Budapest Business Journal 2807

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

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 7

APRIL 9 – APRIL 23, 2020

SPECIAL REPORT

Telecoms & ICT

SPECIAL REPORT

IVSZ: Rebooting the Digital Economy is a Priority The ICT Association of Hungary has taken a survey of 150 CEOs to look into the challenges the coronavirus pandemic is throwing up, and how digitalization can help find a way out of the crisis, while also putting the country on a stronger, tech-driven path. 7

SPECIAL REPORT

5G Rollout Starts, Leaving Full Leverage to Later The tech-savvy maintain high hopes for the capabilities of 5G. In proof that COVID-19 has not brought everything to a grinding halt, leading telco providers bought a range of 5G frequency bands in the media authority’s March auction. 9

SOCIALITE

Veganism Finding its Path Even in Meat-loving Hungary Aspiring vegan David Holzer talks with one of the leading Hungarian plantbased foodies, blogger and YouTuber Kristóf Steiner, about the spread of the movement here. 12

Hungary Must Adapt to Survive NEWS

Further Measures of Economic Plan Disclosed

The coronavirus will surely have a devastating economic impact in the near future. In order to ease such shocks and fuel the re-launch of the economy, the government has created an economic package that takes action on several fronts, including job protection and wage subsidies. 3

NE BUSI

SS

In an exclusive BBJ interview, AmCham president Farkas Bársony says the COVID-19 pandemic has exposed vulnerabilities in Hungarian business and society, but also offers an opportunity to learn and change.5

NEWS

Need for Liquidity Apparent in Investment Market Will the perception of CEE as a relatively low risk, high yielding investment option survive in the current health and economic crisis?, asks BBJ real estate editor Gary Morrell. 4

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Budapest Business Journal | April 9 – April 23, 2020

BBJ

THE EDITOR SAYS

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

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

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MAKING THE CORONAVIRUS STATISTICS MORE PERSONAL For me, the COVID-19 pandemic became much more personal last week. My nephew, a fit, 32-year-old sporty type who teaches English in Madrid, contracted the disease.

Fortunately, he is well on the way to recovery, although his sense of smell was returning more slowly than that of taste.

Amid the very tight lockdown in Spain, he is particularly grateful his flat has a reasonably sizeable balcony of which he can exercise and take in some fresh air.

Concerning though that news was, it was trumped when I found out my older brother, in the less oppressively locked down United Kingdom, has also been diagnosed with coronavirus, along with his wife. He is generally fit, but will be 60 this year and has diabetes, both of which place him in a higher risk category. So much so, in fact, that on the advice of his health clinic, he had already been ordered to stay at home.

He, too, seems thankfully well on the road to recovery.

In many ways, we were somewhat surprised he had not caught it anyway, since his work was in information and passenger assistance at Gatwick Airport. I say was, because he has now been laid off, but with a reasonable package, and compared to his health, that is, while important, not the most pressing matter right now.

I mention all of this because it has really brought home to me the reality of what we face. The tragedy of 13,798 deaths in Spain (as at the time of writing) is truly awful.

But those deaths remain a statistic until you see some of the victims for yourself, or happen to have a relative in the country with the disease.

Being British-born, I obviously have a closer connection with the United Kingdom. But the drama

THEN & NOW

unfolding there (5,373 deaths at noon on Tuesday, April 7) was made much more real by my older brother’s diagnosis, even than the truly shocking news that its Prime Minister Boris Johnson had been moved to intensive care. (It goes without saying that, regardless of personal views or party politics, everyone should wish him, his pregnant fiancé and his government well.)

They used to say there was barely a family in Britain – let alone a village or town – left untouched by the bloody slaughter of World War I. The mild infection of the heir to the British throne, Prince Charles, and the much more serious one suffered by Johnson, make it clear COVID-19 is entirely non-discriminatory. Race, gender, age, color, creed, nationality; all are as one to it.

No one is exempt.

It will be a distinctly odd Easter this year. No trip down to Szeged for my kids to meet with their Mama and Papa, go through the rituals of “sprinkling”, playing with the live Easter Bunny my father-in-law always manages to arrange to be on hand in the back garden prior to the traditional Easter present hunt. Instead, it will be Easter by Skype and Facetime (other service providers are available), and prayers that we all stay well.

However it is that you chose to celebrate Easter, whatever you call it, and whether you worship one god, many or none, I wish you a peaceful, loving and above all healthy long weekend.

Robin Marshall Editor-in-chief

In the black and white photo (left) from the Fortepan public archive, a patient in Hungary in 1914, during World War I, receives an injection from a doctor, accompanied by a nun, possibly prior to an operation. In the color image from state news wire MTI to the right, nurses dressed in protective gear are about to enter an isolation room set up for patients infected with COVID-19 in the Korányi National Institute of TB and Pulmonology (originally opened in 1901) at Pihenő út 1, Budapest, on April 3.

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Budapest Business Journal | April 9 – April 23, 2020

News///macroscope

Further Measures of Economic Plan Disclosed

While the economic effects caused by the coronavirus pandemic could not be observed in the February industrial output data, COVID-19 will surely have a devastating economic impact in the near future. In order to ease such shocks and fuel the re-launch of the economy, Viktor Orbán’s government has created an economic package that takes actions on several fronts, including job protection and wage subsidies, rechanneling 18-20% of GDP for the purpose.

ZSÓFIA CZIFRA

Although there are no official estimates by the government of the extent to which Hungary’s economy will shrink due to the pandemic-inspired crisis, Prime Minister Viktor Orbán’s cabinet has come out with a three-stage economic protection plan. The first phase had already been introduced; the second wave of measures were just revealed on April 6-7.

The new steps include a wage support scheme, reintroducing 13-month pensions, restoring highlighted sectors of the national economy and granting more than HUF 2 trillion in loans with interest subsidies or state guarantees to companies.

The first stage of the three-step plan, introduced mid-March, involved a reduction in social security payments, help offered to those paying KATA simplified business tax and the suspension of bank loan repayments.

Numbers to Watch in the Coming Weeks We will see a relatively calm twoweek period when it comes to macroeconomic statistics. The second estimates of February’s industrial output data will be released on April 15, followed by the February construction sector figures the next day.

Industry Performed Well in February

Prime Minister Viktor Orbán announces the second wave of economic support and recovery measures in Budapest on April 6, 2020. Behind him are, from left, Minister of Finance Mihály Varga, Minister Responsible for Managing National Assets Andrea Bártfai-Mager and Minister for Innovation and Technology László Palkovics. “We are living in difficult times, but you can see that no Hungarian is alone; we will succeed if we take care of each other,” the prime minister said. Photo by MTI/Prime Ministerʼs Press Office/Zoltán Fischer The second set of steps consists of five elements, with the government reshuffling 18-20% of GDP in order to execute them, the prime minister said on April 6 when he introduced the measures.

That means the government must deviate from the 2020 budget given the changed circumstances and raise the budget deficit from 1% to 2.7% of GDP this year, Orbán said.

The goal of the economic protection action plan is to create as many jobs as will be wiped out by the coronavirus, the prime minister said. The first of the five measures now introduced aims at preserving jobs, he said.

In order to do this, the government will subsidize the wages of employees whose working hours are reduced, representing a special Hungarian form of wage support, Orbán said.

Priority Sectors

Another part of the program concerns priority sectors of the national economy which will have to be restarted. These include tourism, the health industry, the food industry, agriculture, the construction industry, logistics, transport, the film industry and the creative industry.

In order to provide funding for businesses, there will be interest- and guaranteesubsidized credit facilities made available to Hungarian businesses to the total value of more than HUF 2 tln. For job creation purposes, the government will support investments with some HUF 450 billion.

The program also contains measures protecting families and the elderly, so the government will reintroduce the 13-month pension in four instalments, Orbán announced. As a result, in February 2021, in addition to the January pension, pensioners will receive an extra week’s pension, with the same arrangement repeated in 2022, 2023 and 2024.

Altogether, a total of HUF 9.2 tln forints will be available in the years ahead to mitigate the economic effects of novel coronavirus in Hungary, with an emphasis on protecting the

labor-based economy, Minister for Innovation and Technology László Palkovics said a day after Orbán’s announcement, revealing further details of the plan.

The government will take over 70% of the wage costs of employees who work reduced hours at companies affected by the coronavirus pandemic, for a period of three months. Engineers and researchers will get 40% salary coverage from the government.

Palkovics also said that HUF 2 tln in subsidized credit and HUF 500 billion in state guarantees will be made available to struggling businesses. A further HUF 600 bln will be allocated to the tourism sector.

The National Bank of Hungary (MNB) will also look to do its bit. Governor György Matolcsy announced that the Monetary Council of the MNB will provide a total of HUF 3 tln in fresh funding to protect the financial system, about 6% of this year’s GDP. The central bank will reintroduce its Funding for Growth scheme, called NHP ADVERTISEMENT

The volume of industrial production grew by 4.1% year-on-year in February, the latest data from the Central Statistical Office (KSH) shows. Based on working-day and leap-day adjusted data, production rose by 1.7%. The economic effects caused by the coronavirus epidemic cannot be observed yet in this period, the KSH said. Of the subsections in manufacturing, the rate of growth slackened in that representing the largest weight, the manufacture of transport equipment, while it accelerated in the manufacture of computer, electronic and optical products, as well as in the manufacture of food products, beverages and tobacco products. Production volume declined in the majority of the subsections with a smaller weight.

