Budapest Business Journal 3012

VOL. 30. NUMBER 12

JUNE 17 – JUNE 30, 2022

HUF 1,850 | EUR 5 | USD 6 | GBP 4

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

SPECIAL REPORT INSIDE THIS ISSUE

Telecoms & ICT Normalizing 5G Opens way to Expanding Services

Even as the Hungarian market is getting used to fifth-generation technology on the residential side of the business, the corporate landscape is readying itself for more complex use of machineto-machine and internet of things applications. 14

FaceKom Aims to go Public After Record Year

Hungarian-owned company that is a market leader in corporate remote digital customer identification, has said it plans to go public after closing 2021 with record revenue and profits. 17

New Business, New Reality

SOCIALITE

From Charming Art Deco to the Social Surgery of drMáriás At the superb Budapest Art Deco.

Posters. Lifestyle and the City (1925-1938) exhibition at the National Gallery, David Holzer was struck that what he saw as purely decorative was once cutting edge and contemporary. 22

NEWS

Annual Inflation Hits 23-Year High in May The annual inflation rate in Hungary accelerated to 10.7% in May, up from 9.5% in the previous month, surpassing market expectations. Further rises are expected. 3

SPECIAL REPORT

The “brave new world” of digital commerce has prompted Vodafone Hungary to make the “new business reality” a central focus, enterprise business unit director Mátyás Dobó explains.15

BUSINESS

Hotel Sector Looking for Investment Resurgence The annual Hotel Investment Conference for CEE & Caucasus attracted more than 300 delegates from over 30 countries to Budapest for the first time since January 2020, after a COVID-enforced break.  8

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Budapest Business Journal | June 17 – June 30, 2022

IMPRESSUM

THE EDITOR SAYS

THE ECONOMICS OF SOCCER SUCCESS

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

Czifra, Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Renáta Kónya, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth.

LISTS: BBJ Research (research@bbj.hu)

You do not have to be the sharpest of our many sharp readers to have noticed that we are not a sports publication. The masthead does not name us as the Budapest Sports Journal, and we have never seriously considered a swimwear issue. Despite that, it is to sporting prowess that my attention has been drawn this week. Specifically, the 4:0 thumping Hungary handed out to England in England in the Nations’ League on Tuesday night, the home team’s worst result since 1928.

Both countries have a fondness for slightly odd sports, think of cricket for England and handball or water polo for Hungary, but for each, football is the people’s game, the sport of mass appeal. That is despite a comparative lack of success. England has only ever got through to one world cup final, which they won, and one European final, which they lost, and that’s about it.

On the other hand, Hungary has three Olympic titles and was runner-up in the 1938 and 1954 World Cups. England claims to have invented the game (which, as with many sports, is disputed and probably impossible to prove), but Hungary revolutionized it in 1953 and produced one of the all-time great squads in the Golden Team.

Led by Ferenc Puskás, for whom the national stadium is named, Hungary and England have history. Once a Hungarian discovers you are English, it won’t be long before the conversation comes round to a particular score line – 6:3. The date is well known to Hungarians: November 25, 1953. England was well beaten at Wembley for the first time in 90 years. Worse was to come a year later, on May 23, 1954, in Budapest, with England humiliated 7-1.

All this history was raked over again when England played Hungary in Budapest on June 5 and lost 1:0. Most people I spoke with had expected Hungary to lose. Even after that game, one colleague remarked, with typical Hungarian pessimism, that it was more that England played

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poorly rather than Hungary played well. Presumably, England was awful on June 14. The home crowd certainly thought so.

Under Viktor Orbán’s multiple premierships, a vast amount of money has been invested in sports in general and football in particular. Is this a return on that investment? At present, Hungary tops a strong group that includes Germany (one point behind), Italy (a further point adrift), and then England, winless and bottom.

Time will tell if this is a resurgence or a brief rally, but does it have any economic benefit for the country? A paper published in 2014 asked if soccer data could be used to measure economic and social development. According to the website sportseconomics. org, “The authors suggest there is a positive effect from international football success on productivity through increases in happiness and positive intangible effects, such as community spirit, self-confidence, pride, solidarity, etc.” Could a feel-good factor around the water cooler equate to greater productivity?

While it seems an undoubted link is not established, “The empirical analysis in the paper [...] clearly finds a strong association between FIFA ranking and GDP per capita and HDI [Human Development Index]. The relationship is particularly notable for developing countries. The authors accept that determining causality is not straightforward, but that a ‘significant association does exist’ and that football performance may be mirroring national institutions that strongly affect development.”

I read that as “case unproven.” Perhaps it’s better just to enjoy a good sporting run for its own sake. For Hungary, for now, that means making the most of the Nations League. The world cup is played in Qatar in November and December this year. Hungary has not qualified; England did. Good luck with that.

Robin Marshall Editor-in-chief

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THEN & NOW

In the color photo from state news agency MTI, Dániel Gazdag (left) scores Hungary’s fourth goal, beating England goalkeeper Aaron Ramsdale, in the Nations League soccer match at Molineux Stadium, Wolverhampton, England, on June 14. Hungary won 4-0. 1953 was another famous year for the Hungarian national side. The black and white photo from the Fortepan public archive shows the lineup at the Stadio dei Centomila (now the Stadio Olimpico) on May 17, 1953. Hungary would beat Italy 3:0. The legendary Ferenc Puskás is fifth from right, standing next to William Ling, who officiated the World Cup final a year later.

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News macroscope •

Annual Inflation Hits 23-Year High in May

The annual inflation rate in Hungary accelerated to 10.7% in May, up from 9.5% in the previous month, surpassing market expectations. Further rises are expected.

Inflation in Hungary, 1992-2022 (January-May) Price index, consumer price

ZSÓFIA CZIFRA

Consumer prices were 10.7% higher on average in May 2022 than a year earlier, the highest in 23 years. The most significant rises over the last 12 months were measured for food and consumer durables.

In just one month, consumer prices increased by 1.7% on average, according to the latest data released by the Central Statistical Office (KSH). In January-May of this year, consumer prices were up

by

9%

for all households on average and by 8.7% among pensioner households, when compared to the same period of the previous year.

According to KSH, the highest price rises seen during the last 12 months were recorded for food and consumer durables in May. Motor fuel prices were 10.8% higher than a year earlier, and the cost of household repairs and maintenance goods rocketed by 28.3%.

To try and tackle the high inflation, Hungary’s government capped the prices of six basic food items (sugar, wheat flour, sunflower oil, pork leg, chicken breast, and cow’s milk) from February 1, fixing the prices at their level on October 15. Despite the measure, known somewhat clumsily in the English translation as the “price stop,” food prices increased by 18.6% in May on an annual basis.

In November 2021, the government capped fuel prices, a measure that will stay in force until at least July, according to Prime Minister Viktor Orbán.

Global Pressure

Inflationary pressure has been present worldwide for a while now. According to the latest quarterly forecast by Fitch Ratings, the global economy is likely to grow at a much slower-than-expected

Source:

pace this year due to the demand effects of increasing global inflationary pressures and renewed Chinese restrictions on coronavirus hotspots.

Márton Nagy, the newly appointed minister of economic development, was quick to point out that inflation in Hungary is caused mainly by international tendencies. Eighty percent of inflation in Hungary is of global origin, with rising energy and grain prices in the background, he told journalists on Tuesday (June 14).

The minister spoke about the weakening of the forint in recent days also being a result of global developments that can be traced back to the U.S. inflation data released last Friday (June 10).

“Hungary cannot escape the influence of global processes either; the exchange rate of the forint is also driven by these processes,” said Nagy, who also drew attention to the growing inflationary tensions and the risk of a recession.

Bond yields are rising, posing another challenge not only for countries in the region but also for southern European states. According to the minister, if the war in Ukraine continues, 2023 will be a more challenging year

than

2022;

it all depends on when the conflict ends, he said.

