I have been nurturing the idea of simplifying our work with the help of information technology and have been thinking of which aspects of the job can be automatized. By the end of 2018, I had realized, that through various applications, by assisting me in tasks such as navigation, bookkeeping, mailing, my smartphone has become a significant part of organizing my daily chores. With a phone in our pocket, we can sort out almost everything. I’ve learned from my experiences that a good idea by itself is not enough to guarantee success; a business must get started at the ADVERTISEMENT

right place and at the right time and needs a professional approach. At the beginning of 2019, I felt that the market was ready for change, so we have started to materialize it. The changes in the travel industry have shown us in the past few years what exactly the user is expecting from booking agencies.

As one of the leading agencies of the field, we came to the decision of taking the risk and putting our 30 years of knowledge and experience into this program.

BBJ: What does Koncertbooking have to offer to rise above its competitors?

ZT: Currently, our competitors are trying to stay on top by employing extra workforce and by contracting acts and artists on an exclusive status. At the same time, clearly, the majority of artists prefer to be independent, as most agencies are unable

Zoltán Tabár to represent them fully. The technical development of the past decade has ruined the traditional structure of label companies, it has wiped away physical publishing and as digital sales are not profitable either, artists need to give a share from booking incomes.

Essentially, it means deductions from all incomes of a performance, due to royalties to be paid towards their management. Also, contractors like to book direct and to receive first-hand information. Koncertbooking.com offers to simplify this process, by helping the artist and management gain profit, also by lifting the weight of administration off their shoulders in exchange for only a small fee.

BBJ: What successes has Koncertbooking achieve so far?

ZT: We have only just started in the middle of October and the numbers of registered artists and agencies have been steeply growing since.

It is clear from the first feedback received that the field has been waiting for a long time for a rejuvenation like this and that it welcomes and supports the development.

Likewise, the users have responded positively and daily use of the site has begun.

BBJ: What are your plans for the future?

ZT: On top of the booking function, the aim is to develop an “E-manager assistant”.

This app allows the artist to efficiently manage everything they have to deal with on a daily basis. The list is long, from renting out rehearsal rooms and finding fellow musicians to getting their songs to radio stations. A so-called “backstage” element is coming soon, where performers will find themselves in a virtual musician’s market. In the following months, we will be adding more modules to the program based on the needs of users.

2

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Budapest Business Journal | November 4 – November 14, 2019

WHO’S NEWS

Do you know someone on the move? /// Send information to news@bbj.hu

In 2014, Ferencz received the “Aranykaptár Díj”, an award celebrating exceptional personal achievement, established by the Hungarian Banking Association to foster the development and operation of the credit institutions sector.

In 2017, in recognition of his activities in the building societies sector, he received the Hungarian Golden Cross of Merit.

Szabó, Kelemen and Partners Attorneys became a collaborating partner of Andersen Legal in Hungary as of January 1 this year.

UPS Announces Change in Regional Head Package delivery firm UPS has announced the appointment of Yannick Mooijman as managing director for Hungary, Greece, Romania and Slovenia (HUGRROSI), taking over from Jim Kearney, who will continue his career at UPS as executive vice president for finance at UPS Emerging Markets.

“Through his wide professional knowledge, Yannick could contribute to Hungarian clients of UPS expanding their cross-border or even intercontinental business connections, which grow faster than the performance of local markets,” said UPS Europe President Lou Rivieccio. “Hungary is a growing, exportoriented economy, famous in Europe and other parts of the world for striving for excellence. Yannick understands the supply chain of our clients, their related needs, and at the helm of his team, he will help us find the best way to grow our export activities.”

Mooijman noted, “UPS sees serious potential in the Hungarian market, and it constantly invests in its local service portfolio, network, and infrastructure.”

Martin Kern Appointed EIT Director The Governing Board of the European Institute of Innovation and Technology has appointed Martin Kern as director of the independent, Budapest-based EU body. It has the stated mission of boosting Europe’s ability to innovate by nurturing entrepreneurial talent and bringing new ideas to market.

“I am delighted by this appointment and honored to have been selected to lead the EIT,” Kern said. “Innovation is defining our future and the EIT has developed a unique model that delivers solutions to pressing global challenges.

Together with the EIT team in Budapest, we will maximize the EIT Community’s impact for our planet, Europe and its citizens,” he added.

“The EIT needs an experienced and motivated director at its helm,” noted Dirk Jan van den Berg, chairman of the EIT Governing Board. “The board has appointed a proven leader who will continue to steer the EIT on a successful path as it prepares for an increased mandate under Horizon Europe, the EU

building this, but at the same time it is a challenge that I am pleased to face.”

The company says it is committed to responsible marketing communications that also take into account the interests of the communities where it operates. As a member of the UNESDA Soft Drink Association, Coca-Cola HBC Hungary made a voluntary commitment in the field of responsible advertising and commercial communication.

Marketing Facility Director at Coca-Cola HBC Hungary Martin Kern framework program for research and innovation for 2021-2027.”

Kern brings extensive EU experience with 20 years at the European Commission (EC) and the EIT. Prior to joining the latter as interim director and COO in 2014, he worked at the EC for 15 years in a variety of posts.

Senior Lawyer Joins Szabó, Kelemen and Partners

Yannick Mooijman

Business | 11

Iván Ferencz, a former senior legal advisor and legal director at FundamentaLakáskassza Zrt., joined Szabó, Kelemen and Partners Attorneys as of counsel.

Ferencz graduated summa cum laude at ELTE’s Faculty of Law in 1995. He also studied at the University of Trier and Munich on scholarship programs.

He started working at Lakáskassza Zrt., the predecessor of Fundamenta, in 1998 as head of legal. In 2002, he was the legal counsel responsible for the transaction that resulted in the takeover of the full portfolio of Otthon Lakástakarékpénztár, and in 2003 he participated in the successful merger of Fundamenta and Lakáskassza.

From 2013, he was the legal and compliance director of the company, which by then was known as FundamentaLakáskassza Zrt. and was one of the

Iván Ferencz largest credit institutions in Hungary based on its portfolio of retail clients.

His main responsibilities included coordinating the complex legal activities of the company and providing legal support for the development and implementation of business strategy.

András Palkó took on the role of CocaCola HBC Hungary’s marketing facility director this summer.

Palkó began his career at British American Tobacco in 2006, before becoming marketing manager at Carlsberg in 2013. A year later he continued at Heineken, gaining experience in management, while contributing to the expansion of the brewer’s brand portfolio.

“Coca-Cola HBC Hungary is extremely dominant in the domestic FMCG world,” he says. “I have long been amazed at the speed and extent to which innovations reach the market, as well as the wide portfolio of products for every consumption opportunity. It is a great honor to work in this system, to study and keep ADVERTISEMENT

András Palkó Accordingly, the company does not advertise on media and surfaces aimed at children under the age of 12 and it does not engage in direct commercial activities in primary schools, selling only mineral water and fruit juices are in school cafeterias.

3

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2018

Special Report Telecoms

Fifth-generation tech and services, Artificial Intelligence, the 5G Coalition, and the Internet of Things: The trends shaping the Hungarian telco market.

Market Talk: Ready for Transformative new Tech

14

Putting Technology at the Benefit and Service of Society

15

Hungary’s Hottest Mobile Telephone Handsets

17

Hungary Plans to Take the Lead in 5G Worldwide

18

3

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Special Report | 13

Fifth-generation Service Arrives in Hungary Fifth-generation cellular network technology is already a reality in about 20 other countries, so it was only a matter of time before Hungary would adopt it too. On October 17, Vodafone officially launched its first 5G service.

GERGELY HERPAI

Just two days before the official announcement and launch party with an official customer party also attended by politicians such as Péter Szijjártó, Minister of Foreign Affairs and Trade, and selected journalists, telecom experts turned on the commercial 5G mobile service of Vodafone Hungary so customers could try the fifthgeneration mobile phone. The service was first noticed by the HWSW IT Newsletter.

Vodafone can now say that it was the first company in Hungary to introduce a 5G mobile service, grabbing a head start on rivals, T-Mobile (Magyar Telekom), Telenor, and Digi.

Vodafone has been able to turn on the 5G service now, despite the fact that National Media and Communications Authority is still handling 5G auctions, because the telecom giant already won the 3600 MHz tender back in 2016.

Earlier this summer Vodafone already switched on some of its base stations.