Production was 3.2% higher in the first two months of the year than in the same period of the previous year. Industrial output in February – according to seasonally and working-day adjusted indices – was 0.2% above the level of the previous month. Analysts said that March data will already show the impact of the coronavirus pandemic, and while the first quarter data might still be quite good, a sharp decline is anticipated already in the second quarter of the year.

Hajrá, through which it will allocate HUF 1 tln, together with HUF 500 bln in the Funding for Growth Fix scheme.

Commercial banks will receive an additional 4% interest rate subsidy, freeing up some HUF 250 bln in liquidity.

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Budapest Business Journal | April 9 – April 23, 2020

Need for Liquidity Apparent in Investment Market Will the perception of the Central European region as a relatively low risk, high yielding investment option survive in the current COVID-19 health and economic crisis, asks the Budapest Business Journal’s real estate editor Gary Morrell.

GARY J. MORRELL

“It depends if we still have liquidity on the market and available funds to invest in commercial real estate. CEE countries were always dependent on core EU economies, but those markets were always more expensive.

As long as there is a recovery in markets, sooner or later the appetite will come back to towards CEE assets as well,” comments Adorján Salamon, CEO of Eston International, an international associate of Savills.

CBRE expects COVID-19 to have a negative short- and medium-term effect on the wider commercial real estate market in Europe, provided the outbreak is brought under control in a reasonable time frame.

“The shorter the shock lasts, the faster the recovery is. The economic fundamentals were healthy before COVID19, it will all depend on how long the European economies will be shut down,

“This is indeed uncharted territory, as the pandemic and subsequent states of emergency are restricting ‘business as usual’ for so many individuals and businesses. Therefore, reaching a mutually ‘best of a very bad situation’ compromise is surely one way to help protect all of our interests in the long run,” he says.

On one hand, landlords will understandably want to collect their rents to protect their investments, while on the other, occupiers will want to focus on securing the future of their businesses and people.

CTPark Budapest East how much time it will take to restart the engine,” Salamon agrees.

“Industrial and office assets with high WAULTs [weighted average unexpired lease terms] will still be considered safe investments, however, the number of retail and hotel transactions will most probably decrease significantly.”

Eston sees the industrial market as the least negatively impacted sector in Hungary; it has record low vacancy and no change in demand has been seen, although this could change if the crisis is prolonged. In spite of governmental public health measures and downsizing by manufacturers, client companies of the consultancy are continuing their long-term plans for acquiring development land.

The office sector is seen as the second least affected market, if the traditional long-term leases are taken into consideration. However, co-working/serviced offices could be put to the test with the current use of home offices. If companies and workers explore this approach, then it could change not only co-working, but the whole traditional

Coronavirus ///roundup Multi-patient Ventilator Being Developed in Óbuda The development of a multi-patient ventilator is being worked on at the University of Óbuda, says portfolio.hu. The special ventilator may be suitable for the care of several patients with critical coronavirus at the same time, while also filtering the airspace for medical staff. One distinct advantage is that the equipment can be installed on an ad-hoc basis in an out-of-hospital environment, even without hospital infrastructure. The director of the institution’s innovation center said their goal is for the tool to be up and running within two months.

110,000 Liters of MOL Hand Disinfectant Shipped in First few Days Within the first few days of production, 110,000 liters of MOL Hygi hand and surface disinfectant were shipped by MOL Lub to various parts of the country to help curb the coronavirus epidemic, the company said on April 5, writes hvg.hu. With the global spread

of the coronavirus epidemic, there has been a huge spike in demand for hand and surface disinfectants around the world. In just two weeks, MOL Lub Kft., which is part of the MOL Group, was able to switch one of the production lines of a plant that previously produced windshield fluid, to disinfectant production. The unit began production in the final days of March, hvg.hu adds.

IKEA Donates HUF 100 mln in Hungary IKEA is offering a HUF 100 million donation to support the local governments and organizations most affected by the outbreak, said Mounia El Hilali, regional trade manager, on March 31, writes hvg.hu. In addition, nearly 1,500 kg of food have been donated via local governments to people in need, elderly people and a hospital in Budapest, he added. Several organizations are in talks about additional product donations. In the wake of the coronavirus outbreak, IKEA has also made parking free on weekdays in the parking lot at its store on Örs vezér tér in Budapest, hvg.hu adds.

office approach. However, clients seem to be advancing new lease plans; the only limiting factor is the difficulty of office viewings.

Disrupted Sectors

Retail is seen as a disrupted industry: fashion and comfort products are expected to suffer enormous decreases in footfall. The biggest impact, however, is on the hotel sector: many countries have closed their borders and so long as there is a lack of trust in traveling, Eston do not expect this to change. This is particularly bad news for Hungary, which had been seeing a hotel development boom and record tourism numbers.

According to Kevin Turpin, regional director of CEE research at Colliers International, the current situation puts both landlords and tenants in a very unfortunate predicament.

“It depends if we still have liquidity on the market and available funds to invest in commercial real estate. […]

As long as there is a recovery in markets, sooner or later the appetite will come back to towards CEE assets as well.”

In all real estate sectors, a future where properties have no businesses to occupy them and where businesses have no properties to operate from does not paint a very good picture for anyone.

“Loan repayment holidays and/or other financial measures, including government aid packages across the region are hopefully in the making and until these are more clear, it is essential that we find solutions that will work alongside these,” comments Luke Dawson, managing director and head of CEE capital markets at Colliers International.

Ambulance Service Teams up With Code School The National Ambulance Service (OMSZ) and the Codecool Programming School have started a collaboration to create rapid IT developments to help fight the coronavirus, writes Forbes.hu.

According to the rescue service, the software school and graduate programming students at the school are developing, within a few days, intranet-, mobile- and web-based targeted applications for rescuers

to help them fight the coronavirus.

The first app has already been completed and ambulances have been tracking the evolution of the amount of protective equipment at all rescue stations in the country since last week via it. With the help of the data, the rescue service can react immediately to changes in the OMSZʼ toolbox, thus speeding up its response, Forbes.hu says. Photo by Tibor M/Shutterstock.com

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Budapest Business Journal | April 9 – April 23, 2020

Business

Coronavirus Response: ‘Adaptation is a Condition of Survival’

How do you run a chamber of commerce when you can no longer meet your members? The Budapest Business Journal asked AmCham Hungary president Farkas Bársony how it is coping, what it is doing, and what the implications of the pandemic might be for the current and future business world.

ROBIN MARSHALL

BBJ: AmCham is famous for many things, not least its events. How does a chamber function when it cannot meet?

Farkas Bársony: The COVID-19 outbreak put everyone’s adaptability and resilience to the test. After assessing the situation, we regrouped and moved our leadership, policy task force and committee meetings online with success. For the time being, the flagships events are postponed to the fall but, in April, we started a new webinar series where experts talk about the latest developments surrounding the economy and the labor market and we will also discuss highly relevant topics such as remote team management, home office efficiency, wellbeing and new competencies.

We stay in touch with our members and serve as a platform where they can discuss the situation, share best practices, their insights and services amid the crisis.

BBJ: What, specifically, has AmCham been focusing on in recent weeks?

FB: Advocacy remains our top priority.

Fortunately, the government has been open and cooperative with the business

Farkas Bársony, president of AmCham Hungary. sector: We were invited to join an action group to help analyze the situation and support the crisis response.

We have reached out to our members, conducted surveys to get a better understanding of the impact of the coronavirus and the challenges businesses face now. We compile their feedback and have sent proposals to the government every week. These suggestions are aimed to help maintain liquidity, preserve jobs, simplify administration and ensure the flow of goods and raw materials.

BBJ: What are the biggest concerns of your members right now?

FB: Uncertainty. The coronavirus hit the economy with an overwhelming scale and speed. In an unpredictable, escalating, constantly changing environment with no peak and end in sight, it is extremely difficult to adapt, make good, smart and fast decisions and prepare long-term.

Besides this, job retention, maintaining productivity, lower demand, supply chain issues and adaptation to remote working are the main challenges right now. Everybody is looking forward to the government’s economic stimulus action plan. We hope for an effective solution that considers the interest of large companies and SMEs equally.

The protection, recovery and modernization of small- and mediumsized enterprises, the cornerstones of our economy is essential, but it is also important to support large corporations which bring investment, lead innovation, employ a considerable part of our workforce and account for a significant share of our exports.

Hungary needs to remain an investorfriendly economy, safeguarding the advantages and capabilities with which we have attracted an outstanding number and amount of investments in recent years.

BBJ: The chamber is able to call on a lot of brain power. What is your best estimate for how long this crisis will last?

FB: Unfortunately, we are not in a position to make predictions. At the moment, the best we can do is monitor the situation, stay informed, maintain contact with the authorities and stakeholders, and prepare scenarios for all possible outcomes so, when the time comes, we are ready to take the best course of action.