Exceeding expectations, inflation rose to 10.7% in May due to substantial

price increases, Gergely Suppan of Magyar Bankholding, commented on the data. The analyst said that increasing price pressure is reflected in the fact that core inflation jumped very sharply to 12.2%, way above expectations. The surprise was caused by the significantly higher-thanexpected rises in food and spirits prices, he said.

Sharp Rises

With much higher-than-expected inflation and sharp price rise of raw material and energy costs, especially in the food production chain, the bank holding is raising its average inflation expectation to 10% this year, which could decline to 5.7% next year, he noted.

Analysts at ING Bank warned in a note that inflation in Hungary is expected to rise further in the coming months as the economy continues to show a significant demand-supply mismatch. According to them, the labor shortage, rising wages, and other supply-side shocks are increasingly spilling over into consumer prices, with companies enduring significant pricing power.

Recent surveys are showing that

roughly

60-80%

of companies (depending on their respective sectors) are planning further price rises, the analysts said.

As far as monetary policy is concerned, with underlying inflation also strengthening to an extraordinary extent (1.8% month-on-month), the National Bank of Hungary (MNB) will hardly have an opportunity to think about stopping the interest rate hike cycle anytime soon.

“In our view, the recent data will urge the central bank to rethink its tightening path both from the perspective of its length and its peak,” ING Bank wrote.

Hungary’s central bank slowed the pace of its rate hikes on May 31, raising its base rate by 50 basis points to 5.9% even as inflation was seen accelerating to double-digits in the coming months before it could peak later this year. Having held a nonpolicy meeting on Tuesday, the next rate-setters’ meeting of the MNB’s Monetary Council is due on June 28.

Numbers to Watch in the Coming Weeks On June 23, May labor market statistics will be published by the Central Statistical Office (KSH). In April 2022, the average number of employed persons aged 15–74 was 4.6 million, and the unemployment rate was 3.6%. On June 24, April earnings data will be released.

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Budapest Business Journal | June 17 – June 30, 2022

Orbán Tells EU to Fight ‘War Inflation’ With Peace

Ukraine

Crisis

Roundup

In a recent interview on public radio, Prime Minister Viktor Orbán decried the impact of higher prices stemming from the war in Ukraine and the European Union’s sanctions policy, instead advocating that “peace must be financed, not war.”

American combat vehicles at the Ádám Vay Training Base of the 5th István Bocskai Rifle Brigade near Hajdúhadház on June 15, 2022. U.S. and Hungarian soldiers have been mounting a joint patrol in the Hajdú-Bihar and Szabolcs-Szatmár-Bereg counties bordering Ukraine. Photo by Zsolt Czegléd / MTI.

NICHOLAS PONGRATZ

Orbán told Kossuth Rádió on June 10 that government-mandated price caps had kept five-to-six percentage points off headline CPI but added that those measures could not contain external inflation.

“Because this is war inflation, it can’t be stopped only in Hungary. As long as the European Union finances this situation of war […] inflation will continue to rise,” Orbán said. “The easiest way to stop war inflation is peace,” he added.

Calling for a shift in EU strategy, Orbán claimed that his government is “practically the only one in all of Europe that is not talking about sanctions and war but about the need for peace.” If that strategy does not change, “we’ll ruin ourselves with war inflation,” he warned. Following the ban on importing Russian seaborne crude, Orbán said introducing an embargo on Russian gas is “not a sensible European policy.”

Earlier, the Minister of Foreign Affairs and Trade Péter Szijjártó urged for a “pragmatic” approach to the matter of secure energy supply, which he said had become “over-politicized,” at the 27th Baku Energy Forum on

June

2.

While debates focused on how to stop using Russian energy, there is little conversation on how to replace those resources, Szijjártó pointed out.

He said Hungary is committed to diversifying its energy supply, but that would first require a more significant amount of European Union funding, commitment, and programs necessary to develop delivery routes to bring that gas to Central Europe.

Earlier, Hungary had successfully opposed the complete blockade on Russian oil, brokering an exemption for pipeline deliveries, an effort Szijjártó said “was worth it.”

Sector Slowdown

At a Traders Conference hosted by building material wholesaler Mapei Kft., a survey of about 70 representatives of the building materials trade who were present revealed that 95% expect a crisis. While home renovation subsidies have stunted the sector’s slowdown, unfavorable international economic developments, such as the prolongment of the Russo-Ukraine war and declining municipal investment, point to difficulties in the construction industry.

Yet, a majority of Hungarian companies believe that the conflict may end this year, around 54%, according to a survey conducted by K&H among large companies. However, 61% of companies say it will take at least two years for the world economy to reach its pre-war performance. According to the survey, the economic relations of domestic companies with those in Russia and Ukraine may only recover after a similar amount of time. While

12% believe that such pre-war growth could be achieved this year or the next,

another

17%

think it will take at least another five years before those levels are seen again.

Hungarian Interchurch Aid delivered another shipment of medicine worth HUF 10 million to Ukraine, the organization’s chairman and director László Lehel told news channel M1 channel on June 6. Lehel said that the Hungarian Interchurch Aid, as an “international consortium,” was coordinating the delivery of donations from the Netherlands, England, Denmark, Finland, and Sweden to a hospital in Berehove, in Transcarpathia.

While it was mostly food and hygiene products that were required in the first months of the war, medical supplies are now in greater demand, as refugees have started returning home and their local medical needs are being assessed.

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Semmelweis University and Roche Sign Strategic Agreement A landmark agreement has been signed between Semmelweis University, the top medical and health sciences higher education institution in Hungary, and the local unit of Swiss multinational Roche, a leading healthcare company in biotechnology and diagnostics.

BENCE GAÁL

The main areas of the agreement, which aims to improve the quality of life of patients significantly, include the expansion of innovation projects and clinical trials in Hungary. The expectation is that the strategic cooperation between Semmelweis University and Roche Hungary will trigger significant advances in joint research and development activities in oncology, hematology, immunology, neurology, and ophthalmology, among others.

Support for education, sharing of international experience, and developing domestic practices will all play an essential role in the joint work, which will focus on personalized medicine, valuebased healthcare and data-driven healthcare decision-making.

The agreement builds on past work.

Over the past five years, Roche has conducted around 70 clinical trials in various disease areas in collaboration with the university.

“To create a patient-centered and more sustainable healthcare system, leadingedge professionals in science and healthcare need to work together, which is why we are building a partnership with Semmelweis University that will bring radical change for patients and healthcare providers,” said Raffaella Claudia Bondi, CEO of Roche Hungary.

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Health Matters A monthly look at health issues in Hungary and the region

can be used to tailor disease treatment and thus increase efficacy through biomarker-based therapeutic design.

Patient Pathways

Dr. Béla Merkely, rector of Semmelweis University.

She added that the parties are united by a vision for a major breakthrough in healthcare, a passion for science, and a belief that a lasting partnership based on shared values and focused on the whole patient journey is the key to improving the health of the population and healthcare indicators in Hungary.

“I believe it is of particular importance that all elements of the document are characterized by a patient-centered approach, aiming to deliver efficient and high-quality care and improve

“To create a patientcentered and more sustainable healthcare system, leading-edge professionals in science and healthcare need to work together, which is why we are building a partnership […] that will bring radical change for patients and healthcare providers.” the quality of life of our patients. This contributes to the main mission of our university, which is to improve the health of our citizens,” noted Dr. Béla Merkely, rector of Semmelweis University.

Innovative Therapies

He emphasized that increasing the volume of clinical trials will help ensure patients have access to innovative therapeutic options as soon as possible

and that researchers and doctors are among the first to gain experience with new procedures.

“The partnership will also help support research initiated by Semmelweis University clinics, which will strengthen our scientific achievements and contribute to our goal of becoming one of the top 100 universities in the world and one of the top five medical universities in Europe,” Merkely added.

Breast cancer is one of the most critical areas of clinical trials. In Hungary, more than 8,000 cases are diagnosed and at least 2,000 people die from the disease each year, accounting for 6.7% of all cancer deaths. Within the collaboration framework, the university and the company are looking to bring significant advances in breast cancer treatment. In developing new directions, the parties are also counting on the involvement of patient organizations in the field.