One is at Zalaegerszeg, near the ZalaZone vehicle test track, allowing Prime Minister Viktor Orbán to try out the remote control driving of a BMW i3 to demonstrate the advanced capabilities of the new 5G technology.

While Orbán was sitting in a remote seat, he could see the picture from the camera fixed on the car, broadcast in HD quality and real-time. He was thus able to drive and steer the car remotely, via the 5G system, without delay.

Vodafone was also able to present its 5G technology at the Internet Hungary event which took place at Siófok on October 1-2. As the main sponsor of the event, Vodafone Hungary opened its 5G truck to the professional public, where they could try out fifth-generation mobile network service.

On October 15, Vodafone, without announcing the launch of the service, posted a 5G service coverage map on its website.

Opening the Door

“Next-generation mobile and fixedline networks are opening the door to opportunities that could revolutionize the way the entire economy works,” Vodafone’s press department told the Budapest Business Journal.

“The potential lies not only in speed but also in embedded network intelligence

Prime Minister Viktor Orbán takes the wheel to remotely drive a BMW i3 test car, courtesy of 5G technology, this summer. Photo courtesy of Vodafone. and the ability to interact with other technologies. Thanks to all this, 5G will bring many new solutions to the energy industry, agriculture, transport, healthcare, education and almost every aspect of life,” the press department added.

Although users have to pay an extra charge for the use of the 5G service in Germany, according to tech magazine HWSW, the Hungarians do not have to fear this; all customers with a Vodafone RED tariff and 5G capable devices can join the new network for free.

It is quite another issue that, for the time being, relatively few people will have the privilege of the new service, as 5G-capable phones are not yet widely available in stores. Vodafone has, however, already put two 5G mobile phones in its stores: the Huawei Mate 20 X 5G and the LG V50 ThinQ 5G. Vodafone says it can provide download speeds of 150 to 600 megabits per

“The potential lies not only in speed but also in embedded network intelligence and the ability to interact with other technologies. Thanks to all this, 5G will bring many new solutions to the energy industry, agriculture, transport, healthcare, education and almost every aspect of life.” second in 5G-covered areas, but this may vary depending on reception conditions and network congestion.

Digi Threatens NMHH With Legal Action While the 5G tender was a success for Vodafone, it was an entirely different story for Digi in Hungary.

Indeed, NMHH excluded Digi from the Hungarian 5G mobile network tender altogether, a fact Digi insists was based on unfair and unfounded assumptions.

An article on Media1 alleges that Győző Drozdy, the CEO of the rival Telenor Hungary (which Népszava, for one, has suggested could be in line to become 25% stateowned), may have leaned on NMHH to exclude Digi due to an earlier sanction by the Office of Economic

Competition (GVH) in connection with the merger of Digi with Invitel.

At the time of the exclusion, the NMHH only said that one of the applicants did not meet the eligibility criteria, without mentioning the specific problem.

When asked by the BBJ about the reasons behind the exclusion, the NMHH Communication Directorate said, “According to the General Administrative Procedure Act, the authority may not disclose details of the procedure to any third party, only the client or interested party.

The 5G mobile technology is not only faster, but the response time is also significantly lower, resulting in a better customer experience, which can be great for real-time gaming and other applications. More importantly, thanks to the multiplication of the capabilities of the 4G technology used to date, even tens of millions of devices will be connected to the fifth-generation network.

The significance of 5G solutions is that with the advancement of technology, applications that require very low latency, real-time data exchange across many devices, such as self-driving cars and remote sensing, can also accelerate mobile internet data transmission and the reliability of networks can also be significantly increased.

Progress rolls relentlessly on, however.

Even though 5G is only just arriving, Digitrendi.hu has announced that next generation 6G network research, is already underway in the world.

There are two reasons for this: on one hand, the procedure is still ongoing and, on the other hand, the decision about the exclusion is not a resolution (not a decision on the merits) and is therefore not subject to the disclosure requirement. Of course, an unregistered service provider has the right to seek legal help through a suitable forum.”

The BBJ also asked Digi about the tender exclusion and whether it really does plan to go ahead with the lawsuit it has threatened, but the company had not responded by the time we went to press.

14 | 3

Special Report

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Hungarian telco providers face a market that is on the brink of major changes at its core: emerging new technologies such as 5G and AI will upturn the industry, as much as the advent of mobile phones and connectivity on the go did previously.

The Budapest Business Journal discusses current sentiment and the near future with market players.

CHRISTIAN KESZTHELYI

The global telecommunications sector has been rapidly changing since the introduction of the mobile phone and internet. These technologies has not only transformed how companies operate, but are also shaping how consumers behave.

Although the mobile phone in itself brought bigger flexibility for consumers, the overall game-changer was the advent of connectivity on the go.

Consumer behavior started changing; customers were not only connected to each other but they could connect to different services on the road in 24/7. This transformed environment put immense pressure on telecommunications service providers, BBJ learns from Telenor Hungary’s chief commercial officer Mohamed ElSayad.

Telco firms had to compete in finding alternative revenue sources that were relevant and useful for consumers, yet profitable to operators, he adds.

Market transformation, building up competition and quickly shaping consumer habits are the chief factors in the Hungarian market, Magyar Telekom tells the BBJ. “With the spread of new mega trends and technologies, such as the Internet of Things, big data, artificial intelligence

and

5G,

the vertical will drastically change in the upcoming years,” a Magyar Telekom spokesperson says.

Photo by Iaremenko Sergii/Shutterstock.com

Market Talk: Ready for Transformative new Tech

“We believe that companies can only be successful in the upcoming years if they are quick and flexible enough to adjust to the rapidly-changing environment and continuously changing habits of consumers,” the spokesperson adds. As such, providers have to offer seamless partnership for their customers, which Telekom says it has kept its focus on.

Content consumption has also been changing. In Telekom’s experience, customers expect services that give them access to the same content, regardless of whether they are using linear television channels, or on-demand services. Therefore, product portfolios need to change.

Well-placed

Considering Western European trends, the Hungarian telecommunication infrastructure fares well in international competition. The mobile network of Hungary is, in fact, the 11th fastest in the world, and the sixth fastest in Europe, according to the most recent survey by OpenSignal, the independent mobile analytics company, which looked at 87 countries, Magyar Telekom says.

Additionally, fast upload speeds and 4G coverage in Hungary has placed the country in eighth position globally, while mobile video experience bagged second place for Hungary, according to the OpenSignal survey.

The robust infrastructure appears to be fertile soil for the tech solutions in the pipeline. Cloud-computing, for instance, is becoming a determining factor in the lives of telcos.

The globally-competitive local infrastructure has well been leveraged by companies, ElSayad of Telenor says. He cites areas such as network virtualization through cloud-computing, developing IoT solutions and innovation at elevated speeds. Telenor Hungary sees the possibility of a myriad of solutions emerging in business propositions for automating operations, as well as mining big data in order to tap into new revenue sources, he adds.

AI is also stirring waters. Although its initial phase has not, perhaps, delivered what the public may have imagined (or even feared), the potential is enormous.

The AI buzz has caught the world by storm, and while some people might tremble in thought of robots turning against

“Earlier technologies all centered around a service or area of use: 2G focused on voice and SMS, 3G focused on mobile internet, while 4G was all about fast data transfer; nevertheless, development stayed linear in these cases. Compared to these, 5G brings such additional opportunities to applications on the network that are revolutionary in reality.

Inevitably, 5G is the future.” humanity, in reality, artificial intelligencebased solutions are already in our lives, helping social media platforms curate our news feeds, ElSayad says.

For the time being, the most-marketed AI solutions are chat-bots and virtual assistants that can be clumsy, but are increasingly helpful. For instance, as of July 2018, calls running into Magyar Telekom’s

1414 helpline

are answered by Vanda, a virtual assistant based on artificial intelligence.

Still Telenor’s ElSayad says that AI will deliver robotic automation to our

production world that will be able to manhandle complex yet dull workflows.

Eventually, this could lead to operators being forced to slowly re-adapt their own processes as revenue growth will not be the only important key performance indicator, ElSayad explains.

Blockchain and 5G

With the arrival of blockchain and distributed-ledger technologies, which also come with immense promise, albeit few actual solutions for the time being, operators are shifting toward serving such solutions to businesses and governments in need of a decentralized platform.