BBJ: Beyond a reminder that society can actually be quite supportive when forced to, what positive outcomes do you think might come from this?

FB: The coronavirus has brought the world to its knees at an unprecedented pace. People are realizing that we are not invincible and we, as individuals and a community, must better prepare for extraordinary events like this.

Our flexibility, resilience, discipline and strength as a community are being tested. We were thrust into a situation where adaptation is a condition of survival.

Sudden and drastic changes were needed to continue production, facilitate remote working and enable digital education.

Another positive outcome would be an increased attention to health, mental and physical wellbeing both at home and at the workplace. In general, the pandemic highlighted the need for serious healthcare, education and environmental reforms. And I also hope this extraordinary situation

will teach us to appreciate our healthcare professionals, first responders, teachers and service industry workers even more.

BBJ: One of the few obvious positives to date has been a drop in road and air transport and a rise in air quality.

Bearing in mind climate change targets, do you think we will return to “business as normal”, or need to find a “new normal”?

FB: This tragic pandemic has had several positive effects on the environment.

While these are likely short-lived, I believe this is an effective wake-up call for everyone: Governments and businesses all over the world need to revise their environmental policies and economic stimulus packages must refrain from relaxing environmental supervisions.

It is always easier to return to normal, to follow customs, but we have a chance to build a better, greener future. I hope one of the biggest lessons for everyone is to trust science and the experts in these matters.

“I think this crisis has revealed our shortcomings and vulnerabilities, but it also gives us an opportunity to learn and push the envelope. We have a chance to build a smarter, more resilient, more productive and sustainable economy. We have a chance to modernize education to prepare our students and teachers for a dynamic world with the required competencies, skills and thinking.”

BBJ: Is there anything else you would like to add?

FB: This is an opportunity to rebuild and reinvent. The pandemic will have a lasting influence on our behavior and way of thinking. It will alter our preferences, expectations and demands, changing how we live and work.

I think this crisis has revealed our shortcomings and vulnerabilities, but it also gives us an opportunity to learn and push the envelope. We have a chance to build a smarter, more resilient, more productive and sustainable economy. We have a chance to modernize education to prepare our students and teachers for a dynamic world with the required competencies, skills and thinking.

One thing is for sure: We will not be able to restore the “normal” proceeding the COVID-19 pandemic.

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Budapest Business Journal | April 9 – April 23, 2020

COVID-19 and Financial Markets: Part III There is still much we don’t know about the virus. The biggest question mark is the mortality rate, commonly estimated by most health authorities

After several weeks of extreme volatility, the most dramatic crash in the history of financial markets and partial recovery, Les Nemethy asks: Where can we expect financial markets to go from here?

at

2-2.5%.

How should you allocate your assets to help withstand further volatility in the coming months? In my opinion, the course of financial markets is highly dependent on the course of COVID-19, and how governments and media respond; hence, let me first provide my latest thoughts on this subject.

The world is about to witness the most horrendous months of pandemic witnessed since the Spanish flu in 1918. While Italy may be peaking, (after weeks of lockdown and more than 10,000 deaths), new hotspots are rapidly emerging in Western Europe and the United States.

In the States alone, where containment has failed, there could be 70 million to 150 million people infected with COVID-19, according to a cnbc.com report from March 11, which could mean 1 mln-3 mln deaths.

Countries such as India and Indonesia are now ramping up the geometric curve where absolute numbers of cases are becoming very significant. These countries have higher population density, lower hygiene standards, fewer medical facilities, and hence the toll in lives could be enormous.

We have accurate hospital statistics on the number of people who die from COVID19, but very unreliable information on the number of people infected, which is massively underreported.

In most countries, only symptomatic cases are being tested, and even that is not always the case. If many more people are infected than realized, we reach herd immunity faster than expected. That does not take away from the reality that there will likely be hundreds of thousands if not millions of people dying in the coming months from COVID-19 in the United States and Western Europe.

Not to minimize the humanitarian devastation caused by COVID-19, but we suffer more than a million deaths from each of car accidents and regular flu every year, yet the world economy does not miss a beat.

It is lack of preparation and poorly thought out strategies of governments that magnify the economic damage, according to a piece titled “COVID-19 Derangement Syndrome: A World Gone Mad” on thesaker.is

‘Dead Cat Bounce’

My own belief is that the partial recovery of equity markets last week was a classic “dead cat bounce.” The good news of last week’s massive monetary and financial stimulus caused the bounce, but the stimulus is already fully priced into markets.

The coming bad news is probably not.

It is unlikely that the Fed’s monetary and fiscal bazookas will solve the economic devastation caused by the virus, nor quell the panic and disruptions from loss of life.

It can only provide some relief through liquidity. Over the coming months, the combined effect of death toll, lockdowns, associated panic, and unforeseeable knock-on or domino effects, will likely take market indexes lower, possibly significantly lower.

When looking at domino or knock-on effects, just the existing damage done to

The Corporate Finance Column the global economy and financial system to date has the potential to unleash mass bankruptcies (restaurants, hotels, etc.)

What about the ability of the Italian banking system to withstand the lockdown? To what extent will supply chains fail in this period of reverse globalization? What chance is there that a country hostile to the United States takes advantage of its weakness, going on a land grab or starting a regional war?

We have no way of knowing what these domino effects may be, and they are not priced into markets. In my opinion, all bets are off.

We are in a financial and economic storm without a compass. There is nothing financial markets dislike more than uncertainty.

The possibilities are endless. We have no way of knowing what these domino effects may be, and they are not priced into markets.

In my opinion, all bets are off. We are in a financial and economic storm without a compass. There is nothing financial markets dislike more than uncertainty.

So, how should assets be allocated over the coming months?

• Cash: If you can afford it, have enough cash on hand to cover personal or corporate overheads for several months as a form of insurance.

• Gold: This is the classic “safe haven” asset. While it was sold off during the recent market crash, this was probably due to margin calls and a massive need for liquidity. Gold may be positioned for a breakout in the coming weeks.

I personally have one third of my modest portfolio in gold-related assets: 10% of that in physical gold (coins),

30% in gold mining shares, 10% in a gold ETF, and 50% in gold royalties (Franco Nevada, FNV).

• Debt: There is a distinct possibility that massive amounts of stimulus will lead again to inflation. As interest rates tend to rise during inflationary periods, to the extent you need debt, try to shift it to fixed interest rate debt. During periods of flight to quality, further appreciation of U.S. Dollars, Swiss francs, etc., may be expected. Holding debt in emerging market currencies would likely be better.

• Equities: Domino effects may severely effect certain types of equities (e.g. banks). Nevertheless, the most astute investors will be able to find winners in this difficult environment.

Look at Amazon hiring 100,000 workers, or companies engaged in viral drug research.

Massive fiscal and monetary stimulus may very well reignite inflation in the medium to long-term. This reinforces the rationale for gold, and suggests we not hold too much cash. Long-term fixed rate debt, particularly in weak currencies, may well deflate in value over time, should inflation kick in.

Our next blog will deal with the M&A environment in the coronavirus era.

Disclaimer: The information, data, and analysis in this article should not serve as advice for any investment decision.

Neither Euro-Phoenix Ltd. nor any of its officers and directors make any representations or warranties, express or implied, as to the validity and/or accuracy and/or completeness of the information set forth in this article.

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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Special Report Telecoms & ICT

IVSZ: Rebooting the Digital Economy is a Priority

The ICT Association of Hungary has taken a survey of 150 CEOs to look into the challenges the coronavirus pandemic is throwing up, and how digitalization can help find a way out of the crisis, while also putting the country on a stronger, tech-driven path.

CHRISTIAN KESZTHELYI

IVSZ, as the ICT association is known, has called for immediate initiatives and the launch of a program to support the restart of the digital economy, which it worries could suffer due to the current economic slowdown caused by today’s unprecedented times.

The association says it believes that digitalization will not only help to alleviate the likely economic crisis caused by the coronavirus pandemic, but also represents a unique opportunity.

To that end, the association is promoting the launch of a program that includes education, increasing the digital preparedness of workers and small businesses, and the digital development of those sectors hardest hit by the crisis, based on a survey of

150 executives

over the course of two days.

The research was carried out to assess the effects of the crisis on the digital economy and to gather the challenges the sector faces, so the association can offer solutions to address the real world difficulties.

More than three-quarters of the IVSZ respondents said they already feel insecure about the loyalty of their customers, with 70% mentioning deferred orders and 28% canceled orders due to the current situation. Some 44% said they have postponed development and investments while 23% have reduced their capacities.

Short-term Measures

With more people WFH (working from home), steps must be taken to protect the digital economy, the IVSZ warns. Photo by Peshkova/Shutterstock.com work schedules), while more than a third have closed offices and set up crisis teams.

In the long run, approximately 80% expect the current situation to have a negative financial impact on their businesses, 71% have a negative view of the revenue outlook for the ICT sector as a whole, and 64% are pessimistic about the industry’s employment prospects.

Those surveyed by IVSZ are even more pessimistic about the national economy as a whole:

more than

90%

expect negative effects on both employment and GDP. While a wide range of economic rescue measures have already been announced by the government, IVSZ says that a large proportion of respondents believe that schemes specifically related to digitization are also necessary.