The joint efforts of the parties in neurology and neurogenetics are another priority. Current research is looking into areas such as Alzheimer’s disease, for which no breakthrough has yet been found. In Hungary, it is estimated that between 150,000 and

500,000 people

could be affected by Alzheimer’s, for whom early detection is critical.

There is also a decade-long collaboration between two pathology institutes at Semmelweis University to research the causes of lung tumors. More than 8,000 patients die of lung cancer in Hungary annually, so reducing this number and improving the quality of life of those with the disease are also key objectives of the cooperation.

The discovery of oncogenic mutations leading to tumors and their targeted therapy has opened a new dimension in treating lung cancer.

Knowledge of these genetic variations

Semmelweis University is also testing a web application within each of its disease groups to develop and operate a digital patient management system. The app was donated to the Hungarian state by the Hungarian Foundation for the Development of Personalized Healthcare (SzEFA), established by Roche, in December 2021.

Integrating this solution into the university’s hospital IT systems can significantly reduce the administrative burden. In the medium-term, patient pathways can become more transparent diagnosis times can be shortened.

The joint project will also aim to improve healthcare organization and use digitalization to help doctors make faster, better decisions based on all the available data, taking into account the whole patient journey. It will also allow more time for quality interactions between doctors and patients.

Raffaella Claudia Bondi, CEO of Roche Hungary.

To improve patient safety, the university will set up a digitalized cytostatic (a process that aims to retard cellular activity and multiplication) mixture infusion laboratory based on CATO (Computer-aided Therapy for Oncology) with the support of Roche this year. The lab will be used for more automated, controlled, safer and patient-tailored creation of individual formulations for oncology treatments.

The centralized preparation will also optimize the use of equipment, medicines and resources, thus contributing to more cost-effective operations, in addition to improving patient safety.

The cooperation agreement was signed

by Merkely and Dr. Lívia Pavlik, the chancellor of Semmelweis University, and by Bondi and Tibor Kövesi, head of strategy and organizational development, on behalf of Roche.

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Budapest Business Journal | June 17 – June 30, 2022

in Brief

Bosch Exhibition at Fine Arts Museum Draws 100,000 Visitors

Addressing the contest winners, Csák stressed the importance of curiosity, creativity, and positive risk-taking, in addition to innovation.

An exhibition of the work of the Dutch painter Hieronymus Bosch at Budapest’s Museum of Fine Arts has drawn more than 100,000 visitors since it opened on April 9, according to origo.hu. The exhibition will also be open on Mondays (when the building is often closed) until the run ends on July 17, the museum said.

The show, dubbed “Between Hell and Paradise. The Enigmatic World of Hieronymus Bosch,” features around 90 works, including 10 Bosch paintings, close to half of the artist’s surviving painted oeuvre.

Special Taxes Have Marginal Effect on Growth Sectoral taxes in advanced economies, which have become a standard tool in economic policy over the past decade, are by no means unusual, writes business daily Világgazdaság [Global Economy]. Their impact on growth may be minimal for the extra-profit taxes recently introduced by the government, said Zoltán Török, Raiffeisen Bank’s senior analyst. The expert, one of the most pessimistic about the outlook for the Hungarian economy this year, said there are such far-reaching and unpredictable developments in the world economy that the role of special taxes in GDP growth or inflation is almost marginal.

Domestic Green License Plates More Than Double Since 2020 The number of domestic green license plates has more than doubled over the past two years, the Ministry for Technology and Industry told state news agency MTI on June 11. The figure crossed 51,000 in May. According to the announcement, the government aims to achieve complete climate neutrality by 2050, without compromising economic growth or prosperity, as set out in its National Clean Development Strategy. The greening of transport, which accounts for a fifth of total CO2 emissions, will play an essential role in this.

Szeged Rated Top Hungarian University The University of Szeged (SZTE) is Hungary’s top university, according to the latest annual ranking of higher education institutions by Quacquarelli Symonds, writes state news agency MTI. The SZTE (170 km southeast of Budapest) was placed in the 551-560 group in the QS World University Rankings.

QS noted that Hungarian Nobel laureate Albert Szent-Györgyi, credited with first isolating vitamin C, conducted research at SZTE, while Katalin Karikó, whose discovery of mRNA technology was instrumental in producing COVID vaccines, is a more recent

alumna. SZTE offers more than 70 full-time international degree programs at bachelor’s, master’s, and doctoral levels in English, German, and French. Some 4,500 international students from around 130 countries are enrolled at SZTE. The University of Debrecen (225 km east of Budapest) was in the 651700 group in this year’s rankings; Eötvös Loránd University (ELTE), in the capital, and the University of Pécs (195 km southwest) were in the 701-750 group; and the Budapest University of Technology and Economics (BME) was in the 801-1000 group.

Varga: EU Funding Talk Could Finish by July Talks on Hungary’s European Union funding for the 2021-2027 budget cycle could finish by the end of July, Minister of Finance Mihály Varga said in an interview with Kossuth Rádió.

Varga said talks with the European Commission on Hungary’s Recovery and Resilience Facility (RRF) funding are underway, adding that he trusts an agreement will be reached. Hungary can count on the EU funding for the 2023 budget, he added.

Hungary to Raise R&D Spending to 3% by 2030 Hungary aims to raise spending on research, development and innovation from 1.6% to 3% by 2030, Minister of Culture and Innovation János Csák said on June 13, presenting prizes at a youth science contest, according to conservative daily Magyar Nemzet [Hungarian Nation].

COVID Vaccination Days at Hospitals on Fridays Only Due to the retreat of the pandemic and the high vaccination rate, vaccination days at hospital checkpoints will only be held on Fridays from the end of this month. However, vaccination can still be requested from a general practitioner or pediatrician, according

Dugonics tér in the center of Szeged with the main university building on the right. Photo by Marko Rupena / Shutterstock.com

to koronavirus.gov.hu. The government portal reported that the use of hospital vaccines had declined significantly in the recent past due to high vaccination rates and the favorable pandemic situation. The number of those vaccinated has already reached 6.411 million, with 60% taking the third booster dose. The figures have been promising for weeks, with the number of new infections, hospitalizations and vaccinations declining.

Experts Identify More Cases of Monkeypox Experts have identified more cases of monkeypox, the National Public Health Center (NNK) said on its website. A 35-year-old male from Budapest and a 24-year-old male living in Pest County have been placed in home quarantine with mild symptoms, the NNK said.

Hungary announced its first confirmed case, in a 38-year-old male, on May 31.

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WHO’S NEWS

István Szatmáry Joins Oppenheim as Competition Partner

István Szatmáry Law firm Oppenheim has announced the appointment of István Szatmáry as the partner leading the firm’s antitrust, competition, and trade practice.

Szatmáry joined on April 19, bringing on board some 25 years of experience in the legal practice in addition to several years of managerial experience.

“Oppenheim is a highly reputable brand on the Hungarian legal market and is one of the leading independent law firms in the country. Thus, it is my great pleasure to join the team and to provide cutting-edge, high-quality service to the firm’s existing and new clients,” comments Szatmáry on his alignment with the law firm.

Head of Climate Change and Sustainability Services Appointed at EY

Ákos Lukács has joined EY Hungary as a partner, becoming responsible for the Big Four firm’s climate change and sustainability services.

From 2012 to 2016, Lukács worked as a head of climate policy in public administration, where he was the domestic liaison to the UN Intergovernmental Panel on Climate Change (IPCC) and negotiator of the Paris Climate Agreement. He started his career in the scientific field in 2007 and later became active in the German public administration as well as in Hungary before founding his own company.

For the last six years, he has been working in the consulting sector, helping several large companies in Germany and Europe develop and implement their sustainability strategies and reports. He has assisted banks in developing green frameworks, loan, bond, and mortgage products, and their issuance to green standards.