Blockchain at this point seems like little more than worldwide hype; evangelists claim it will be the new internet, while sceptics claim the same results can be achieved with attentive and more cautious programming. Nevertheless, such technology might enable mobile network and service providers to interact securely and directly without any complex integrations or intermediaries and that, ElSayad says, could establish ecosystems with powerful reach.

Fifth generation technology is similarly putting service providers and developers under disproportionate pressure: expectations are at stellar heights.

Industry insiders and tech aficionados discuss 5G as it was the Holy Grail of telecommunications.

“Earlier technologies all centered around a service or area of use: 2G focused on voice and SMS, 3G focused on mobile internet, while 4G was all about fast data transfer; nevertheless, development stayed linear in these cases. Compared to these, 5G brings such additional opportunities to applications on the network that are revolutionary in reality,” Magyar Telekom’s spokesperson says.

“Inevitably, 5G is the future.”

This new technology will impact every industry, to a greater or lesser extent, pundits predict.

ElSayad expects that, with the spread of 5G, IoT technology and related solutions will become mainstream.

Essentially, telcos will join forces with IoT providers to create solutions that go well beyond the widely-discussed smart cities and self-driving cars, expanding into predictive maintenance and fleet management, for example.

Beyond the obvious super speed and wide coverage 5G promises to deliver, the extreme-low latency inherent in the system will create opportunities that never existed before.

“We can’t even start to imagine what those use cases are, but we can start dreaming of what this will bring.

What really differentiates 5G is that it comes at the crossroads of what we call ‘intelligent connectivity’ which is intersection of three important technologies coming into play together; 5G connectivity, IoT and AI which should change the industry as well as the future of customer experience,” Telenor Hungary adds.

Editor’s note: The BBJ also contacted Vodafone and Digi to comment for this article, but they had not responded by the time we went to print.

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PRESENTED CONTENT

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Putting Technology at the Benefit and Service of Society the fortunate elite. Everyone should be entitled to the opportunities and promise of a better digital future offered by this technological revolution and everyone should be able to have access to it. That is why our Vodafone 5G Truck has travelled through the country this year to get more people acquainted with the new technology, its applications and its potential.

Roll-out of the 5G network will continue throughout Hungary. Vodafone is participating in the ongoing frequency

The Budapest Business Journal discusses market trends, digitalization, the Internet of Things, the UPC acquisition and the coming 5G revolution with Dr. Gergő J. Budai, the director of external affairs at Vodafone Hungary.

BBJ STAFF

BBJ: What are the latest trends on Hungary’s telecoms market in?

Gergő J. Budai: Compared to the last 15-20 years, in the past two-to-three years, the market has been vibrant. There is significant M&A activity and, at the same time, technology is being revolutionized.

This year saw the acquisition of UPC Hungary by Vodafone, which allows us to become a converged operator, able to offer Hungarian consumers the full scale of services, including mobile, fixed broadband and TV. The merger of two of Hungary’s significant operators will fundamentally change the market to better serve customer needs. This will undoubtedly intensify competition, and the ultimate beneficiaries of this process will be the clients and the Hungarian economy.

BBJ: What do you think the upcoming trends will be?

GJB: The future of connectivity as we see it are the Gigabit Networks. Commercial 5G services are starting to be launched around the world. We are particularly proud that Hungary is one of the leading countries in this respect, as Vodafone launched its commercial 5G services a few days ago in the downtown area of Budapest.

In the coming years, 5G is expected to deliver significant changes to our everyday lives. The technology will enable faster data transfer speeds and as a result, 5G creates tremendous opportunities for numerous industries.

From enabling remote robotic surgery and autonomous cars to improving crop and livestock management, the opportunities are endless. We do believe that 5G technology and the new smart solutions attached to it will make our lives better and more sustainable.

BBJ: How ready are Hungary’s corporate players to really embrace the benefits of digitalization?

GJB: There are many ongoing projects focusing on digital transformation throughout the country. Many market players and governmental institutions have

Dr. Gergő J. Budai, the director of external affairs at Vodafone Hungary. already recognized not only the potential of digital solutions, but also the need for partnerships to deploy them.

A good example of this is our recent cooperation with municipalities.

Thanks to it, last year we implemented Vodafone’s smart parking system in

“It is very important that we connect for good; in other words put technology at the benefit and service of society.”

District V of Budapest and also in Székesfehérvár, taking a huge leap towards the modernization of city parking by improving its efficiency.

Another successful project is our partnership with Innomed to introduce a 21st century model of cardiovascular rehabilitation. The newly developed appliance can continuously monitor the condition of patients undergone heart surgery and contribute to their recovery.

It is very important that we connect for good; in other words put technology at the benefit and service of society. As one example of this, I can mention one of the Vodafone Foundation’s Digital Award winners, the OncoVR Project, which uses technology and artificial intelligence in

child oncology to increase the success of treatments and alleviate discomfort.

We are constantly working to improve and expand these services and solutions.

In October, we reached the 500,000th milestone regarding Internet of Things connections, making us the largest IoT provider in Hungary.

BBJ: What are Vodafone’s next steps toward 5G implementation in Hungary?

GJB: The acquisition of UPC Hungary will boost Vodafone significantly as a service provider, opening the door to larger-scale development. In the middle of October, Vodafone became the first of the active mobile operators in Hungary to launch a commercial 5G network in Hungary.

However, it is also equally important for us to make 5G understandable and accessible to all Hungarians, not just

Bio Box Dr. Gergő J. Budai has been director of external affairs and a member of the board at Vodafone Hungary since 2017. As of May 1, 2019, he has been vice chairman of the board. In addition to his business activities, he is also the curator of the Vodafone Hungary Foundation and the ambassador of the Digital School Program. Budai graduated in law and started his career at an international law firm

“5G is expected to deliver significant changes to our everyday lives. The technology will enable faster data transfer speeds and as a result, 5G creates tremendous opportunities for numerous industries. From enabling remote robotic surgery and autonomous cars to improving crop and livestock management, the opportunities are endless.

We do believe that 5G technology and the new smart solutions attached to it will make our lives better and more sustainable.” tender of the National Media and Infocommunications Authority (NMHH) with the aim of acquiring further spectrum to expand the 5G network.

BBJ: What do you think corporates should chose Vodafone over your competitors?

GJB: Vodafone Hungary has a truly enthusiastic team striving for innovation and development. We are the first to introduce new technology, like 5G. As an emerging and growing company, everyone is highly motivated to provide customers with a new, high quality choice in mobile and fixed segments as well. Customer needs are at the center of our focus.

where, in addition to Budapest, he also worked in Brussels and Washington. Following this, for five years he was a board member at Pfizer in Hungary and later in Romania and the Czech Republic.

After 2012, he held various positions at Invitel Group.

He was a board member and the group’s general deputy CEO. After the successful sale of the company, he joined Vodafone in September 2017.

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INSIDE VIEW

How to survive a cyber breach Dóra Petrányi

Márton Domokos

Partner, CEE Managing Director, Head of TMT

Senior Counsel, Coordinator of the CEE Data Protection Practice

CMS Budapest

CMS Budapest

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Expansion, the increasing complexity of operations and the growing international reach of CEE businesses has made cybersecurity one of the most pressing concerns for general counsels and boards of directors in this region.

The standards for cybersecurity in the European Union are set by the EU’s General Data Protection Regulation (GDPR) and the Network and Information Security (NIS) Directive, which demand state-ofthe-art and high-level security solutions, covering technical, organizational and administrative areas.

Cyber Threats: The Biggest Risk for a Company In partnership with LegalWeek Intelligence, CMS surveyed respondents from across CEE to examine how businesses are responding to cyber threats, levels of risk awareness and planning, and who in each organization is responsible for cybersecurity.

The survey, entitled “Cybersecurity Challenge in Central and Eastern Europe”, revealed that most companies face at least two cybersecurity incidents yearly, with 52% of cyber incidents resulting in litigation. And 67% of respondents reported a significant increase in the time spent managing cyber risk over the past 12 months.

Cybersecurity Health Checks Companies can strengthen their defenses against cyber threats, even after an attack. The first step is to conduct a “cybersecurity health check” followed by the introduction of risk mitigation measures, which should include policies for internal privacy and IT security policies, plans for business continuity and disaster recovery, an IT security strategy, and breach management procedures.