The association points out that dozens of proposals have been prepared in this regard. Going further, respondents believe that the role of the EU will also be essential in three key areas: financial support, investments and regulatory issues.

In agreement with the players in the sector, IVSZ also urges that support for the IT sector and the digital economy should become an integral part of public economic protection measures; digital solutions, it says, are essential for economic recovery.

The majority of respondents have already taken short-term measures to cope with the current situation: 93% have set up the technical conditions for working from home (now widely Help for the Self-employed known by the letters WFH), 80% have started IVSZ found that the executives they spoke remote working and 90% use online and video tools to substitute for face-to-face meetings. to were looking forward to the general (sector-neutral) economic rescue package A third of executives IVSZ spoke to – announced by the Prime Minister this introduced new working hours (or shifted

week, after the survey had closed –, hoping for support relating to wages and contribution to keep businesses operational and help retain jobs.

More than three-quarters of IVSZ respondents said they already feel insecure about the loyalty of their customers, with 70% mentioning deferred orders and 28% canceled orders due to the current situation.

Some 44% said they have postponed development and investments while 23% have reduced their capacities.

Bosses further noted that the selfemployed also need to receive support, being an important part of the national economy. Businesses anticipate the acceleration of the disbursement of already awarded or still eligible EU funds, as well as the creation of new funding opportunities, and the introduction of packages supporting digital development.

Additionally, many respondents called for the acceleration of municipal and

state orders, the launch of new public procurement tenders and the rapid execution of payments.

Executives also emphasized the importance of digital education and retraining, the development of digital competences and the digitalization of education. They say the some of the digital solutions that have emerged for overcoming the current challenges in education, such as remote working and communication, must be improved and changed once the passes, so that both the economy and society can become more prepared for similar shocks in the future.

Battling with high fixed costs (such as paying office rental) and trying to pay invoices and finance debts can cause a crisis of business confidence, which might result in cost cuts leading to redundancies, the leaders surveyed by the association have warned.

Based on the findings and proposals, IVSZ has created a summary it has made available for government decision-makers to help manage crisis in the digital sector.

At the same time the association says it is initiating the joint development of a program with the government and industry players to support the digital relaunch of the economy.

In a study published last year based on the analysis of weight of the digital economy, IVSZ said that the national economy could achieve thousands of billion forints in GDP growth within a few years through the consistent digitalization of processes and businesses supported by government policies and measures.

If anything, that message is even more important today, the associations insists.

8|3

Special Report

PRESENTED CONTENT

www.bbj.hu

Budapest Business Journal | April 9 – April 23, 2020

Operating a Telco Giant in the Time of COVID-19 The Budapest Business Journal talks with Judit Endrei-Kiss, chief HR officer at Telenor Hungary, about the extraordinary measures taken to help employees and keep the company – and business in general – running during the coronavirus pandemic.

BENCE GAÁL

BBJ: How is Telenor solving situations around meetings and personal contact?

Judit Endrei-Kiss: We were among the employers first to make home office compulsory on the Hungarian market. This affected all jobs, including the customer service ones, as we have closed down our Törökbálint HQ. Remote work is an integral part of our work culture, and depending on one’s position it is usually possible.

To make home office suitable for everyone, our tech colleagues have implemented the necessary capacity expansions, making VPN available to all colleagues who may not have had it on their computer before.

Telenor is lucky in this respect, as many companies do not have a system to support home office; however, there are now a number of open access, remote connectivity solutions that only require a laptop and internet connection.

While personal meetings are hard to replace, we can keep in touch with each other, thanks to technology. Our colleagues can take care of communications with the help of creativity and planning. We support their work with tech tips, a webinar sharing good practices, and online learning opportunities.

In the current situation, we are facing new challenges every day, we have to react quickly, and in my experience, many people work more because of this than during a regular work schedule.

We encourage businesses and their leaders to follow our example, as the most important thing is slowing down the spread of the epidemic and protecting people.

BBJ: What about your store employees?

JE-K: We are very proud of our colleagues working in our stores, as their position does not make home office possible, and they have to stand their ground on the frontlines. One of our most important tasks is protecting them and our customers.

Judit Endrei-Kiss, chief HR officer at Telenor Hungary.

We have sent our pregnant and chronically ill colleagues home. Naturally, the others receive personal protective equipment. From March 17, and continuing until the government revokes such measures, our stores are open until 3 p.m.

Every employee is mandated to wear masks and we have placed easily visible guides for customers regarding precautions. In the meantime, we are also calling for our clients to stay at home if possible, and use digital channels for purchases and services, such as our website, the My Telenor app and online platform, and our call center.

BBJ: Are you distributing unused equipment among colleagues?

JE-K: On the one hand, we have made unused laptops available for colleagues previously working on desktop PCs, and it is now possible to use monitors in the office at home, if necessary. But the exemplary cooperation experienced during the crisis is even more important. From the moment compulsory home office was ordered, colleagues started organizing self-help groups for each other, which we have helped coordinate.

This is fantastic because helpers and those who need help have found each other. Many found themselves in a difficult situation after school closures and did not have tools for studying at home. Anyone who had a dispensable tablet or laptop offered it to someone who needed it.

BBJ: How does Telenor help the families of colleagues working from home?

JE-K: The first phase of crisis management was about protection; from now on, our priority is retaining jobs. We have committed to sending no one away, including colleagues working in the store network. To this end, we need collaboration; for example, we have decreased allowances at the management level.

Protecting the families of our colleagues is just as important as protecting the colleagues themselves. The company’s management unequivocally agreed not to resort to unpaid vacations, regular vacations, absences, downtime, and sick leave, but rather decided to introduce home office.

As an emergency measure, we have decided to support those who have seriously ill family members who require care.

“The current special situation requires a lot of patience and caution, and we had to instate changes overnight. Tension and uncertainty is unavoidable.

Hence we are offering a consultation opportunity with voluntary coaches and psychologists.”

While we have closed our HQ, our kitchen is still operating, meaning that those who work there have not lost their jobs, and we can also offer food delivery options to colleagues and their families in need. The current special situation requires a lot of patience and caution, and we had to instate changes overnight. Tension and uncertainty is unavoidable. Hence we are offering a consultation opportunity with voluntary coaches and psychologists.

BBJ: What kind of discounts are you offering customers?

J-EK: In the state of emergency, problemfree internet access has become more

important. In view of the situation, we gifted 100 gigabytes of data to all our business and retail, postpaid and prepaid customers until March 31. Based on the feedback, this has been a huge help to many. From April 1 to May 31, instead of one gigabyte, we are offering 100 gigabytes of Hipernet at a very discounted price of HUF 1,000.

With the professional help of the Hungarian Red Cross, we have launched a wide-ranging public information campaign to inform about basic precautions, facts and misconceptions about the coronavirus.

With our HiperSuli digital education team and educators we published a package of suggestions to parents and educators within 24 hours of the school closures being announced. New suggestions and professional articles for educators and parents are constantly posted on the HiperSuli website, so it is worth visiting from time to time.

The TelenorMyTV service now allows clients to view public service programming from the last three days. In addition, visiting websites recommended by the education authority is not included in the data consumption on our network.

BBJ: How much has data usage increased since the virus’ appearance in Hungary?

J-EK: It is worth noting that traffic also depends on the exact solutions and platforms our subscribers use for mobile education and work. Our network traffic has increased in the recent period, customers make many more and far longer calls than normal, and the total daily data usage is on average approximately 30% higher, especially during working hours.

For example, video calls may be one of the underlying causes. The increased usage starts in the morning and is apparent in both uploads and downloads.

3

www.bbj.hu

Budapest Business Journal | April 9 – April 23, 2020

5G Rollout Starts, Leaving Full Potential Leverage to the Future Although there are sceptics with adverse feelings, a common phenomenon with emerging new technologies, the tech-savvy maintain high hopes for the capabilities of 5G. The industry in Hungary is getting closer to its practical realization every year: In proof that COVID-19 has not brought everything to a grinding halt, leading telco providers bought a range of frequency bands at the media authority’s end of March auction.

CHRISTIAN KESZTHELYI

“We don’t sense either any meaningful opposition or very strong optimism regarding 5G,” György Koller, the chief technical officer of Telenor Hungary tells the Budapest Business Journal.

“We believe that our customers don’t necessarily have to understand the underlying technology. From a certain perspective, it doesn’t make any difference whether they use a 4G or a 5G network. If their needs including the need for highquality are satisfied, technology is of secondary importance.”

Telenor Hungary has 5G test networks in Győr, Törökbálint (home to its currently closed head office) and Budapest, and expects the spectrum and commercial service to go live

30 days

after the official announcement of auction results. The firm’s 4G consumer coverage (Hipernet 4G) now reaches 99.5% of the country.

Special Report | 9 HUF 8.44 bln; and 120 MHz in the 3600 MHz band for HUF 19.8 bln. Telenor Hungary got the maximum (140MHz) in the 3,600 MHz frequency range and 2x5 MHz duplex band in the 700 MHz range, while it did not receive frequencies in the 2100 MHz band. Vodafone Hungary acquired 2 x 10 MHz in the 700 MHz band for HUF 26 bln; 2 x 5 MHz in the 2100 MHz band for HUF 4.4 bln; and acquired 50 MHz in the 3600 MHz band for HUF 8.25 bln.