Commenting on his appointment, Lukács said that his primary goal is to help more companies recognize the opportunities they have in today’s sustainability-driven business and financing environment. He considers it essential to contribute to reducing the emissions of organizations, strengthening climate risk mitigation and resilience. The expert says this is also critical to ensuring business growth, so all companies must focus on mainstreaming environmental, social, and governance (ESG) considerations.

“Establishing and maintaining responsible and sustainable operations will be a key challenge for companies in the coming years, both because of the organizational and attitudinal changes that will be needed to support them, and because of the green financing capabilities of financial markets. ESG considerations are becoming more prominent in the value of companies every day, and no manager can afford to ignore this,” Lukács stressed.

Ákos Lukács The expert has extensive experience producing non-financial reports that showcase companies’ impact on the environment, describe how they address sensitive social issues and detail the

management decision-making process that can take them through to an ESG certification.

Lukács graduated from Szent István University in 2006 with a degree in financial accounting and EU agricultural management. He was a contributor to the ESG Guide developed by the Budapest Stock Exchange and project manager of the EBRD and EU-funded Sustainable Capital Markets Strategy for the National Bank of Hungary.

LG Electronics Hungary Gets MD

Sung Sik Choi Sung Sik Choi took over as the new managing director of LG Electronics Hungary in April. The Hungarian subsidiary also functions as LG Electronics’ regional center coordinating the commercial activities of 10 countries in the Southeastern Europe region (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania, Serbia, and Slovenia).

Choi started his career with LG more than 20 years ago and has held several senior management positions in LG Group’s consumer electronics business.

The new managing director will aim to strengthen further the brand’s dominance in key segments such as consumer electronics and high-end home appliances and to expand further the range of innovative products available in the region, including in the IT devices market.

“It is a great honor and an exciting opportunity for me to strengthen the presence and position of the LG brand in Hungary and the markets of Southeastern Europe,” Choi said.

“Our broad and steadily expanding product portfolio, including consumer electronics, home appliances, laptops, IT products, and air conditioners, brings

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unique solutions and features to the homes.

I’m proud that LG is a trusted brand in the region that has been able to make everyday life better and more comfortable for local consumers through continuous innovation for 30 years,” he added.

Mathieu Deloly Named Tier’s Regional Director for CEE Micromobility service provider TIER has appointed Mathieu Deloly to head its Central and Eastern Europe region.

He took over the management of the 225-employee group, which includes Hungary, Poland and Slovakia, in April this year.

“Tier’s mission is to offer a sustainable and accessible transport alternative for city dwellers. All our electric scooters are climate neutral, so we actively contribute to the sustainability efforts of European cities,” Deloly explained.

“In Central and Eastern Europe, too, local city governments are increasingly focusing on greening transport networks and combating climate change, which Tier supports through its micromobility services,” he added.

The regional director has extensive experience in micromobility, having previously held senior positions at electric scooter sharing company Bird and public bike service operator BikeU.

Mathieu Deloly Tier launched its e-scooter service in Budapest in September last year.

Its scooters are currently available in Budapest in Districts I, II, III, VI, VII, VIII, IX, XI, XII and XIV, with plans to expand to more Budapest districts and rural towns in the near future.

The company, plans to further expand the service in the region and will launch a global campaign in the near future to promote sustainability and carbon reduction.

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Business

Hotel Sector Looking for Investment Resurgence Says HOTCO 2022

Two years ago, developers, investors and hotel operators in the CEE region had seen strong potential for hotel development and investment based on rising tourism and occupancy rates above 80%. Since then, tourism and international travel have been hit by the coronavirus, and now the war in Ukraine, coupled with rising inflation, the prospect of rising interest rates and ESG expectations.

That was the backdrop to HOTCO 2022.

GARY J. MORRELL

The annual Hotel Investment Conference for CEE & Caucasus attracted more than 300 delegates from over 30 countries to the Kempinski Hotel Budapest on May 30-31 for the first time since January 2020, after a COVID-enforced break.

HOTCO aims to foster investment in hotels and hospitality in the region, including those who do not traditionally regard the sector as an option, according to Marius Gomola, managing director of the hospitality consultancy Horwath HTL Hungary, organizers of the annual event.

From a demand perspective, Budapest could return to pre-pandemic levels at around

12

million

annual visitors by next year, according to figures presented at HOTCO by the hospitality consultants STR. As a walk around the historical center of Budapest reveals, individual tourists

the last two years, so I am sure they will be able to adapt again,” he comments.

Hotel yields for Budapest are difficult to estimate in the current environment, with a limited number of transactions concluded. Further, the hotel market is less liquid than, for example, the office sector, as hotel investors tend to be more specific in their requirements.

Hotel yields for Budapest and Prague are put at around 5.5% for trophy assets and 6-7% for others, in the view of many analysts. Takács thinks sellers are looking for 5-6%, although there are no transactions to confirm this. He argues that buyers should complete acquisitions, as the next three years will be critical in the hotel investment market.

ESG Standards

As with other real estate and service sectors, ESG and EU Taxonomy rules are setting new financial standards and a shift in the entire economy, according to Mary Gostelow, hotel and travel journalist and commentator.

She argues that adherence to ESG standards is no longer an option and is central to hotel investment.

HOTCO 2022 developers panel, with Tibor Massányi of DVM at right and Noah Steinberg of Wing in the center. have returned, notably from Europe.

However, Asian tourists are lacking, as are tourist groups.

Further, business travel has not bounced back, with growing concerns over the environmental impact of air travel and the ability to conduct business online, as was proved during the lockdowns. Whether business travel will return to its pre-pandemic levels is a significant question. The MICE (Meetings, Incentives, Conferences and Exhibitions) sector will only recover slowly as large-scale events, once canceled, take a long time to re-arrange.

Despite the perceived complexities of hotel projects, Budapest and Hungary have attracted developers and investors from the more traditional commercial property sectors seeking long-term partnerships with hotel operators for the day-to-day operation of the projects.

Pipeline Revision

A large number of hotel projects are at various stages of preparation or construction process across the country. There are more than 2,000 rooms in a substantial active hotel pipeline across Hungary, according to CBRE. However, given the current environment, the hotel pipeline needs to be revised downwards, with a significant proportion slipping back, according

to analysts. Indeed, several projects have been put on hold with no new delivery dates announced. That said, hotel investment discussions are expected to restart.

Horwath HTL has an estimated 2022 pipeline for Budapest of six hotels totaling 490 rooms, while next year, the expectation is 10 hotels constituting 1,474 rooms. The total pipeline between now and 2026 is put at 32 hotels with a total of 4,418 rooms.

Péter Takács, a partner at Newmark VLK Hungary, argues that the pipeline for 2022 stands at 500 rooms for Budapest, mainly in city-center hotels, with a further

700-800 rooms

in the countryside, most wellness or thermal hotels. He sees Budapest as an excellent hotel location and says there are good opportunities for developers and investors for projects with strong covenants.

“When COVID started two years ago, we were among those who predicted that the recovery would take three to four years. Without the war in Ukraine, this would likely have been possible, but now everything is uncertain again. I do not think anyone can tell when the recovery will finally happen. Hotels have learned to operate in the leanest possible way during

“This [ESG standards] will transform the economy, including, for example, land-use and the sourcing of food, and therefore directly impact the hotel industry. The current environment offers distinct opportunities for hotels in the CEE region by attracting custom through the quality of service.”

“This will transform the economy, including, for example, land-use and the sourcing of food, and therefore directly impact the hotel industry. The current environment offers distinct opportunities for hotels in the CEE region by attracting custom through the quality of service,” she said.

There is still no standard measurement of sustainability in the hotel industry, according to Attila Radvánszki, director of Horwath HTL. “Very strict transaction reporting and obligations are coming into force, and the social and governance element of ESG needs to be incorporated into the reporting strata,” commented Barbara Koncz, partner at PWC Hungary.