The vetting and ongoing management of vendors are also important, since contracts often contain elaborate language on security and compliance that is not always put into practice or regularly tested. If a breach does occur, a risk analysis should be conducted, based on the Personal Data Breach Severity Assessment Methodology developed by the European Network and Information Security Agency (ENISA).

Surprisingly, the cybersecurity challenge report found that only

37% of respondents have specific insurance coverage relating to cybersecurity incidents or payments to service providers.

Cybersecurity Incidents Already, CEE has been the target of numerous cyberattacks. In October 2105, when Bulgaria held municipal elections and a national referendum on the electoral code, hackers hit the Central Election Commission website with a distributed denial-of-service (DDoS) attack.

In the Czech Republic, the Ministry of Foreign affairs was attacked in one of the most infamous cyber incidents in the region, when unknown agents hacked and downloaded the email accounts of several public servants.

Between June and August 2018 in Romania, hackers used Advanced Persistent Threat techniques to eliminate withdraw limits and extract money from bank accounts in several of the nation’s financial institutions.

And in Hungary, the NAIH, the nation’s data protection authority, imposed a EUR 32,250 fine against the Budapest Transportation Authority (BKK) for security lapses in its online ticket system that made the personal data of registered users particularly vulnerable. Specifically, investigators found that the BKK did not provide proper instructions and data security requirements to its IT system provider.

Tackling Operational Risk The ability of CEE businesses to grow and develop in the future depends on multiple factors. For CEOs and their fellow board directors, cybersecurity may not appear to be critical since many consider it a defensive, rather than a proactive, policy. Furthermore, there is no automatic or tangible added value derived by implementing it.

But recent history has proven that a carefully crafted, well-executed and regularly updated cyber strategy is integral to future success. Although risk cannot be completely eliminated, it can be significantly reduced and implementing cybersecurity measures can save businesses millions of euros.

Just as importantly, taking cyber threats seriously is an opportunity to protect customers, shareholders and employees.

It can preserve the integrity of the brand and enhance a business’ reputation, both nationally and internationally.

cms.law

News///in brief Viber-Mastercard Money Transfer Service Debuts in Hungary Rakuten Viber users will soon be able to send money to each other via a new, Hungarian-developed service called Moneytou, which had its world premiere in Budapest. The system is set to be rolled out on other markets in the next few months.

The new service leverages Mastercard’s Send technology, the result of a cooperation of Rakuten Viber and Mastercard. It allows users to send and receive money immediately through the app in a secure, fast and easy way. Moneytou has been developed by NeoPay with the aim of making the service available to customers of most Hungarian banks from the very start.

“Partnering with Mastercard and NeoPay has enabled us to offer Hungarians the ability to easily send, receive and transfer money to friends and family with just a few taps,” says Cristina Constandache, chief revenue office at Rakuten Viber.

Funds could be transferred within a matter of minutes, regardless of the time of day or day of the week. The amount transferred will appear in

the recipient’s balance and is immediately available to spend by card or to be withdrawn in cash.

Consumers can register multiple cards (Mastercard or VISA) in the Rakuten Viber app and select the card to use for each transaction.

For troubleshooting, the service also features an online chatbot.

“Leveraging Mastercard Send technology and NeoPay’s new service, Rakuten Viber’s customers will be able to benefit from nearinstant money transfers, meeting the consumer demand for an always-on payments network,” explains Gabriel Ghita, vice president, business development at Mastercard.

Gergely Benda, NeoPay’s founder-executive says, “The transaction takes place between the cards of two private parties, which means that Moneytou is not a ‘wallet’ application, it does not have a balance; users do not need to deposit or withdraw money with or through the app. Our company’s goal in the first phase of expansion is to also appear in more than 25 million Rakuten Viber users’ apps in Ukraine, Romania, Serbia and Bulgaria.”

60% of Hungarian Firms Suffer Cyberattack

media are the most vulnerable field in terms of cybersecurity, uzletem.hu notes.

Some 67% of Hungarian IT professionals think that customer data protection is the most critical challenge companies have to face, according to the latest survey

by Panda Security, uzletem.hu reports.

The survey says that some 60% of responding companies have already suffered a cyberattack. The majority of domestic companies say they have an adequate protection system against such attacks. The study questioned 260 Hungarian IT-related SMEs, of which only 10% considered their own security system to be weak. Some 56% of responders believe mobile and smartphone devices and external storage

Vodafone Pulls UPC Brand From Hungary The Hungarian unit of British multinational telecommunications conglomerate Vodafone will pull the UPC brand from the Hungarian market, hvg. hu reports. Following the acquisition of the Hungarian subsidy of UPC, Vodafone Magyarország Zrt. will provide the company’s mobile and landline services under its own name as of April 2020.

All fixed-line services (VoCaTv phone, internet and digital cable TV) offered by UPC will remain available, but will run under the Vodafone brand, hvg.hu says

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When it comes to the most popular handsets in circulation, the Hungarian market largely follows international trends, with Samsung, Huawei and iPhone devices ruling the landscape.

However, Huawei’s feud with the United States appears to have dented its popularity in Hungary, the Budapest Business Journal has been told.

CHRISTIAN KESZTHELYI

“Samsung’s new A-series is popular with customers. After a rather difficult year, Samsung has also invested heavily in the development of lower-end devices, and has been able to gain market share in most segments. The most popular models are the Samsung Galaxy A40, A50, A20e, A70 and A10e,” Dorottya Török, head of device office at Telenor Hungary tells the BBJ. Apple’s iPhones has maintained its steady popularity in the premium handset segment. The recently-launched iPhone 11 seems to have been well-received by consumers, with Telenor Hungary saying customers “love and buy” the new models.

Hungary reflects international trends in terms of operating systems, too. Apple’s iOS-run devices take up

approximately

10%

of the global total in general. Some 13% of Telenor Hungary’s clients use iOS, while the rest is Android, the service provider says.

Huawei’s most popular handsets are the P30 Lite, the P Smart 2019 and the Y7 2019. But while the manufacturer’s efforts to increase its market share seemed to be paying off – it has reached significant customer recognition over the past year – its quarrel with the United States appears to have left a dent in its popularity.

“Since mid-2019, its sales have been severely and negatively affected by U.S.

Photo by SFIO CRACHO/Shutterstock.com

Hungary’s Hottest Mobile Telephone Handsets

sanctions, and many customers have turned away from the brand. In the fourth quarter, Huawei failed to enter the market with its high-end handsets (the Mate series), which worsened its position in the mid-range and premium categories,” Török says, citing Telenor’s own data.

Despite their relatively limited accessibility and marketing operations, Chinese brands are claiming an increasingly bigger slice of the pie in both European and Hungarian markets, Török says.

Value for Money

“Due to their excellent value for money, customers are happy to buy Xiaomi’s equipment,” she adds.

When smartphones first hit the shelves, a portion of handset users seemed

Hungary Survey by eNet With a population of just under 10 million (the latest figures from the Central Statistical Office, for January 1, 2019, put the total at 9,772,756), Hungary currently boasts 5.3 million smartphone users, which means that 89% of adult internet users are in possession of such a handset, according to a survey published by eNet. Samsung and Android-based devices are still king, while the mobile internet users reached 4.5 million, up by 1.7 million since 2017.

The survey, which eNet conducted in May and published in September, shows that smartphone users are not only increasing in numbers, but consumer dependence on such devices is also on the rise.

A staggering 71% of Hungarian mobile phone users claim they never switch off their mobile phones, 55%

reluctant, claiming that they would never opt for a smart device. However, sales reveal clear a preference: 85% of buyers today opt for a smartphone.

“There is a clear difference between service provider sales and the wider free market breakdown: the share of smartphones in the Hungarian telecom market is even higher, at

improved existing features, such as longer battery life, better, and more, cameras and improved chipsets, hence increased speed.

A staggering 71% of Hungarian mobile phone users claim they never switch off their mobile phones, 55% keep it beside them during the night, while a quarter of them admit to taking their device with them to the toilet, too.

For the time being, it is hard to tell what innovation might turn out to be disruptive in the future. One thing is certain though: users are increasingly moving to other tech, beyond phones.

“As the pace of innovation slows, customers are spending more on ecosystem assets, such as wearables, and internet of things (IoT) is increasingly relevant to them,” Török says.

more than

90%,

and in the free market around 70%,” Török explains.