Future Needs

“Frequency allocation opening the way to new technologies should always be planned based on future rather than current needs. In Hungary, NMHH has elaborated a highly professional auction procedure giving maximum consideration to technical and user needs expected in the coming decade, the needs of the Hungarian economy and the criteria of its long-term competitiveness,” Koller says.

György Koller, chief technical officer of Telenor Hungary.

“Thanks to ongoing development, this technology now has a capacity formerly projected for 5G and the old technology still has some further development potential. In the near future, 5G will go hand in hand with 4G in serving growing needs, primarily in high-traffic areas,” Koller says.

Despite that, the recent 5G frequency auction was a necessity, István Király, business unit director at Vodafone Hungary insists.

“To put it briefly, this step was extremely important for the industry, as the frequencies purchased now are prerequisites to building a wider coverage on 5G network. Basically, there are three major benefits to fifth-generation (5G) networks, which allow the industry to take digitalization to the next level and bring new technologies to our daily lives: speed, capacity and no latency. The current 4G capacity can handle about 100,000 devices per square kilometer, while the new network can manage up to 10 times as many; approximately one million devices, without interruption. Incidentally, due to the lack of latency, machineto-machine communication can also advance significantly,” Király explains.

Smooth Transition

The transition from 4G to 5G will be gradual and smooth; embraced by an emerging interest in 5G opportunities from consumers and business customers that will promotes the broad adoption of the new technology.

“5G has 3+1 major benefits over the previous technology including higher download and upload speeds, extremely low response times, a large number of devices served within a cell and the fact that 5G can maintain end-point connection at a speed

of up to 500 km/h which is much higher than possible with previous technologies,” Koller agrees with Király.

Maintaining end-point connection up to

500means km/h

that devices travelling up to this speed can stay connected to the internet; widening the opportunities for autonomous vehicles, automated production systems and a growing number of agricultural smart devices.

Given 5G’s importance for national economies, nearly all European countries have started implementing the technology which will be a long and complex process in any country.

“Hungary has world-class 4G networks due to the mature and proactive approach of local operators,” Koller says. “There are no front-line leaders in rolling out 5G, and Hungary is proceeding at the right pace.

5G will be similar to previous technologies in that it will be rolled out in response to growing market demand.”

The NMHH awarded 5G spectrums to Magyar Telekom, Telenor Hungary and Vodafone Hungary for a combined HUF 128.5 billion of bids in the 700 MHz, 2100 MHz and 3600 MHz bands on March 26; no participant submitted bids for spectrums in the 2600 MHz band. The telcos will hold licenses until 2035, with a possibility to extend for a further five years until 2040, enabling them to launch commercial 5G, Győző Drozdy, chief corporate affairs officer of Telenor Hungary, after the auction.

Neither Telenor nor the NMHH’s disclosed the price of frequencies, in their official statements, though Vodafone and Magyar Telekom did. Magyar Telekom received licenses for 2x10MHz frequency blocks in the 700 MHz band for HUF 26 bln; 2x10MHz in the 2100 MHz band for

“V4 countries have been proceeding at about the same pace in rolling out 5G. In Slovakia, the so-called C-band spectrum required for 5G has already been allocated, but this hasn’t taken place in Poland and the Czech Republic yet.

We are taking the lead in the lower 700MHz range which has been allocated only in Hungary as yet.”

“V4 countries have been proceeding at about the same pace in rolling out 5G. In Slovakia, the so-called C-band spectrum required for 5G has already been allocated, but this hasn’t taken place in Poland and the Czech Republic yet. We are taking the lead in the

lower

700MHz

range which has been allocated only in Hungary as yet,” the Telenor technical chief adds.

Koller says the telecommunications sector is of the least unfortunate ones considering the COVID-19’s affects. As schools shut down, people moved to remote working, and social distancing kicked in, telcos have seen peaking traffic.

“Nevertheless, we understand that the current situation is a heavy blow on other industries with implications for our business customers and consumers as well. While providing free and attractively priced mobile internet service, we also expect our revenues to decline in this period,” Koller notes.

Király, from Vodafone, agrees. “Because of the spread of the coronavirus, since mid-March, the vast majority of office workers in Hungary have been forced to find a way of working from home.

Many businesses, large companies and, indirectly, employees are affected by the current situation. The most important thing is to keep companies running smoothly in remote operation.”

10 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 9 – April 23, 2020

Telecom Service Providers

vOdaFONE magyaRORSzág 2 TávközléSi zRT.

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lEaSEd liNE

vOiP

SaTElliTE Tv

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OPTiCal CablE NETWORk

aNalOg WiRE NETWORk

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OTHER

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mObilE iNTERNET

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PaCkagE TyPE SOld

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NO. OF Full-TimE EmPlOyEES ON maRCH 1, 2020

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OWNERSHiP (%) HuNgaRiaN NON-HuNgaRiaN

TOP lOCal ExECuTivE CFO maRkETiNg diRECTOR

addRESS PHONE Email

8,246

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

Tibor Rékasi Darja Dodonova Zoltán Pereszlényi

1097 Budapest, Könyves Kálmán körút 36.

(1) 457-4755 sajto@telekom.hu

amanda Nelson Cüneyt Avci Balázs Révész

1095 Budapest, Lechner Ödön fasor 6.

(1) 288-4288 sajto@ vodafone.com

192,659(1)

A

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✓

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✓

✓

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✓

✓

✓

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–

–

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A

– Vodafone Europe B.V. (100)

182,631

3.5 million

–

✓

–

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–

–

–

–

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1,201

Antenna Hungária Zrt. (25) PPF Group (75)

Jan Hanuš Martin Oravec Mohamed ElSayad

2045 Törökbálint Pannon út 1.

(1) 464-6000 –

–

Microwave connectrion

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2,345

– RCS&RDS S.A. (100)

dragos Spataru – –

1134 Budapest, Váci út 35.

(1) 707-0005 ugyfelszolgalat@ digikabel.hu

–

–

–

552

Hungarian state (100) –

zsolt Sárecz Ádám Hargitai Anita Fuzik

1119 Budapest, Petzvál József utca 31–33.

(1) 464-2464 antennah@ahrt.hu

www.vodafone.hu

3

TElENOR magyaRORSzág zRT. www.telenor.hu

digi TávközléSi éS 4 SzOlgálTaTó kFT. www.digi.hu

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6,000 ✓ (approx.)

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–

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–

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–

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570

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

gerald grace Dániel Majubu –

2040 Budaörs, Edison utca 4.

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A

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25,286 (2018)

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444

DIGI Távközlési és Szolgáltató Kft. (100) –

dragos Spataru – –

1134 Budapest, Váci út 37.

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

9,746 (2018)

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319

Individuals (100) –

János Tarr – –

7100 Szekszárd, Kadarka utca 18.

(74) 416-000 info@tarr.hu

–

Satellite data transmission, satellite broadcasting, WiFi central infrastructure

–

–

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45

–

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Individuals (68), ThreeF Kft. (32) –

attila Farmosi, gábor varga Gábor Varga Péter Németh

1037 Budapest, Zay utca 3.

(1) 999-1000 office@ acetelecom.hu

–

–

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–

–

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33

NETFONE-INVEST Kft. ( A ), Zsolt Wilhelm ( A ) Scanwinavia ( A )

lászló mészáros – István Kun

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

zsombor attila Papp Rezső Dunay Csaba Csizmadia

7624 Pécs, Budai Nagy Antal utca 1.

(80) 811-118 info@dravanet.hu

andrás beliczay Katalin Urbanics Judit Stark

1117 Budapest, Fehérvári út 50-52.

(1) 999-6000 info@opennet.hu

TaRR kFT. www.tarr.hu

HuNgaRO digiTEl 9 kFT.

6,419

A

–

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–

–

–

–

–

–

–

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10

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11 kFT. www.netfone.hu

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13

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8

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7

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–

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6

–

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1,472

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–

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–

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–

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–

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1,340 (2018)

A

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✓

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–

–

–

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–

–

Antenna Hungária Zrt. (55.38) antónio Felizardo PT Móveis Serviços Éva Illés Csíkné de Telecomuni– cações SGPS, S.A. (44.62)

565

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server hosting

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11

Pallas Office Kft. (81.40), other (18.60) –

306

A

–

–

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–

–

–

–

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–

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–

–

–

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15

András Beliczay (100) –

NOTES: (1) Data of business year April 1, 2018-March 31, 2019.

2310 SzigetszentmiklósLakihegy, Komp utca 2.

(1) 488-8500 info@hdt.hu

www.bbj.hu

Budapest Business Journal | April 9 – April 23, 2020

PRESENTED CONTENT

3

Responding to the Coronavirus and Laying 5G Foundations Reacting to the situation caused by the coronavirus outbreak, Vodafone Hungary has introduced measures aiming to help the public, followed by action supporting companies.

In addition, educational content was also made available free of charge.