With rising construction costs, the option of whether to build or buy is an ever more important question for developers and investors.

“It is difficult to convert historic buildings into hotels as these buildings are full of surprises. There is a need to be close to the development partner in order to achieve targeted prices,” concluded Tibor Massányi, managing director of the architects and construction supervisors, DVM group.

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Hungarian Brewers’ Association Toasts Successes, Faces new Challenges The Hungarian Brewers’ Association celebrated its 30th anniversary this year by reviewing the progress the beer industry has made here since the 1990s and the new challenges ahead with the heads of the four biggest beer producers in Hungary: Borsodi, Dreher, Heineken, and Carlsberg, and the secretarygeneral of the European brewers association.

Business | 9

several beer specialties such as IPA, APA, and also a sour-cherry flavored beer.

“We are also supporting a local hops cultivation program in Kastélydomb,” he added.

Burdach noted that Carlsberg had managed to “move away from being just a lager distributor in Hungary. Now we offer several special beers, and also the popular Sommersby ciders,” he said.

Békefi recalled that Dreher was privatized

in

1992

when the brewer’s association was founded and reckoned that the “premiumization” of the brand was successful as “on the economic side, profitability grew.”

Kántor asked the brewers about the supply security issues brought about by the Russo-Ukrainian war.

“Supply security is now an everyday question; in the past years, we drew up a one-week plan and completed it. Now, even a one-week plan must be revisited due to the shortages. For us, this issue is more of an economic question, rather than quality,” said Dreher’s Békefi.

Who Speaks 1st?

Vuleta of Borsod said that one of From left: Pierre-Olivier Bergeron, secretary-general of the the most noticeable changes today Brewers of Europe; Nikos Zois, managing director, Heineken is who speaks first around the table Hungária; Sándor Kántor, director of the Hungarian Brewers’ at brewery meetings.

Association; Gábor Vuleta, general manager of Borsodi “Now, it’s almost always the supply Brewery; Marcin Burdach, CEO of Carlsberg Hungary, and guy,” he noted, adding that since the Gábor Békefi, general manager of Dreher Breweries. factory in Bőcs is a regional center, it is now a priority for Molson-Coors, which is a huge advantage.

He also praised the breweries’ Burdach explained, “The situation is He added that in terms of the solidarity schemes during the crisis not easy. We can buy the goods, but we increasing costs of grains and malts, that helped employees and people can’t say what the price will be.” the difference is not a mere 5-6% and in need, adding that they dealt that the brewers will have to adjust the with the situation with “modesty, consumer prices. solidarity, and intelligence.”

Nikos Zois, who leads Heineken “The development of the Speaking about the success of Hungária, remarked, "In two years, the beer industry in Hungary in we had two global crises. A crisis largest beer producers the last three decades, Kántor is not pleasant, but may also offer operating in Hungary over concluded, “The development of opportunities.”

BENCE GAÁL the largest beer producers operating the past 30 years shows Mental Health in Hungary over the past that beer production plays Opening the panel discussion, He argued that, in terms of priorities, Hungarian Brewers’ Association head people’s mental health should come a key role in the Hungarian years Sándor Kántor noted that the habits first, followed by continuity of operation food sector, especially shows that beer production plays a of Hungarian consumers are shifting and cash flow. He agreed that the war in terms of supply and key role in the Hungarian food sector, towards quality over quantity: had brought about soaring inflation and “Thanks to the recent product and noted that Heineken is trying not to push especially in terms of supply and occupational safety.” occupational safety. A wide range of technological development, the product it all on consumers. products and high European quality range of Hungarian breweries has Dreher Breweries general manager ensure the companies’ present, while broadened significantly.”

Gábor Békefi concurred that employees’ continuous product and production While beer consumption per capita mental health is important and added Zois said that Heineken Hungária development guarantee the future fell from around 100 liters in the early that “COVID and the war brought about is now planning with three scenarios: of the sector.”

1990s to different supply chain challenges.” optimistic, realistic, and pessimistic. He just Gábor Vuleta, general manager of also explained that the company has an Forefront of Innovation Borsodi Brewery, noted that the crises alliance with Heineken subsidiaries in Talking about specific successes of “Changed the operation environment the Czech Republic and Slovenia to help in 2021, Kántor said that the market share and consumer habits, but we persisted his brewery, Vuleta said that Borsodi each other with supply issues. of premium beers has grown to 30%. has always been at the forefront of and served the markets. The crisis “Overall, in Europe, there is a control Speaking about the war in Ukraine, all innovation, with achievements such catalyzed changes, as we needed to center that helps in case we can’t find the brewery heads agreed that the crisis as introducing the first 0.0% alcohol react to stay on our feet and be viable raw materials locally,” he said. had brought about significant challenges in terms of operation.” content beer to the market.

Bergeron of Brewers of Europe made Pierre-Olivier Bergeron, representing for an industry that has only just started “In 2020-2021, we concluded the point that the production costs of the Brewers of Europe association, told to recover from the COVID pandemic. the biggest development at our beer are high, and the brewing process his Hungarian colleagues that they “We thought 2022 would be the facilities in Bőcs, which is now is complex. were being “too modest.” year of peace after the HoReCa [hotel, the regional center of Molson“The duty of the EU is to maintain “The situation reminds me of restaurant, catering] shutdowns, but Coors,” he added. its internal market. Now is not the time a car’s dashboard full of red lights, now we have a skyrocketing input cost Zois emphasized the success of to implement indirect taxation that warnings about human costs, inflation,” said Marcin Burdach, head Heineken’s popular Soproni Óvatos would further complicate the lives production costs, and more.” of Carlsberg Hungary.

Duhaj beer line, which includes of brewers,” he warned.

30

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10 | 2

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Budapest Business Journal | June 17 – June 30, 2022

Hungarian monetary and fiscal policymakers are facing an increasing number of challenges and risks, according to the latest analysis by Equilor Investment Ltd., presented on May 31. Several factors have combined to force the Hungarian government to adjust, introducing new windfall taxes to halt the further widening of the ballooning budget deficit.

Graphic by Myvector / Shutterstock.com

Equilor: Increasing Risks Around Hungarian Economy, With Negative Real Interest Rates

GERGELY HERPAI

Lajos Török, the lead analyst at Equilor, warned additional measures might still be needed to keep the previously set deficit target. Based on the current outlook, the general government deficit could reach 5.5% this year and slowly decline.

The firm believes interest rates could peak at 7.9% in 2022, but even so, a positive real interest rate will not be achieved this year, as annual inflation could

reach

9%.

Rising interest rates, global uncertainties, the explosion in commodity prices, and

the upsurge in inflation are the main factors behind the unfavorable outlook, which fiscal and monetary policy can only combat with moderate success in the short term.

According to Equilor’s analysis of most indicators, a bear market has set in, meaning we can say goodbye to steadily and predictably rising equity prices for a while. The supply and demand shocks have affected almost all commodity prices, with the price increases for agricultural commodities practically continuous.

Price rises can cause inflation in developed countries and shortages of goods and even famine in developing countries, which could, in turn, lead to political instability in some regions, Equilor warns. This process is not yet fully reflected in the prices of finished goods, and price increases could be further exacerbated by the fall in Ukrainian and Russian prices.

Global Simularities

Globally, similar trends are playing out in the major economies: growth in the United States is more buoyant, but a significant slowdown is

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expected this year, with accelerating inflation. In the euro area, growth is slower, but inflation has picked up, leading to the European Central Bank’s first rate hike in 11 years, expected to be 25 basis points in July, while the U.S. Federal Reserve has said it will raise rates by 50 basis points this month and next.

According to Equilor’s analysis of most indicators, a bear market has set in, meaning we can say goodbye to steadily and predictably rising equity prices for a while. The supply and demand shocks have affected almost all commodity prices, with the price increases for agricultural commodities practically continuous.

The Hungarian fiscal situation has triggered an adjustment, which poses further risks to growth and, indirectly, even inflation,

the investment services firm warns.