With telecommunications providers offering flexible financing programs, higher-end devices are becoming more affordable for the mass market, and the popularity of such tech is increasing.

“Higher-end devices are often used for a longer period of time, which also increases the average life cycle of devices,” says Török. She adds that innovation in the handheld sector is quite slow: new models offer better user friendliness and

keep it beside them during the night, while a quarter of them admit to taking their device with them to the toilet, too.

Some 85% of participants of the survey use Android devices, iOS devices have an 11% share, and surprisingly Windows Phones still have a thin 3% slice of pie — despite Microsoft having ended support for Windows Phone in July 2017 and stopped active development on Windows 10 Mobile in October of that year, eNet says.

Samsung handhelds rule the market with a share of 34%, Huawei’s take up is at 23% and Apple has 11%, according to the eNet survey. The firm also mentions that U.S. sanctions – threatening the manufacturer with a possible withdrawal of Android support that eventually never happened – earlier this year negatively affected Huawei sales.

Nevertheless, tensions sparked

Dorottya Török

the emergence of Huawei’s homegrown Harmony operating system, which is currently used in several smart devices.

The most important factor for consumers buying a handset in Hungary is, unsurprisingly, its price. Some 85% consider the price of the device, 82% consider the features of the device, while 75% consider the operating system used, eNet has found.

The internet research and consulting firm therefore raises the question of whether users would stay with Huawei, should Google decide, for whatever reason, to withdraw Android support. Considering that both Nokia and Blackberry eventually ditched their home-grown operating systems, the question is clearly valid: would Huawei remain as popular as it is today if it had to rely solely on its own Harmony OS?

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INSIDE VIEW

Free Internet vs. Business Secrets: How to be a Prudent Hosting Service Provider Kinga Hetényi

Dorottya Gindl

Managing partner

Associate

SCHOENHERR HETÉNYI ATTORNEYS AT LAW

SCHOENHERR HETÉNYI ATTORNEYS AT LAW

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What kind of liability do hosting service providers face if it turns out that their customers’ data happens to violate other parties’ rights?

What if, for example, an employee who is about to leave a company transfers emails containing the business secrets of his employer from his company mailbox to his private mailbox without the employer’s prior knowledge and consent? Once the employer becomes aware of this, it may request the hosting service provider to block the employee’s access to these specific e-mails. Can the hosting service provider fulfil the employer’s request without knowing for sure whether or not they actually infringe the employer’s business? If the hosting service provider does not deny the access and the employee discloses the concerned emails to third parties, the hosting service provider contributes to the injury caused by the employee.

Pursuant to the Hungarian e-commerce Act, the hosting service provider is not obliged to monitor the contents of the information that it stores on behalf of its customers, or to actively seek facts or circumstances indicating illegal activity by its users.

The hosting service provider may be held liable only if the service provider has knowledge that the information stored at the request of a customer is illegal or violates the right or legitimate interest of a third party.

But when can the hosting service provider be entirely sure that stored information is unlawful or infringes someone’s right? If intellectual property rights are concerned, the Act is clear that upon notice of the third party stating that his rights are infringed, the service provider must remove the content. In all other cases, the Act is silent.

In our example, the hosting service provider may not be required to examine the arguments of the parties and determine whether or not the requested emails actually affect the employer’s right to business secrets.

This needs a complex evaluation in light of the employment relationship between the employee and the company, the Act on business secrets and the employee’s privacy rights by a

court. Thus, the hosting service provider is advised to await a court’s official decision or an interim injunction. Once such an injunction is delivered, the hosting service provider must remove the content. Moreover, it could be required to remove not just the original content of the infringement but, also any content having an equivalent meaning to the original content.

This was established in a recent decision by the European Court of Justice: In the case of Eva GlawischnigPiesczek (the applicant) vs. Facebook Ireland Limited, a Facebook user shared an article (Greens: Minimum Income for Refugees Should Stay) from an Austrian online news magazine on Facebook and added a comment below the post. The respective Austrian court established that the comment of the Facebook user harmed the reputation of GlawischnigPiesczek and insulted and defamed her.

Therefore, the court ordered an interim injunction and required Facebook to cease and desist from publishing and/ or disseminating photographs showing the applicant if the accompanying text contained the assertions either verbatim or used words having an equivalent meaning to those of the original comment. Thus, the court may not only bring an end to an illegal act but also prevent it being repeated in a similar form.

The ECJ highlighted that the injunction may not lead to the hosting service provider being required to carry out an independent assessment of whether the content has an equivalent meaning. The court must rather specify in the injunction which are the specific elements based on which a content with equivalent meaning must also be removed (e.g. the name of the person concerned by the infringement and/ or the circumstance of establishing the infringement). Thus, the hosting service provider should be able to filter out the concerned equivalent content with automated search tools and technologies.

Based on the above decision of the ECJ, it remains to be seen whether hosting service providers will actually be able to filter out the concerned equivalent content without human intervention and avoid infringing the principle of freedom of expression.

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Hungary Plans to Take the Lead in 5G Worldwide As the world readied for the introduction of 5G technology — and the myriad of changes it is anticipated to bring, industry-wide — Hungary decided not just to await events, but to stake a claim in spearheading introduction of the technology in order to reap its benefits.

CHRISTIAN KESZTHELYI

The country’s 5G Coalition has gathered a wide-range of interested parties to ensure Hungary can be among the first countries to bask in the 5G dawn.

Government institutions, companies, business chambers, universities and professional and civic organizations came together to establish the 5G Coalition (5G Koalíció or 5GK for short in Hungarian) in June 2017. Initiated as part of the government’s Digital Welfare Program, the founding declaration of was signed by almost 50 companies.

At the time of publication, the body now comprises some

155

professionals

in five working groups. Its most important focus is to aid the development of 5G mobile telecommunications technology in the country.

Furthermore, the coalition aims to offer a strategic and professional platform for 5G innovation and development in

Hungary. The body says it keeps an opendoor policy to anyone who is committed to innovation in the sector and wants to work with coalition members, using their knowledge and professional experience to help achieve Hungary’s 5G goals.

The 5GK aims to tap into both the physical and human resources of Hungary.

On the one hand, the country’s digital infrastructure is among the best not only in Europe, but globally, which has been recognized by independent research and surveys in the past years. (See also Market Talk on page 14.) On the other hand, the 5G Coalition aims to leverage the country’s engineering expertise, the university ecosystem and vocational training pool, as well as team up with the local SME sector.

Under a draft strategy 5GK published this March, Hungary is seen as transforming into a European hub for development of 5G mobile telecommunications technology, according to an announcement by the Ministry for Innovation and Technology.

The draft is currently in the discussion phase by public sector experts prior to coming before the government.

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State Player

Minister for Innovation and Technology László Palkovics, speaking at a meeting of the coalition in June, said the Hungarian government must play a role in building the country’s 5G telecommunications network. In his speech, the minister vowed to coordinate with local service providers, the market and the economy to significantly speed up the development of the infrastructure essential for running exceptional services.

He said he believes a “mixed model” of the state and market players working together in various infrastructure construction areas will be the best solution for rolling out 5G networks.

Palkovics appeared to be in line with the overall market sentiment: he said that the potential of 5G goes well beyond a faster 4G network. He believes the new generation could act as a technological catalyst for a number of innovative fields, not least self-driving cars and the expansion of the Internet of Things.

Although he acknowledged that establishing 5G networks comes with challenges incomparable to the construction of earlier networks, as it will require more small base stations operating with a broader spectrum range, he said he believes issues related to the density and operation of base stations can be cleared up very quickly, according to a report by state news agency MTI. The minister compared Hungary to Germany, saying that the CEE country is better off in timing: while Germany’s 5G spectrum winners are expected to deliver by the end of 2022, for such frequencies, Hungary’s tender winners will prepare and roll out infrastructure much sooner: 5G services should begin to become a reality by the

end of

2019

at the latest. Services demanding bigger capacities in 26GHz range can be realized after 2020, he added.

The minister tasked the 5G Coalition with deciding on the areas where the state could support technological development; for instance, self-driving

5G and eSports Minister for Innovation and Technology László Palkovics said in September that the Hungarian government is backing eSports. He was talking prior to the Counter Strike: Global Offensive contest at the V4 Future Sports Festival in Budapest. The minister said the government had extended its digital welfare program, launched in 2015, to include eSports.