In recent weeks, the company purchased new spectrum worth close to HUF 40 billion to expand its 5G network and, on April 1, officially completed its legal merger with UPC. We discussed these changes with István Király, Business Unit Director at Vodafone Hungary.

BBJ STAFF

BBJ: Coronavirus aside, that’s a lot of new developments in such a short period.

István Király: Many developments have indeed just become visible to the general public recently; however, their preparation began much earlier. The deployment of the 5G network is a prime example of this, as it was a flagship project for which preparations had begun many years ago; we purchased 5G-capable frequencies back in 2016.

Mass deployment, however, will only become possible after the current auction.

István Király, Business Unit Director at Vodafone Hungary.

BBJ: Talking of 5G, why was it necessary to purchase additional spectrum in the tender opened by the National Media and Infocommunications Authority (NMHH)?

IK: To put it briefly, this step was extremely important for the industry, as the frequencies purchased now are prerequisites to building a wider coverage on 5G network. Basically, there are three major benefits to fifthgeneration (5G) networks, which allow the industry to take digitalization to the next level and bring new technologies to our daily lives: speed, capacity and no latency. The current 4G capacity can handle about 100,000 devices per square kilometer, while the new network can manage up to 10 times as many; approximately one million devices, without interruption. Incidentally, due to the lack of latency, machineto-machine communication can also advance significantly.

BBJ: Why is that lack of latency so important?

IK: 5G and NB-IoT [Narrowband Internet of Things] are industry’s future communication platforms and, for efficiency reasons, will be gradually integrated into all industrial modernization programs. They will bring about the same revolutionary change in the industry as the internet, mobile phones and mobile data services did in their time for low cost flights, travel, the hotel industry, logistics and so on.

The spread of the 5G network is a prerequisite to a lot of IoT and NB-IoT development, and it is thanks to this that we can realize concepts such as the “smart city”, where sensors show us free parking spaces, full bins, or simply help optimize public lighting systems.

The latter also ensures, for example, that self-driving cars can safely move

about in a smart city by communicating with the sensors built into the transport infrastructure and also with each other, practically with no latency. I often say that, with only a slight exaggeration, any major car manufacturing company can make a self-driving car, but it’s still risky to let them out on the roads, as the required regulatory conditions are not yet in place, and the transport infrastructure is not ready either.

The trick about self-driving is not autonomous movement, but the ability of the vehicle to properly communicate with its surroundings. If there were only selfdriving cars on the roads, the process would be much easier to control; the biggest challenge will most probably be the “mixed mode of operation”.

BBJ: When might self-driving vehicles, remote diagnostics, smart cities and so on become reality in Hungary?

IK: This is a long-term process that will realistically be in the focus of developments in the next 10+ years; a kind of evolution. We must not think that all the benefits it offers can be realized in the first year.

When it comes to 5G, for now, we are at the stage of some very promising tests. In order to support the mass use of these smart solutions, sensors must be installed at as many points as possible, and for that, having a new network capable of providing stable and highcapacity communication between devices is essential.

We often say that 4G brought about the age of smartphones, and 5G will be the network facilitating the mass use of smart devices. Luckily, we can already see such future solutions locally.

Last year, for example, we brought a car that can be remotely controlled via a 5G connection to Hungary and, at the end of the year, we demoed a self-parking service together with

Special Report | 11 AImotive and HERE Technologies, in the underground car park of the Vodafone head office building.

I believe that in the next few years, manufacturers will also begin to develop 5G-capable products on a massive scale, and, as network coverage increases, more people in the industry will show interest in such solutions. We are expecting this technology to spread in clusters; first we want to cover the busiest parts of larger cities, industrial parks and universities, and this may happen in Hungary in the coming years.

BBJ: More immediately, in your view, what kind of impact will the coronavirus outbreak have on Hungary’s economy?

IK: A huge number of companies are already affected. Some car manufacturers have temporarily suspended production, and tens of thousands of people may be forced to take a break or have already lost their jobs. Because of the spread of the coronavirus, since mid-March, the vast majority of office workers in Hungary have been forced to find a way of working from home. Many businesses, large companies and, indirectly, employees are affected by the current situation. The most important thing is to keep companies running smoothly in remote operation. I believe that for this they can rely on Vodafone today, and will continue to be able to do so in the future.

BBJ: How is Vodafone supporting companies?

IK: We have made available an additional 15GB of data allowance to customers, activated on request, and we have also committed to fast-tracking payments to our small business suppliers, reducing the payment deadline to 15 days, to support them during this difficult time.

In addition, all our business clients can upgrade to a larger internet access option without signing a loyalty agreement.

This means that customers can opt out of the larger data option at any time, in which case the original data allowance and loyalty period will be reinstated, free of charge. The larger data packages can be activated by customers over the phone or through key customer service points. In response to the increased data usage resulting from working from home, we are offering the option of an extraordinary bandwidth extension for existing leased line services. Business clients can request this service through their account managers.

We offer services that can help in the current period, such as the Vodafone Office service, which automatically redirects calls routed to the central switchboard to the mobile phones of colleagues staying at home. We also use this solution.

In addition, we have simplified our ordering and contracting procedures for all clients, facilitating the discussion of terms and conditions and the conclusion of the agreement by phone, in almost all instances.

Finally, Vodafone Hungary has made remote learning-related sites available to all its customers without data usage, until the end of the school year. We have also made all content related to the Vodafone Digital Classroom Program free of charge, where modern, 21st-century learning materials facilitate the better understanding of the curriculum.

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and participated in is not sustainable. A plant-based diet – as radical it sounds – is still a relatively easy way of taking a huge step towards a more conscious lifestyle.

BBJ: Do you think veganism will grow in Hungary?

KS: I have no doubt veganism will grow all over the world, including Hungary.

Major companies are going plant-based.

Governments and global organizations support the shift. As human beings become more and more sensitive and intelligent, as we learn more and embrace compassion, the concept of eating animals will cease to exist.

Photo by Sára Salamon

Veganism Finding its Path Even in Meat-loving Hungary Aspiring vegan David Holzer talks with one of the leading Hungarian plantbased foodies, blogger and YouTuber Kristóf Steiner, about the spread of the movement here.

“I recently published an article asking people to join me raising money for a Hungarian doctors’ organization. My cooking videos and recipes, which I used to be paid for, are now being shared for free.

I’m trying to help people survive and be well.”

DAVID HOLZER

Kristóf Steiner, the vegan foodie whose cooking I had been looking forward to tasting at Budapest gastro space Borganika, described it as “the last normal day of the universe back then.”

I was keen to experience Steiner’s cooking because, even before the news that the coronavirus might have come from an undercooked bat or a snake, I’d been trying to go vegan. But this was the weekend when the government ordered the universities to close. So travelling up to Budapest from Szeged by train didn’t seem to be a smart move.

My partner, a vegetarian since her early 20s, was also looking forward to meeting 38 year old Hungarian Steiner, who describes himself as “a passionate foodie and vegan YouTuber travelling the world with his husband Nimrod Dagan, holding cooking classes, pop-up dinners, foodie workshops, visiting festivals and markets.”

Steiner has published three vegan cookbooks, gives lectures, participates in roundtable talks and helps hotels, cafés, bars and restaurants to “veganize” their menus, or come up with new vegan dishes that fit with their profile. He’s also a social media expert helping other vegan, LGBTQ and travel influencers to succeed.

Born in Budapest, Steiner recently moved to Greece, to a tiny village of 12 people, where his lifestyle embraces zero waste, seasonal, locally sourced shopping and cooking with whole, unprocessed food ingredients. As we couldn’t meet, Steiner kindly corresponded by email.

BBJ: How did you get into veganism?

Kristóf Steiner: For many years I was hoping I’d get to a place where I wouldn’t be able to make excuses for eating meat.

In our age of freely flowing information, ignorance is a matter of choice, so I got into researching and reading. One day I was sitting with my dog on my lap,

BBJ: How is coronavirus impacting what you do?

KS: I’m having to rethink everything I’m doing. I was making my living from travelling the world and sharing food experiences with people. Several of our cooking holidays have been cancelled, as has the night of the museums in Budapest and a big food festival I was going to be part of. Several publications that used to publish my articles and recipes have closed down for the time being. I could panic but I’m rethinking how I want to contribute to building a society that can live on.

BBJ: How are you trying to mitigate that?

KS: I’m continuing to share recipes and ideas to help people connect to the joy of cooking and plant-based living. I’m focusing on what made me love cooking in the first place, creating food at home for Nimi, my loved one, and me.

Kristóf Steiner munching on a huge piece of meat and it hit me: my pet gets everything he needs from me to be healthy and happy but I’ve just ordered a leg of a goose that’s been slaughtered simply so I can eat. Right then I decided to stop contributing to the meat, dairy and egg production industries. This was 11 years ago, and I’ve never, ever felt like I was missing animal products.

BBJ: Why did you become a vegan chef?

KS: I’m such a food freak that I couldn’t turn vegan and give up on my favorite dishes, so I started experimenting. After uploading my food creations online some editors from magazines and TV programs I used to work for asked me to do a column sharing vegan recipes. Not long after this, famous Hungarian food blogger Zsófia Mautner visited me in Tel Aviv, where I was living, tasted my food, and said: ‘You’re insane for not doing this professionally.