The pace of price increases approached 10% in April, a high not seen for

21

years,

and could exceed this level in the coming months, while annual inflation could reach 9%.

The National Bank of Hungary (MNB) is currently trying to fight expectations of inflation building up and anchoring itself at higher levels: the cycle of interest rate hikes launched last June was less effective due to the countervailing fiscal and monetary policies, and a sharp shift in fiscal policy is now visible.

Equilor points out that the MNB has repeatedly stressed the need for a positive real interest rate, which is unlikely to be achieved this year. The central bank may reduce the pace of base rate hikes from 100 to 50 basis points and raise the one-week deposit rate further at a speed of 30 basis points. According to Török, if this scenario materializes, the two interest rates could converge at the end of September at 7.9%.

Forint Risks

A range of risks is influencing the forint market: uncertainty over the transfer of the EU recovery fund from Brussels, the RussoUkrainian war, monetary tightening by major central banks and the

Equilor lead analyst Lajos Török (center right) makes a presentation alongside CEO Bálint Szécsényi (center left). unconventional fiscal measures favored by the Hungarian government have all weakened the domestic currency recently.

According to Equilor, if an agreement is finally reached with the European Union, the euro should not remain stable above HUF 400. The exchange rate could hover around the current level of HUF 393 over the year.

The most significant payers of the windfall taxes on “extra profits” will be MOL and OTP, which are expected to pay an extra HUF 250 billion and HUF 82.5 bln in annual taxes, respectively.

In the case of MOL, the further widening Brent-Ural spread will significantly improve the company’s results, only partially offset by the

PROMOTION

Bán, S. Szabó, Rausch & Partners celebrated its 25th birthday A quarter of a century on the Hungarian legal market.

Not many law firms can say this about themselves and we are proud to belong to such an elite club. The firm was established in 1997 under the name of Bán, S. Szabó & Partners, led by Bán Chrysta, as a result of the reorganization of Shearman & Sterling's Budapest office, and has maintained its independence and international connections.

Business | 11

The anniversary celebration was held with the friends and clients of the office, and the event was hosted by the beautiful Haris Park. After a garden reception, the celebration continued with an elegant dinner and the unmissable birthday cake. As a surprise, after his speech, János Bánáti, President

of the Hungarian Bar Association, presented a memorial plaque to János Rausch, who represented the office as managing partner. Myrtill and Swinguistique provided a nice musical atmosphere after dinner.

We would like to thank our clients for their trust, we hope to meet you again in the 30th year!

loss due to the wholesale price capped for Hungarian forecourt customers

at

HUF 480.

In the case of the banking sector, the higher interest rate environment helps profitability.

The increase in telecoms tax will negatively affect Magyar Telekom, increasing its payable tax by HUF 15 bln, according to Equilor estimates.

In contrast, pharma company Richter, the fourth blue-chip share on the Budapest Stock Exchange’s main BUX index, will not be affected by the windfall taxes. Still, they could impact lending when high interest rates are expected to be negative anyway.

12 | 2

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Budapest Business Journal | June 17 – June 30, 2022

Company Consumer Protection Probe Launched Against Ryanair Minister of Economic Development Márton Nagy said he initiated a consumer protection probe of Ryanair on June 13 after the Irish low-fare carrier started passing on the cost of Hungary’s windfall tax on airlines to consumers, according to portfolio. hu. “The government considers it unacceptable and rejects in the strongest terms Ryanair’s passing of the special tax on extra profit levied on airlines to passengers,” Nagy said in a statement. “It is especially adverse that Ryanair has started this practice with regard to tickets sold earlier,” he added. Authorities will undertake a thorough investigation to protect consumer rights and prevent what it calls the airline’s unfair business practices where possible, the statement said.

Waberer’s to pay HUF 1.2 bln in Windfall Tax Listed Hungarian hauler Waberer’s International said it expects to pay HUF 1.2 billion this year on a windfall tax on insurers, according to an announcement on the website

News

of the Budapest Stock Exchange on June 9. The additional tax, paid on revenue from premiums of the company’s general insurance business, will reduce operating profit, Waberer’s said. Hungary’s government has levied “extra profit” taxes on several sectors in 2022 and 2023. Revenue from the levy is earmarked for funds to protect the regulated utilities price system for households and upgrade the country’s military defense.

OTP Bank to pay HUF 78 bln Under Windfall Tax OTP Bank, Hungary’s largest commercial lender, will pay HUF 78.3 billion this year on the windfall tax on “extra profit” the government is levying on the banking sector, according to an announcement posted on the website of the Budapest Stock Exchange yesterday. OTP said it would book the tax payment in a lump sum in the second quarter. The accounting treatment of the windfall tax payable in 2023 is “still under discussion,” it added. The windfall tax, one of a number the government is levying on specific sectors, is in place in 2022 and 2023.

Rheinmetall-Hungary JV Could Inaugurate Lynx Plant in Weeks

and hospitality,” said Natalia Lechmanova, chief economist at the Mastercard Economics Institute.

A joint venture between German defense industry company Rheinmetall and the state of Hungary could inaugurate a plant to make Lynx infantry fighting vehicles in Zalaegerszeg (215 km southwest of Budapest) “within a couple of weeks,” Minister for Innovation and Technology László Palkovics said on June 13. He was speaking at France’s Eurosatory international weaponry industry trade fair, according to novekedes.hu [Growth]. Palkovics said the construction of two ammunition plants could start soon in Várpalota (85 km southwest) in cooperation with Rheinmetall. He added that Rheinmetall and Hungary are also partnering on developing a nextgeneration, eight-wheeler, electric hybrid infantry fighting vehicle.

Hungary’s defense industry is also branching out into aircraft, he noted, adding that Airbus will open a helicopter parts plant in Gyula (215 km southeast of Budapest) before the end of June. He said the war in Ukraine had shown the importance of new technologies, such as drones, the production of which could present “an important possibility” for Hungary.

Pre-war Performance not Expected for 2 Years

Mastercard Expanding Metering Service to Hungary Mastercard has announced that it will expand its Mastercard SpendingPulse metering service to several European countries, including Hungary, according to profitline.hu. This globally recognized indicator means retailers, financial institutions, and other decision-makers can receive up-todate, reliable information on consumer spending, payment preferences, or even where to shop. “Across Europe, a major shift is taking place as consumers increasingly choose the experiences they have been deprived of over the past two years instead of buying different products.

This is good news for experiencebased sectors such as gastronomy

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Although most Hungarian companies believe the Russo-Ukrainian conflict may end this year, the world economy will not return to its pre-February 2022 performance for another two years, according to a survey conducted by K&H Bank among large companies, writes profitline.hu. According to the summary submitted on June 13, the economic relations of domestic companies with Russia and Ukraine may only recover in a similar period.

Some 54% of companies expect the conflict to end later this year. However, 61% of companies say it will take at least two years for the world economy to reach pre-war performance, with 17% believing it won’t recover in five years. Only 12% believe the previous level can be exceeded this year or next.

2 Bosch Firms Sign Agreement With Miskolc Training Center A pair of local businesses of German engineering giant Bosch have signed an agreement with the Miskolc Vocational Training Center to renew and expand dual training cooperation launched 10 years ago, according to autopro.hu. Robert Bosch Energy and Body Systems and Robert Bosch Power Tools will work with three schools partnered with the training center in Miskolc (180 km northeast of Budapest) to train prospective employees for the companies while supporting secondary education and adult education programs at the schools. Students will have an opportunity to study at Bosch’s factories.

The cooperation covers the coordination of training content, the incorporation of new technologies into the curriculum along with its development, internships, advanced studies for vocational trainers, the participation of Bosch professionals in theoretical education, and career orientation programs. Bosch Group has more than 17,000 employees in Hungary.

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The Budapest Business Journal’s corporate finance columnist Les Nemethy is worried by how sanguine the financial and corporate world appears to be about our economic prospects.