“Hungary has decided that it wants to be a shaper, not a follower, of digital trends, thus creating the chance to come out a winner in the future,” the minister, according to state news agency MTI. Palkovics said that spreading 5G mobile networks are expected to open the floor for eSports further.

He added that Hungary’s efforts in delivering top-notch 5G coverage to nurture exceptional services can help eSports grow in

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The Future has Started As previously reported in the BBJ, Budapest hosted the International Telecommunication Union (ITU) Telecom World 2019 conference in September. At the opening, ITU head Houlin Zhao said the conference was an opportunity to reduce the digital divide, while Prime Minister Viktor Orbán urged the European Union to take unified action on the bloc’s digital economy.

“Hungary is already a digital economy in the heart of Europe: here the future has started, and we trust that Europe will shift its momentum in this direction, too,” the prime minister was quoted as saying by state news agency MTI. The four-day event attracted more than 4,000 participants from 125 countries.

After the event, Zhao praised Hungary’s level of ICT development which provides grounds for organizing the next conference in the country, the ITU head hinted, adding that talks are ongoing.

Minister of Foreign Affairs and Trade Péter Szijjártó said the government has decided to initiate talks on hosting all ITU events in 2023-2026.

vehicles. Palkovics expects 5G to be launched at industrial facilities in 2020, although public rollout in big cities and along main transport corridors would not happen before 2025.

The technology minister said that Hungary’s 5G system will place elevated importance on preserving dedicated frequencies for universities and industrial companies. He also urged the adoption of a unified inventory system for infrastructure to coordinate the 5G rollout, he added.

the country. The electronic gaming industry is expected to grow rapidly in the upcoming years.

Global eSports revenues are seen to rise by 27% to USD 1.1 billion in 2019, according to a Reuters report earlier this year. In 2018, the global eSports market was valued at nearly USD 865 million, according to Statista (a German online portal for statistics), and it is estimated it will reach USD 1.79 billion by 2022.

The vast bulk of revenues are generated through sponsorship and advertising, while the rest comes from eSports betting, prize pools, tournaments, merchandise and ticket sales.

“While Asia contributed close to half of global eSports market revenue, generating USD 406 million in 2017, the North American market brought in USD 392 million in revenue, followed by the European market at USD 298 million,” Statista found.

IoT, 5G, AI to Change Telco Market in Coming Years The Budapest Business Journal asks Chief Commercial Officer at Telenor Hungary, Mohamed ElSayad about the situation of the telco market, technological innovation, and how Telenor prepares for the upcoming Christmas rush.

BENCE GAÁL

Regarding how the mobile market was different five years ago, ElSayad says, “When the mobile was first introduced, it gave more flexibility for customers to get connected with what mattered to them through voice and messaging, but only when the internet also became mobile, were people connected to whatever they needed.”

He argues that this led to a change in habits, putting huge pressure on telco companies. “Customers had options to be connected beyond the core voice and messaging that were the bread and butter of the telecom industry,” he points out.

He adds that this led to a race to find alternative revenue solutions, which are both relevant and useful for customers, and profitable to operators.

“Telecom companies are taking leverage of the scale of the cloud to virtualize networks, provide IoT solutions and introduce innovation faster. We expect to see that more and more solutions embedded in business propositions

Mohamed ElSayad directly, without any complex integrations or intermediaries,” he tells the BBJ. He notes that practices like GDPR and stronger encryption have led users, organizations, and lawmakers to be more wary about privacy and data security.

“Telecom companies are taking AI Buzz ElSayad believes that while the “huge buzz” leverage of the scale of the around AI has so far been limited to the cloud to virtualize networks, use of chatbots and virtual assistants, it is far from the end of the story, as robotic provide IoT solutions and process automation will be used to solve introduce innovation faster. complex, highly repetitive workflows.

“This means that operators will have to We expect to see that more slowly re-adopt the way that they work as and more solutions embedded revenue growth isn’t going to be the only KPI; a lot of transformation and in business propositions that important convergence will take place, therefore the introduction of business plans based on will automate operations IMPU [individual margin per user] will start and mine customer’s big being more commonly utilized,” he notes.

Talking about 5G’s superiority over data to introduce new 4G, the CCO notes that while speed and revenue opportunities.” coverage factors are common knowledge, that will automate operations and mine customer’s big data to introduce new revenue opportunities,” he says.

Talking about industries affected by 5G and its mix with IoT technologies, he specifically mentioned agriculture, healthcare, and transport, among others, adding that telco companies are partnering with IoT providers to offer solutions related not only to smart cities and autonomous cars, but fleet management and predictive maintenance too.

“With the introduction of blockchain technologies, operators also found themselves in a great position to start serving blockchain to enterprises and governments that needed a decentralized platform, something that allows mobile network providers and service providers to interact securely and

5G’s extreme low latency will create opportunities like never before.

“What really differentiates 5G is that it comes at a crossroad of what we call ‘the intelligent connectivity’, which is the intersection of three important technologies coming into play together, 5G connectivity, IoT and AI, which should change the industry as well as the future of customer experience.”

With the holidays slowly appearing on the horizon, Telenor is also preparing itself to meet the rush.

“The market is usually geared up with very attractive offers since it is also about a shopping spree and spreading the love to our families and loved ones,” he says. He adds that Telenor will be working hard to surprise customers with the best offers, and to handle them with care, although he can’t divulge more at this stage, so watch this space.

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Internet Service Providers Ranked by total net revenue (HUF mln) in 2018 no. oF subsCRibeRs on July 1, 2019

modem

leased line

Cable

adsl

miCRoWave

mobile

4g

yeaR establisHed no. oF Full-time employees on July 1, 2019

oWneRsHip (%) HungaRian non-HungaRian

1

magyaR telekom nyRt.

493,317

4,948,426

✓

✓

✓

✓

–

✓

✓

1991 8,948

Free float (40.78), own shares (0.01) Deutsche Telekom Europe B.V. (59.21)

tibor Rékasi János Szabó Zoltán Pereszlényi

1097 Budapest, Könyves Kálmán körút 36.

(1) 457-4755 sajto@telekom.hu

2

vodaFone magyaRoRszág távközlési zRt.

192,659

Ÿ

✓

✓

✓

–

✓

✓

✓

1999 1,969

– Vodafone Europe B.V. (100)

amanda nelson Ádám Jakabos Balázs Révész

1095 Budapest, Lechner Ödön fasor 6.

(1) 288-4288 sajto@vodafone.com

3

telenoR magyaRoRszág zRt.

170,191

3.10 million

✓

–

–

–

–

✓

✓

1993 1,101

– PPF Group (100)

Jan Hanuš Martin Oravec Mohamed ElSayad

2045 Törökbálint, Pannon út 1.

(1) 464-6000 –

4

upC magyaRoRszág kFt.

77,420

Ÿ

–

–

✓

✓

–

✓

–

1994 969

– Vodafone Europe B.V. (100)

amanda nelson Ádám Jakabos Balázs Révész

1095 Budapest, Soroksári út 30–34.

1221 ugyfelszolgalat@upc.hu

5

digi távközlési és szolgáltató kFt.

47,299

Ÿ

✓

✓

✓

–

✓

✓

✓

2004 2,283

– RCS&RDS S.A. (100)

dragos spataru Gábor Venczel Gergely Cserép

1134 Budapest, Váci út 35.

(1) 707-0005 ugyfelszolgalat@digikabel.hu

6

inviteCH iCt seRviCes kFt.

25,373

Ÿ

–

✓

✓

✓

✓

–

–

2016 580

– China CEE Fund (99.99), other (0.01)

gerald grace Dániel Majubu –

2040 Budaörs, Edison utca 4.

(1) 801-1500 vip@invitech.hu

7

invitel távközlési zRt.

25,286

Ÿ

✓

–

✓

✓

✓

✓

✓

1995 524

DIGI Távközlési és Szolgáltató Kft. (100) –

dragos spataru Gábor Venczel Gergely Cserép

1134 Budapest, Váci út 37.

(1) 801-1500 info@invitel.co.hu

8

aCe teleCom kFt.

1,393

3,678

–

✓

–

–

✓

–

–

1997 44

Individuals (68), ThreeF Kft. (32) –

attila Farmosi, gábor varga Gábor Varga –

1037 Budapest, Zay utca 3.

(1) 437-0590 office@acetelecom.hu

9

netFone teleCom kFt.