You simply must write a cookbook.’ It’s important to state that I’m not a trained

chef. I learn from chefs, just as they learn from me when we cook together. But I don’t believe in hierarchy in the kitchen.

BBJ: What do you offer people?

KS: Creative plant-based cooking ideas for whoever asks me. I was recently invited to put together the perfect vegan sandwich that included a Beyond Meat Patty for Burger Market Budapest. Sometimes I’ll do a cooking-free workshop featuring dishes that can be created inside 30 minutes.

Other times, we’ll start from scratch and create a four-course themed dinner where we don’t use meat or dairy substitutes or any packaged products. We ferment vegan cheese and make our own “mock meat.”

Whatever I do, I put my own stamp on it.

BBJ: Why do you think veganism is becoming more popular in Hungary?

KS: The same reason it’s becoming popular everywhere. We now clearly understand that the system we’ve built

BBJ: What are you doing for your community and society?

KS: I recently published an article asking people to join me raising money for a Hungarian doctors’ organization. My cooking videos and recipes, which I used to be paid for, are now being shared for free. I’m trying to help people survive and be well. We’re helping our village in Greece in every way we can; taking care of other people’s animals and doing their shopping. This is ultimately a time when we need to do things from a place of compassion and empathy.

If you’d like to experiment with plant-based cooking, Kristóf’s YouTube channel is Kristóf’s Kitchen. You can follow him on Instagram @kristofsteiner.

His blog is www.proudhippieboy. com. His cookbook is here: http://kulcslyukkiado.hu/ kristofskitchen

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Wineries Battle to Come to Terms With Coronavirus’ Economic Effect The impact of the COVID-19 pandemic on the wine industry is deep and far reaching right across the winemaking world, with many Hungarian wineries significantly affected and facing export uncertainty as well as a halt on sales to local restaurants.

ROBERT SMYTH

Nevertheless, online and supermarket sales are booming. Some wine shops and delicatessens selling wine remain open, albeit with limited access and social distancing measures in place.

Online sales are taking over as people, for the most part, keep off the streets, other than trips to buy groceries, often to supermarkets where the shelves are stocked with wine (usually the less premium stuff ).

Meanwhile, restaurants have either closed or switched to carry out and home delivery, killing the so-called on-trade wine business almost overnight.

“It’s tragic, there’s no doubt about it,” says Rob Gilvesy, the CanadianHungarian owner of Gilvesy Pincészet, an organic winery on Szent-György Hill in the volcanic region of Badacsony, on the northern side of Lake Balaton.

“Some 50% of our wines are sold to the on-trade and that channel has dried up, although home delivery has increased.”

Gilvesy adds that the coronavirus presents a real challenge to a lot of winemakers, especially regarding sales.

“There’s real uncertainty on the part of buyers. Two out of three of our recent international orders have been canceled: the wines were all packed up and ready to leave the cellar,” he explains.

However, those selling to large supermarkets are doing well, Gilvesy opines. Vineyard work is going on, with extra care taken. “Vines are going to grow, we can’t stop that, but we’re keeping to social distancing in the vineyards, while there’s not much work going on in the cellar at the moment,” he says.

Wine is Essential

Here, we should spare a moment’s thought for winemakers in the southern hemisphere, who have been hit by the COVID-19 crisis in the middle of harvest.

In South Africa, when President Cyril Ramaphosa imposed a total lockdown at midnight on March 26, it looked like grapes would have to be left out unpicked on the vines, before the government added wine to the list of essential services.

“We learned our lessons from [the financial crisis of] 2008, so I think we’re well prepared. We’re trying to save on spending money and doing a lot of the work ourselves.”

spending money and doing a lot of the work ourselves,” he says. Weninger adds that it’s interesting to see how shocked most of the big importers are.

“We, the small ones, are rethinking our business, by making bike deliveries and such like,” he asserts. Weninger also laments that price pressure is already being applied on winemakers.

“Some distributors are trying to use this situation to get better payment terms, but we’re not playing this game.

I have no wine that will suffer from being in the bottle for a few more months or even years.”

Traveling to international wine fairs is often a feature of the life of many winemakers seeking foreign markets, which is off the table right now with every major event canceled (Vinitaly in Verona had initially been postponed from April to June, but is now skipping a year).

Back in Badacsony, one bright spot for Wine Online Gilvesy is the potential of the fledgling 2019 wines, a vintage which he describes “It’s a good thing I stopped a lot of traveling to fairs a as “special” with high quality across the few years ago, so I see this board for all grape varieties; 2018, by was already the right way. I way of comparison, he describes as a believe that we don’t need to very good vintage, although notes there travel for a lot of things: We were some problems with Riesling. His can do them online,” says new Váradi Furmint 2018 is now out Weninger. and it is worthy of comparison to a high The overall market impact quality Furmint from Tokaj (HUF 4,450 of COVID-19 is still too from Bortársaság).

Franz Reinhard Weninger, a biodynamic early to tell, opines Zoltán Heimann Jr. of Szekszárd’s producer with wineries in Balf, in western Heimann winery.

Hungary, in the region of Sopron; as “The company is running: well as just over the Austrian border in Horitschon, in the Mittelburgenland region, we’re mostly working in the vineyard, but soon we’ll says sales have been around zero for the have to continue cellar last two weeks, but he is ready to batten work, as well. Gastronomy down the hatches. has obviously plummeted, “We learned our lessons from [the but people are still buying financial crisis of] 2008, so I think we’re wines,” he says. well prepared. We’re trying to save on

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The Heimann winery has decided not to hold back and is launching its new Heimann & Fiai (sons) wine range, comprising two Kadarka and four Kékfrankos wines from the 2018 vintage, as planned this month.

“This feels nice; at least we’re doing something about the market stop,” declares Heimann Jr., whose Facebook moniker is in fact Kadarka Man. He sees this new range as an opportunity to develop stylistically with the Kadarka and Kékfrankos grape varieties. (The two Kadarka wines were reviewed in the first Budapest Business Journal of this year).

Three of the four Kékfrankos wines are from single vineyards and, having tasted them recently, it is impressive how distinctive each wine is from the next, as well as how elegant they are.

They not only show how Kékfrankos can convey the intricacies of different vineyards sites, but also totally smash the assumption that Szekszárd’s predominantly loess soils (although there’s also terra rossa and limestone) make uniform wine.

All four Kékfrankos offerings were spontaneously fermented in whole bunches, which Heimann Jr. says can add more layers and length to the wine, though less color.

At the time of going to print, Batti Kereszt Kékfrankos 2018, from an eastfacing vineyard surrounded by forest where the grapes ripen later, was already on the shelves of Bortársaság (HUF 5,650) with the rest of the wines on their way. This is the most intense of the four; very Rhône-like, with juicy blood orange and pomegranate note alongside more typical Kékfrankos notes of sour cherry and raspberry.

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30 YEARS OF FREEDOM: PAN-EUROPEAN PICNIC

Cutting the fence at the Austro-Hungarian border, June 27, 1989.

Testing Moscow With a Picnic Last year, German chancellor Angela Merkel and Hungarian Prime Minister Viktor Orbán celebrated together the anniversary of the Pan-European Picnic, when Hungary allowed thousands of East Germans to flee to Western Germany. Looking back, the event was an enormous risk for an Eastern Bloc country, but these were times when events changed at an incredible pace.

BBJ STAFF

Before looking more deeply at the PanEuropean Picnic and the dismantling the Iron Curtain, it’s worth briefly summing up the historical context, some of which has been outlined in our previous issue (see “Laying the Groundwork for Democratic Hungary”).

For decades, the political and administrative institutions in Hungary had been controlled by the Hungarian Socialist Workers’ Party (MSZMP), led

by General Secretary János Kádár. It was an “authoritarian system which had been disintegrating from the beginning of the ’80s” (as sociologist Erzsébet Szalai told the Budapest Business Journal in our last issue).

An important catalyst in the process was the gradual easing of the grip of the USSR on countries in its sphere of influence, culminating with the public statement of

the General Secretary of the Communist Party Soviet Union Mikhail Gorbachev in

February

1988,

saying that every socialist land has the “freedom to choose” its own societal system.

By that time, Kádár’s political influence had significantly diminished and his health deteriorated. In May 1988 he resigned and was officially replaced by Károly Grósz. While Soviet troops were still stationing in Hungary and the secret police continued to watch over the Socialist order, Grósz never managed to acquire the same power as Kádár had.

In the meantime, two figures from within the MSZMP’s second echelon advanced: Miklós Németh, who became Prime Minister in November 1988 and Gyula Horn, Minister of Foreign Affairs from May 1989. The question of who was in charge would play an important role in later events, as we will see.

The Refugee Question

At this time the Hungarian administration was confronted with another difficult challenge, this time from abroad. The largest Hungarian ethnic minority was living in neighboring Romania, enjoying, for a while, a wide range of opportunities to preserve their cultural and ethnic identity.