Over the past month, I have traveled within North America and Western Europe, met quite a few people, including senior bankers, and have been generally surprised by the feeling of “business as usual.” There is very little sense of impending doom or recession.

The reasons that are given for this include: • The strength of the U.S. jobs market; • The high aggregate savings and bank deposit levels of U.S. consumers; • The U.S. Federal deficit has decreased to USD 1.1 trillion in May 2022, down from a peak of USD 4.3 tln in March 2021 (measured on a 12-month trailing basis).

Why do I believe this confidence is misplaced?

• The Michigan consumer confidence index is at its lowest since 1980.

• The distribution of those savings is skewed. 60% of Americans have little or none.

• Jobs reporting comes with a lag, and the number of unemployed is already starting to notch upwards.

The Corporate Finance Column

Photo by Viktoriia Hnatiuk / Shutterstock.com

World Hurtling Towards Recession and Possible Financial Crisis

Business | 13

• Q1 nominal growth in the United still loose. The European Central bank States was already -1.5%. is not even making noises about QT; it • The S&P is down 18.2% in the first 111 has limited scope to raise interest rates trading days of 2022, the fourth worth due to the effects this would produce performance since 1932, diminishing on the periphery, and monetary policy consumer and investor confidence. is even looser: • Inflation continues to increase in most After stating that inflation was not countries, raising the likelihood of a threat, then calling it “transitory,” further rate increases and the specter United States Secretary of the Treasury of further economic slowdown and Janet Yellen admitted that she was decline in stock market indices. wrong in her assessment of inflation • Bond yields are generally increasing (a welcome step) but went on to state: rapidly worldwide (for example, in “I do not expect inflation to remain Germany, from negative a year ago high, although I very much hope that to more than 1.5% on June 10), with it will be coming down now.” Since yields on the EU periphery rising even when is hope a strategy? faster (a year ago, 10-year Italian As explained in a previous article, bonds yields were about 1% higher than I expect the Fed to tighten until German bonds, today they are more something breaks (for example, a than 2% higher). The 10-year Italian significant market crash or the credit bond yield had risen from 1% at the markets freeze) and then begin its fifth beginning of 2022 to 3.86% on June Quantitative Easing (QE) program.

1, despite massive bond-buying from Will the Dollar Tank? the European Central Bank. While most believe the ECB will do “whatever As the American financial commentator Peter Schiff stated: “The most important it takes to save the euro” (as Mario mistake investors [and I might add: Draghi famously said in 2012, turning central banks] are making is thinking the tide on the then euro crisis), the that a recession will solve the inflation magnitude and speed of movement in Italian bond rates are a cause for worry. problem. In reality, it will make it worse. When the Fed pivots and launches QE5 to stimulate the economy, While the U.S. Fed increases interest the dollar will tank, accelerating rates, the negative real interest rate the increase in consumer prices.” of -7% means that monetary policy is

As macro strategist Lyn Alden recently stated, two major supply-side factors are redefining the world economy today.

1. For at least the past decade, there has been massive underinvestment in energy. Hydrocarbon drilling has plummeted. The Keystone pipeline was canceled. Uranium programs have been shuttered (by Germany, for example); no new uranium mining capacity has been developed since Fukushima.

Meanwhile, an insufficient supply of the minerals required for alternative energy development (nickel, lithium, copper, etc.) constrains capacity.

2. For decades, the global value chain was optimized for efficiency. Since the Ukraine war, priorities have changed, and the focus suddenly became security of supply. Manufacturing closer to home, holding more inventory, and so on requires massive investment and contributes to considerable price increases.

Central banks have no control over the above factors. Nor do they have control of COVID and the Ukrainian war, which play further havoc with supply chains and price pressures. Whereas higher interest rates may dampen demand, so long as interest rates are negative in real terms, that will be insufficient to quell inflation, especially as long as the aforementioned pressures on supply chains remain with us or even intensify.

Of course, globally high debt levels (for government, corporations and individuals, giving a grand total of more than USD 350 tln) add to global economic fragility and lessens the ability to tolerate higher interest rates.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www.businessexitplanningbook. com), and a previous president of the American Chamber of Commerce in Hungary.

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Special Report Telecoms & ICT

Normalizing 5G Sentiment Opens way to Expanding Services Even as the Hungarian market is getting used to fifth-generation technology on the residential side of the business, the corporate landscape is readying itself for more complex use of machine-tomachine (M2M) and internet of things (IoT) applications maximizing the capabilities of the 5G mobile network. The Budapest Business Journal explores the market sentiment in telecommunications.

György Koller, chief technical officer of Yettel Hungary business] segments, which is also supported by our expanding 5G network and coverage,” Koller said.

Out With the Old

Phasing out the obsolete 3G connectivity, which has inherent speed and latency limitations, is welcome and valuable for the more ubiquitous technologies.

Ridding 3G from a telco’s portfolio will release a spectrum that can be used by more state-of-the-art and efficient technologies for 4G and 5G services.

User behavior warrants this change.

“The appetite for mobile internet is still CHRISTIAN KESZTHELYI growing, and we expect this to persist in the years to come in both the B2C and Following the initial hype around 5G, B2B segments. The trends have caught up the sentiment relating to the technology with the peak network traffic of COVID is normalizing. Users are more rational times, leading to more balanced and in their approach to the technology’s steady growth,” Koller noted. Indeed, an capabilities both on the residential and increased inclination for data fueled an corporate levels. So, where do telcos extraordinary expansion in the market. place their emphasis nowadays?

“The past one or two years have seen a “We are focusing on three key areas of decade’s worth of growth in digitalization, network development: 5G, machine-towhich is certainly a positive side-effect of machine communication and the phasing the pandemic,” he added. out of 3G technology,” György Koller, As 5G surpasses previous technologies chief technical officer of Yettel Hungary, in four key capabilities — data speed, told the BBJ. latency, simultaneous device support, As massive information campaigns and network slicing (creating multiple have accompanied the advent of fifthunique logical and virtualized networks) generation connectivity in recent years to — mobile can now provide services that help everyday users understand the power had only previously been available on and potential of 5G, the technology is not fixed-line networks. foreign to most anymore. The time for “With the emergence of autonomous mass adoption has arrived.

5G networks, the 1-2 millisecond “We expect users to become latency promised by the new technology increasingly open to adopting 5G will create many new manufacturing technology both in the B2C [business opportunities. In this field, network to customer] and B2B [business to slicing will be a useful feature, enabling

businesses and plants to implement autonomous networks, offering all the benefits of 5G without being dependent on other external components of mobile networks as a whole,” Koller explained.

Essential Prerequisite

Fifth-generation connectivity is an essential prerequisite of ubiquitous technologies in development. Early in March, Vodafone Hungary announced it had launched a new global platform, enabling users to engage in what the telco describes as safe commercial activities.

The platform is called economy of things, EoT, and plugs into the systems of Mastercard and EnergyWeb, a nonprofit targeted at accelerating a lowcarbon, customer-centric electricity system based on blockchain technology.

EoT, Vodafone hopes, will help companies turn physical products into digital instruments that can compete in online markets.

“Vodafone’s newest EoT platform builds on our IoT platform and will enable the establishment of a commercial network,” said Mátyás Dobó, enterprise business unit director at Vodafone Hungary, according to a press release.

The platform promises to create a framework where everyday objects and devices can negotiate, purchase and sell services online, Dobó added.

Vodafone expects the new platform to help clients overcome their fear of distance when purchasing products and services online, as well as help them make conscious decisions about energy service providers based on the extent to which they use renewable energy sources.

Working Around the Clock Two of Hungary’s three biggest telecommunications services providers have recently changed their working arrangements.

Vodafone Hungary said in February that the organization would adopt agile working conditions and keep the current hybrid arrangement in place, while Magyar Telekom, the Hungarian sister of German giant Deutsche Telekom, has just announced it is piloting a four-day work week.

After a year of preparations, Vodafone Hungary is introducing agile working conditions while sticking to hybrid working. The telco believes that creativity, customer-centeredness, and speed are the most crucial factors determining business success and granting a company a market advantage.