1,340

Ÿ

–

–

–

✓

–

–

–

2012 32

NETFONE-INVEST Kft. (Ÿ), Zsolt Wilhelm (Ÿ) Scanwinavia AB (Ÿ)

lászló mészáros – István Kun

8900 Zalaegerszeg, Nefeljcs utca 2/A (1) 878-1814 info@netfone.hu

10

dRávanet zRt.

418

7,435

–

✓

–

✓

–

–

–

1996 11

Pallas Office Kft. (81.42)other (18.58) –

zsombor attila papp Rezső Dunay Csaba Csizmadia

7624 Pécs, Budai Nagy Antal utca 1.

(80) 811-118 info@dravanet.hu

Rank

total net Revenue in 2018 (HuF mln)

means oF aCCess

Company Website

www.telekom.hu

www.vodafone.hu

www.telenor.hu

www.upc.hu

www.digi.hu

www.invitech.hu

www.invitel.hu

www.acetelecom.hu

www.netfone.hu

www.dravanet.hu

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

3

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Special Report | 21

Telecommunications Equipment Manufacturers ansWeRing maCHines

Fax maCHines

business pHone system/pbx

Call/ContaCt CenteR

vsat system

voip

CtC/CRm solution

message Handling system

industRy-speCiFiC solution

✓

–

–

–

–

✓

✓

–

✓

–

–

–

otHeR teleCom and netWoRk equipment

isdn pHones

✓

yeaR establisHed

pCe paRagon solutions kFt. (Cloud netWoRk teCHnology kFt)(1)

analog pHones

www.samsung.com

659,989

tRi-band mobile pHones

samsung eleCtRoniCs magyaR zRt.

dual band mobile pHones (900/1800 mHz)

1

Company Website

total net Revenue in 2018 (HuF mln)

Rank

types oF equipment

no. oF Full-time employees on July 1, 2019

Ranked by total net revenue (HUF mln) in 2018

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

1,703

1989

– Samsung Electronics Co. (100)

Hwanseog Choi Sang-Woo Lim Gerda Witch

5126 Jászfényszaru, Samsung tér 1 (80) 726-7864 –

péter tálos Gabriella Pistauer –

2900 Komárom, Bánki Donát utca 1.

(34) 886-888 komarom@emea. foxconn.com

www.foxconn.hu

318,523

–

–

–

–

–

–

–

–

–

–

–

–

✓

–

25

2007

– FOXTEQ Integration Inc. (100)

3

lg eleCtRoniCs magyaR kFt.

101,476

✓

–

–

–

–

–

–

–

–

–

–

–

–

–

103

1992

– LG Electronics Europe Holding B.V. (100)

kim dae Hwan, kim Hyeong tae – –

1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 kapcsolat@lge.com

4

HuaWei teCHnologies HungaRy kFt.

79,859

–

Ÿ

Ÿ

Ÿ

–

–

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

–

198

2005

– Huawei Technologies Cooperatief U.A. (100)

li Jian, shi yanli – –

1138 Budapest, Népfürdő utca 22.

0680 HUAWEI –

5

eRiCsson magyaRoRszág kFt.

50,022

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

–

1,872

1990

– Telefonaktiebolaget LM Ericsson (100)

gábor Éry, edina Rózsa, bernadette mária bohács – –

1117 Budapest, Magyar Tudósok körútja 11 (1) 437-7100 valaszolunk@ ericsson.com

6

nokia solutions and netWoRks kFt.

36,042

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

–

2,381

2006

– Nokia Solutions and Networks Oy (100)

balázs kökény, erzsébet tóth, béla zagyva – –

1083 Budapest, Bókay János utca 36-42.

(20) 977-7797 nokia.hungary@ nokia.com

7

neC easteRn euRope kFt.

2002

– NEC Europe Ltd. (100)

lászló magyar, edit Hontiné Cserháti – –

1142 Budapest, Ungvár utca 64–66.

(1) 814-6424 eszter.nagy@ emea.nec.com

8

avaya magyaRoRszág kFt.

andrás turai, györgy gombár, massimo palermo – –

1062 Budapest, Váci út 1–3.

(1) 238-8200 ikovari@avaya.com

2

www.lg.hu

www.huawei.hu

www.ericsson.com

www.nokia.com

www.nec.com

www.avaya.com

9

CisCo systems magyaRoRszág kFt.

10

moHanet mobilsystems zRt.

www.cisco.hu

www.mohanet.hu

panasoniC maRketing euRope gmbH NR soutH-east euRope Fióktelepe

5,574

3,337

–

–

–

–

–

–

–

–

–

–

–

–

✓

–

✓

✓

–

–

–

–

–

–

–

–

✓

–

25

–

–

92

1990

– Sierra Communications International LLC (99.99), AVAYA Emea Ltd. (0.01)

46

1997

– Cisco Systems Inc. (Ÿ), CISCO Systems Management B.V. (Ÿ)

evan sloves, zoltán ottó dalos – –

1123 Budapest, Csörsz utca 45.

(1) 225-4600 –

2,594

–

✓

–

–

✓

✓

✓

✓

–

✓

✓

✓

✓

Desktop UC rendszer üzenetküldési- és telefonfunkciókkal, videokonferecia és telepresence rendszerek

298

✓

–

–

–

–

–

✓

–

–

–

✓

✓

✓

–

21

2009

Zoltán Havasi (100) –

zoltán Havasi Norbert Szabó –

1152 Budapest, Telek utca 7–9.

(1) 271-1141 info@mohanet.com

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

–

28

2010

– Junichi Suzuki (100)

takashi Furumoto – –

1117 Budapest, Alíz utca 4.

(1) 382-6060 reception.psee@ eu.panasonic.com

www.panasonic.com

(1) PCE Paragon Solutions Kft. has continued its operations as Cloud Network Technology Kft. from November 1, 2018.

4

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Socialite The 1956 Hungarian Revolution: When Hungary Meant Freedom Each year on October 23, Hungary holds Revolution Day to commemorate the 1956 Hungarian Uprising.

Up until the revolution was brutally stamped out by the Soviet army, it was a symbol of the human desire for freedom, whatever form that might take.

Presley, who worked as a cinema usher as a teenager, was a big fan and may well have studied him in the

controversial

1949

juvenile delinquent flick “City Across the River”.

There is a far more direct and, on Presley’s part, thoroughly honorable Hungarian connection. It was January 6, 1957 and Elvis was making his third and final appearance on “The Ed Sullivan Show”.

Presley sang seven songs in three segments. When he sung “Peace in the Valley,” Sullivan announced that Presley wanted to dedicate his performance to the Hungarian people. As Sullivan explained, Presley felt “this is sort of in the mood that he’d like to create.”

On Presley’s behalf, Sullivan asked the TV audience to donate to Hungarian relief efforts. Around CHF 25 million was raised.

I’m not sure why Presley made this appeal. It may well have been a smart PR move on the part of his manager, the supremely savvy Colonel Tom Parker.

But it could also have been Presley responding to what was in the air and instinctively supporting freedom.

For which he should be saluted.

DAVID HOLZER

Back then, after the terrors and deprivations of World War Two, the thirst for freedom was in the air, especially in the West.

For a start, is it purely coincidental that the Hungarian Revolution happened at the same time as the explosion of rock and roll and the arrival of Elvis Presley? Presley was a figurehead for teenage frustration and a vehicle for its expression. But, more subtly – because of the clear influence of black music upon his music and his appearance – he was aligned with the growing American Civil Rights movement without perhaps even being aware of it.

Much of the outrage Presley’s arrival sparked was caused by his appearance.

He dressed in a flamboyant style associated with black street culture. But Presley’s look was also influenced by Tony Curtis, the American movie star whose father was a Hungarian born in Ópályi near the Ukrainian border. Curtis sported an ornate, oiled, sculpted hairdo.

Dennis Hopper directed and co-wrote and co-starred in “Easy Rider”. Photo by Jorge Cubells Biela/Shutterstock.com.

Hungarian Hollywood

The history of Hollywood has been shaped by many people of Hungarian origin. But the most profound influence

Zombies”, frequently ranked the worst movie ever made.

In stark contrast, “Easy Rider” is widely rated as one of the most significant movies of all time. It ushered in a new era of hip, independent filmmaking and turned the mainstream movie industry onto the fact that films about the counterculture could make money, lots of it.

Kovács was director of photography.