In 1971, the President and Secretary General of the Romanian Communist Party, Nicolae Ceaușescu, visited North Korea. He was deeply impressed by the unlimited power he saw and the combination of ultra-nationalism with communist ideology promoted by Kim Il-Sung. Upon his return to Romania, Ceaușescu immediately began transposing North Korea’s system locally.

By the 1980s, the ideological domination was not enough, and he started rebuilding the country, under a so-called “systematization plan”, a forced urbanization of rural areas, in parallel with

the “homogenization” of the population.

For the Hungarian minority, this meant total destruction of many villages inhabited mostly by Hungarians and a redistribution of Romanians to areas with a largely Hungarian population.

Ceaușescu presented his plans publicly in April 1988 and they stirred outrage in Austria, the Federal Republic of Germany and Hungary. A protest organized by a Hungarian civil organization in Hősök tere (Heroes Square) in Budapest gathered

60,000-70,000 participants.

Three days later, the Hungarian Parliament issued an official statement calling on the Romanian Assembly to stop the plans for demolishing Hungarian villages.

In response, Romania closed down the Hungarian Consulate in Cluj-Napoca.

As a result of the exacerbated situation, thousands of Hungarians living in Romania started to flee to Hungary. Grósz and Ceaușescu met in Romania in August 1988, but with humiliating results for Grósz, who came home empty-handed.

The situation was embarrassing for the Hungarian government. Ceaușescu insisted that the situation of the Hungarian minority was a domestic affair and he would not accept any demands regarding them. Despite the international protests against the village systematization, there was nothing Budapest could do, while the exodus of Hungarians from Romania was intensifying day by day.

Based on the treaties within the Socialist block, Hungary was expected to return any Romanian citizen, be it ethnic Hungarian or Romanian. So in June 1989, Hungary signed the Geneva Convention on Refugees in order to be able to protect Hungarians fleeing Ceaușescu’s Romania.

Hands Untied

On July 6, 1989, János Kádár died, but by then, the political transformation had long begun. As described in our previous issue, in March 1989 the Opposition Roundtable was formed, and the official negotiations with MSZMP about the political transition started. The MSZMP leadership were desperately trying to cope with the situation and remain in charge; society already tasted freedom and was determined not to let it go; the government led by Miklós Németh was desperately trying to rebuild a rapidly deteriorating economy and a huge budget deficit.

Under these circumstances, in June 1989, Hungarian Minister of Foreign Affairs Gyula Horn and his Austrian counterpart, Alois Mock, together cut the barbed wire at the Austro-Hungarian border, the real life representation of what Winston Churchill had called the “Iron Curtain”. As romantic and hugely symbolic this image might be, the reasons behind were much more prosaic.

The physical obstacles at the border had been built in 1949 and later modified several times, with landmines installed, removed, then installed again. A new stage began with the installation of a Soviet electronic signaling system in 1971. Ten years later, the system started producing errors and required substantial funds for maintenance, while political relations with Austria had improved over the years.

In February 1989, the Politburo of the MSZMP decided to dismantle the electronic system. In an anniversary program broadcasted by Deutsche Welle,

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Budapest Business Journal | April 9 – April 23, 2020

Németh recalls that at that time, “Hungary was close to an abyss, it was bankrupt.”

He was continuously looking to cut expenses. Checking the budget draft for 1989, he noticed a line marked with a secret code. He called the Minister of Domestic Affairs and asked what it was. The minister said it was the money required for the refurbishment and reconstruction of the border fence. So he deleted the line. The electricity in the fence was cut and the system was halted.

Of course, this did not go unnoticed, but nobody reacted, Németh said. Not even the USSR ambassador to Hungary.

An important catalyst in the process was the gradual easing of the grip of the USSR on countries in its sphere of influence, culminating with the public statement of the General Secretary of the Communist Party Soviet Union Mikhail Gorbachev in February 1988, saying that every socialist land has the “freedom to choose” its own societal system.

What is more, shortly after that Németh had a telephone conversation with Mikhail Gorbachev, who told him what had happened in 1956 would not be repeated again.

“Miklós, your hands are not tied anymore,” Németh recalls Gorbachev saying.

The removal of the fence was completed on December 31, 1990, but parts of it were gradually being eliminated from May 1989. The news quickly spread among East Germans, who had been coming to Hungary

since

the 1960s,

Timeline for the Pan-European Picnic

1988 FEBRUARY: USSR’s Mikhail Gorbachev proclaims “freedom to choose” societal system for all Socialist states

Delight that the border crossing is open at Hegyeshalom, Hungary. The sign is an invitation to put up a pair of teachers or doctors travelling with children overnight.

Austria, now that it was seemingly easier, and then into West Germany. By August, thousands of them were stranded in Hungary in camps, tents, caravans, cars.

The good news was that, as stated above, Hungary had joined the Geneva Convention on Refugees in June, so the East Germans could apply for refugee status. The bad news was that Hungary was reluctant to risk an open conflict with a fellow Socialist country, much less with Moscow. Gorbachev may have allowed the cutting of some wires at the border, but permitting East Germans to flee en masse to West Germany, with the Berlin Wall still standing, was surely a different story.

The Hungarian Ministry of Domestic Affairs warned unequivocally: “We will not allow for anyone to use our country as a means to go to a third country.” In other words, a stalemate situation. Some East Germans succeeded in crossing the border, allegedly with Hungarian border guards turning a blind eye to the situation, but obviously this was not a long-term solution.

dynasty and former Crown Prince of Austria-Hungary, was allowed to hold a speech in Debrecen.

A local member of the Hungarian Democratic Forum (MDF, one of the participants at the Opposition Roundtable), suggested to von Habsburg that a talk on this subject should be continued at the Austro-Hungarian border, as a picnic, with some of the guest sitting on the Austrian side, and the others on the Hungarian.

The project met no obstacles with the authorities, on the contrary, the Minister of State Imre Pozsgay agreed to be one of the patrons and the date was set for

August

19.

A Silent Kremlin

Among Hungarians, the mood was one of euphoria and hope. What was unthinkable even a year before – cutting the fence at the Austrian border and a political opposition accepted openly – had come true. The idea of a unified Europe, at least in a spiritual sense, gained shape.

This idea had been promoted since 1923 by the International Pan-European Union and in 1989, its president, Otto von Habsburg, the head of the Habsburg Photo by Fortepan/Szigetváry Zsolt

officially, to spend their vacation at Lake Balaton. Unofficially, to meet their West German relatives.

But in the summer of 1989, something changed. Many GDR citizens remained in Hungary, hoping to cross the border to

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Tourists from East Germany (GDR) waiting outside the Consular Section of the embassy of West Germany (FRG) in a fleet of Trabant cars in Nógrádi utca, Budapest, in the early summer of 1989.

A border gate on the road from Sankt Margarethen im Burgenland, Austria to Sopronkőhida, Hungary opened for three hours, and no limit was set for how many could attend.

From here, historical facts mix with hint and speculation and urban myth.

The news about the event spread among East Germans, especially through German-language leaflets distributed all over Hungary, allegedly with the active support of the Hungarian secret service.

On that day, hundreds of Germans gathered on site and started crossing the border. The guards were taken by surprise. The event was official, the border was open, but no procedures were set for a mass situation, except for a specific order not to open fire. The officer in charge tried to reach his superiors for guidance, but no one answered.

Allegedly, the Hungarian leaders tried to ascertain from Moscow whether the Kremlin would intervene. The phone lines remained silent, and the further steps were taken by West Germany, Hungary and East Germany.

The GDR dictator, Erich Honecker, was severely ill and no one dared to inform him about the situation, while thousands of East Germans were still stranded in Hungary.

On August 25, Németh and Horn met with their German counterparts, Helmut Kohl and Hans-Dietrich Genscher at Gymnich, a castle near Köln.

Two weeks later, the Hungarian government decided to suspend the agreement with the GDR regarding the border crossing. The decision was announced by Horn on September 10.

Within two months, about 60,000-70,000 East Germans had left for West Germany via Hungary.

“We will never forget the good deed,” Genscher later wrote.

APRIL: Romania’s Nicolae Ceaușescu announces rural systematization plan, threatening to demolish many villages inhabited mostly by ethnic Hungarians MAY: Secretary General of the Hungarian Socialist Workers’ Party (MSZMP) János Kádár resigns, Károly Grósz appointed NOVEMBER: Miklós Németh becomes Prime Minister of Hungary

1989 FEBRUARY: MSZMP politburo decides to dismantle the fence at the border with Austria for financial reasons MARCH: Opposition Roundtable is formed MAY: Gyula Horn is appointed Minister of Foreign Affairs JUNE 12: Hungary joins the Geneva Convention on Refugees JUNE 27: Gyula Horn and Austrian counterpart Alois Mock symbolically cut the fence at the Austro-Hungarian border JULY 6: János Kádár dies AUGUST 19: Pan-European picnic at the Austro-Hungarian border, several hundreds of East Germans flee to West Germany via Austria AUGUST 25: Hungarian and German officials meet at Gymnich to discuss solutions for the release of thousands of East Germans stranded in Hungary SEPTEMBER: Gyula Horn announces publicly the Hungarian decision to suspend the agreement with the GDR on border crossing.