Zsigmond was the cinematographer.

Between them they helped craft the revolutionary look and feel of “Easy Rider”, initiating a style that would go onto help form the American New Wave in cinema and define 1970s gritty realism. They worked on classic movies that include “Paper Moon”, “The Last Waltz”, “Close Encounters of the Third Kind” and “The Deer Hunter”. But their influence runs much deeper than helping to shape how movies look.

Life Changer

When I first started coming to Hungary, I was introduced to a Hungarian filmmaker who’d been lucky enough to meet Peter Fonda at a film business party. He told Fonda he was from Budapest and that seeing “Easy Rider” had changed his life.

“Lemme tell you something,” Fonda said.

“It wasn’t just László who was Hungarian on Vilmos Zsigmond in 2007. Photo that shoot. The whole goddamn crew was

by S Bukley/Shutterstock.com. too. They’d all escaped from your country in 1956. And you should be proud to be Hungarian, son.” is surely that of László Kovács and “Why?” the filmmaker said.

Zsigmond Vilmos, in particular with their “Because the spirit of freedom in work on the 1969 movie “Easy Rider”.

‘Easy Rider’ comes as much from those One of the signifiers of the end of the Hungarians as it did from Dennis and me,” 1960s dream of peace and love, it was Fonda replied. produced by Peter Fonda and directed by Dennis Hopper. Both men starred in the movie with Jack Nicholson. “Easy Rider” made them all players in Hollywood.

“Lemme tell you The film is about the crushing of something. It wasn’t freedom. Fonda and Hopper play motorcyclists who ride across America just László who was from Los Angeles to New Orleans Hungarian on that shoot. with the proceeds from a cocaine smuggling trip hidden in Fonda’s The whole goddamn motorbike. The movie ends with the crew was too. They’d all two men attacked by a pair of rednecks who gun them down. escaped from Kovács and Vilmos were lifelong friends your country in 1956. who studied cinema at the Academy of Drama and Film in Budapest between 1952 And you should be proud and 1956. They secretly filmed the daily to be Hungarian, son.” progress of the Hungarian Revolution using a camera borrowed from their school, smuggled the footage to Austria to have it developed and took it with them when they In the aftermath of the 1956 revolution, escaped to the United States in March more than 200,000 mostly young Hungarians like Kovács and Zsigmond fled the country. Because of the years By that time, the revolution was over and of communist rule that were the they could not get the film shown. consequence of the revolution having Kovács and Zsigmond stayed on failed, they were never able to live in the States, becoming naturalized their country again. Last year, according citizens. Often working together, they to official statistics, more Hungarians were among the crew of 1964’s “The returned to the country than left. I Incredibly Strange Creatures Who wonder what ideas of freedom they will be Stopped Living and Became Mixed-Up bringing with them?

1957.

4

www.bbj.hu

Budapest Business Journal | November 4 – November 14, 2019

Tokaj Wineries a Happy Bunch With This Year’s Vintage Although Tokaj’s terrific terroir has been progressively turned to making dry wine with increasingly impressive results, the botrytized sweet stuff that is Tokaji Aszú still remains the icing on the Tokaj cake. The 2019 vintage appears to be on its way to becoming a stellar vintage for the region as a whole.

ROBERT SMYTH

Laurent Comas, managing director of Pajzos Tokaj in Sárospatak, said that the 2019 vintage is looking very good for both dry and sweet wine.

“There weren’t any extreme conditions, it wasn’t too warm, nor too dry or rainy,” he said. “If we don’t complain about anything, it means it’s a beautiful vintage.”

He added that the grapes have shown a good sugar content with balanced acidity, both for dry and sweet wines. A bit of rain at the end of September helped trigger botrytis (also known as noble rot), whereby spores of a desired fungus attack the grapes, shriveling them, drawing the water out and greatly increasing the sugar,

Socialite | 23

This French grape is the third most planted type in Tokaj, after the indigenous Furmint and Hárslevelű, and is typically used to add some floral fragrance and exotic fruitiness to Aszú, but the high acidity it can capture in Tokaj, as opposed to many other parts of the wine world where it can taste flat and flabby, can also make it standout towards the drier end of the scale.

This wine was harvested at the end of August, from three different vineyards comprising both loess and volcanic soils, with the former channeling the natural tropical fruit and grapey character of the grape, and the latter bringing more in the way of acidity and structure.

Made totally in the tank to allow the fruity and floral notes to do the talking, it is a bargain at HUF 2,850 from divinoborbar.hu. It also available in the United States from Taste Hungary.

Concentrated and Classy Hands holding a botrytized cluster of furmint grapes during harvest in Mád, in the Tokaj wine region. File photo by Szilard Csaki/Shutterstock.com acidity and flavors in the process, while adding a delicious dried apricot note.

The Indian summer that followed has meant ideal conditions for the slow development of the Aszú berries, which are still being harvested even as we go to print. Wet conditions mean that the noble rot can turn to an unwanted malign grey rot, something which didn’t happen in this vintage, or at least hadn’t happened by our deadline.

Comas added that it was hoped to bring in all the Aszú berries in by the end of the week, before the fall rains set in. He described 2019 as a better Aszú vintage than 2018, and said 2016 and 2017 were also very good, while Pajzos didn’t have any Aszú at all in 2015.

“It was too rainy [in 2015], from the end of September to the beginning of November, while 2018 was too dry and too hot, although some rain at the end of August helped to make botrytis appear, but it turned out to be more shriveling than pure noble rot.”

Incidentally, Pajzos claimed top stop in Winelovers’ Top 100 Hungarian wines 2019 edition with its 5 Puttonyos Aszú 2006 (HUF 14,060 from Borbazis.hu), a wine that is entering its prime with forest floor and earthy notes now complementing the still very fresh tropical and citrus fruit.

The high acidity cuts through the residual sugar, making the wine

delightfully fresh and taut yet layered and complex, too.

Excellent Quality

At the family-owned and run Erzsébet Pince winery in Tokaj, winemaker Miklós Prácser Jr. said the harvest was almost completed, with a large amount of excellent quality Aszú berries having been picked.

“It’s similar to 1999 [a landmark Aszú vintage, sometimes dubbed the vintage of the century], when we could pick a similar amount of top quality grapes. The weather was perfect with lots of sunshine and a bit of rain to kick-start the botrytis,” he said.

When we spoke on October 29, Prácser remarked that it was the first rainy day since the beginning of the month and the grapes were very healthy before then. He added that the dry wines are also good, but that a lot of hand selection had to be carried out due to vinegar rot caused by fruit flies.

“Thankfully, there were only high-quality grapes remaining after selection, which contained good acidity and sugar,” he said.

Erzsébet Pince Lunée 2017’s is a very good example of how well the Sárgamuskotály grape (also known as Muscat Blanc, Muscat Blanc à Petits Grains, Muscat Lunel and Yellow Muscat) can perform in Tokaj as a dry wine.

One of the three vineyards contributing to the aforementioned wine is Zafír, from the commune of Tarcal, with its mix of loess and brown forest soil on bedrock of volcanic dacite. Erzsébet Pince Zafír dűlő 2016 is a complex, concentrated and classy blend of Furmint (90%) and Hárslevelu (10%).

Not everyone is quite as sanguine on the 2019 vintage in Tokaj, however. Erika Rácz from Tokaj Sanzon in Erdőbénye described the vintage as challenging due to hailstones having damaged the skins and made them vulnerable to fungal diseases, which called for rigorous selection on the sorting table.

Zsolt Berger, winemaker at Karádi-Berger, also in Erdőbénye, said that although 2019 was quite a hot vintage with the same level of warmth as 2018, the harvest for dry wine commenced on September 20 this year, three weeks later than in 2018.

With no rain until the end of May, and then a cold June, the grapes got off to a slow start in 2019, with the acidity remaining sufficiently high, enabling them to stay out on the vine into the second half of September to pick up flavor.

Karádi-Berger’s soon-to-be-released Kalandor Furmint 2017 is a great expression of the grape with its oftenelusive quince note coming through clear and unimpeded, culminating in a deliciously creamy and round finish.

It shows excellent and measured use of oak from fermenting and ageing in (mainly) used barrels from the Kádár Hungary and Miklóssy cooperages, which don’t block out the grape’s natural characteristics, yet help to build structure.

Cour te s y N ation al G aller y of Ar t, Washing ton

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