In a press release, the telco defined “agile” as being fast to react and carrying a proactive mindset. The key to agile working, Vodafone says, is setting shortterm, reasonable targets “After some of our teams started adopting agile methodologies, in a bottom-up approach, digital teams and then the entire residential business has started reforming into agile working, until Vodafone in its entirety will find the agility that is working for them best,” said Balázs Révész, consumer business unit director and chief commercial officer at Vodafone Hungary.

Early in June, Magyar Telekom announced that it was launching a pilot project on the feasibility of a four-day work week. Between July and October, four teams will take part in this pilot. At the same time, Magyar Telekom will initiate a representative, country-wide survey to gauge employers’ and employees’ opinions on the approach.

“Experimentation is one of our core values; we are proactive and courageous in trying new things, which we believe may make our operations better, as well as help our colleagues develop and improve their life quality,” said Zsuzsanna Friedl, chief people officer at Magyar Telekom.

She also underlined the importance of work-life balance and efficient, target-oriented working in light of the pilot.

www.bbj.hu

Budapest Business Journal | June 17 – June 30, 2022

PRESENTED CONTENT

3

Vodafone Hungary: New Technologies Demand ‘New Business Reality’ Industry 4.0 and fifthgeneration networks are part of the “brave new world” of commerce.

They have prompted the local unit of Britishbased multinational telco Vodafone to make the “new business reality” a core value, as enterprise business unit director Mátyás Dobó tells the Budapest Business Journal.

Mátyás Dobó

BBJ STAFF

BBJ: Vodafone has made what it calls the new business reality one of its fundamental corporate values. What do you mean by “new business reality,” and what does its adoption as a core value mean for your business customers.

Mátyás Dobó: The new business reality is about everything we make possible for our customers through our technology solutions. In this sense, we are not just delivering a tech solution; we are also providing expertise and a specialist to make sure the adaptation will have an effect on our customers’ business as a whole, creating a new reality, a new standard, which, in turn, will significantly boost the competitiveness of the company.

BBJ: We have been talking about 5G for what seems like years. What percentage of the country is covered

by Vodafone, and when will we have full coverage?

MD: I’m proud to say that we have been at the forefront of 5G network development since the beginning. In 2019, we were the first operator in Hungary to launch our outdoor commercial 5G service for all in downtown Budapest. After the capital, we introduced the nextgeneration mobile network in the Balaton region, in line with the results of a preliminary survey, followed by several towns in the countryside, including Zalaegerszeg, Székesfehérvár, Miskolc, and several smaller towns and villages.

As in the past years, we will continue to emphasize the development of the 5G network: we will continue to switch on base stations, and we will also pay close attention to the development of our 5G roaming service and 5G mobile private network investments.

BBJ: More recently, there has been much talk about private 5G networks. How do these differ from public coverage, and what are their advantages?

MD: Private networks can be used to build unprecedented industrial and logistics business models that contribute to the development of domestic companies and job creation. The fifth-generation mobile private network, the most advanced mobile technology solution currently available, is essentially a private network separate from the public network. Here, the hardware is on the premises, allowing devices to connect to the network, meaning that data never leaves the site. Therefore, the network can meet the most stringent data security requirements. In addition to security, another key advantage is latencyfree communication and the fact that, when combined with AI or AR solutions, data can be collected without the need for an on-site presence, and machinery can be operated remotely. For example, a possible fault on a production line can be detected without someone having to check the plant in person. It is also always possible to see precisely what machine is working in which location at the plant, and people can track the route of a package live. The technology can help train and educate staff more efficiently and potentially more interestingly, and it can also significantly boost safety levels. Another significant aspect is that the network is powered by 100% renewable energy, another way of encouraging our customers and partners to operate sustainably.

BBJ: Vodafone has been running case studies with East-West Gate in Fényeslitke and Foxconn in Komárom.

Can you give us more details and outline what you have learned and how that might be transferable.

MD: Both investments are an excellent example of how 5G mobile private networks can bring extraordinary breakthroughs in the way companies operate, significantly improving their competitiveness and thus creating a new business reality.

The East-West Gate Intermodal Combi Terminal in Fényeslitke is Europe’s largest smart rail logistics terminal, the first on the continent to use its own 5G network for internal communications and the operation of its technology devices. This is particularly important because the uniquely designed, high data security 5G mobile private network allows the entire container terminal to operate wirelessly and remotely in realtime. It will also be the first globally to use 5G technology to remotely control the fully automated giant cranes of the land terminal with very fine movements.

Its significance is that it will change and improve working conditions; crane operators in Fényeslitke will, for example, no longer have to sit on the cranes all day. The terminal, which uses 90% green energy from the outset, is currently in pilot operation, but it is already clear to see the amazing potential 5G holds for business operations, including logistics.

In terms of Foxconn’s investment, we can report similar results, as well as more efficient and innovative operations.

Foxconn’s factory in Komárom has been running a 5G mobile private network since last summer, after a six-month pilot period. The private network has several advantages: besides information security, one of its key features is network customizability.

These private networks offer extremely high capacity and device connectivity with very low latency, thus meeting the needs of Industry 4.0 solutions and ensuring that companies can adapt

Special Report | 15 to changing market needs and keep their business processes optimized.

Although the scarcity of client devices means that 5G is still in its infancy for industrial use, there are areas where its practical benefits are already apparent. In the case of Foxconn, these include 5G-based mobile units used to test newly manufactured PCs before packaging. The wireless solution has dramatically increased the flexibility of testing, optimizing the utilization of time and space.

BBJ: Along with 5G, the other great perennial seems to be the Internet of Things. Can you give us concrete examples of the IoT in Hungary today and what we might expect to see in the near future?

MD: The IoT is undoubtedly the technology of the future. It will make a real difference in the competitiveness of companies in the financial sector, medicine, smart cities, agriculture, and tourism. In recent years, Vodafone has built up significant experience in the IoT space, and solutions available from the company also support customers’ sectorspecific solutions. Our smart parking system is in successful operation in Székesfehérvár and Budapest, enabling road users to access accurate, live information about available parking spaces. This not only helps them find a parking space faster but also reduces the need to keep driving around in the city unnecessarily, thus reducing the volume of exhaust fumes in the air. IoT also helps make buildings safer; for example, by offering smart access systems that allow people and vehicles to be checked and let in using an automated system.

We also provide innovative solutions for those working in agriculture: farmers can use sensors to monitor environmental changes or even model the cultivation environment in “microfarms” to produce the highest quality crops possible.

BBJ: What is next for Vodafone in Hungary from a corporate solutions perspective?

MD: As a technology company, we have a vast responsibility in the digitalization of SMEs and large corporates, as well as in bringing them the most modern, efficient, and “friendly” solutions for our planet, alongside classic mobile and fixed-line services. In line with the new business reality, we will continue to focus on thinking with our customers to understand better their business processes and the specificities of their sector. This will help us offer enhanced responses to the challenges they face, thereby improving efficiency and boosting competitiveness. Our goal is to help more Hungarian SMEs go digital and support even more of our large enterprise customers in becoming familiar with today’s critical (and soon-to-be essential) technological innovations, including 5G, IoT and CAT-M technologies. It is important to highlight that we are also trying to encourage our partners and customers to operate in sustainable ways, thus creating a green and innovative business community.

16 | 3

Special Report

News Telco and ICT

NMHH Building Technical HQ in District XIII The National Media and Communications Authority (NMHH) will build a technical headquarters with a floor area of 15,000 sqm in District XIII, according to business daily Világgazdaság [Global Economy].

in Brief There, specialists will test various electrical equipment in a new, modern measurement laboratory to ensure the safety of telecommunications equipment. In 2017, the NMHH started preparations to establish a multifunctional technical facility at the Visegrádi utca site.

The two most significant elements

Nokia Investing HUF 2.5 bln in R&D Program Finnish telecommunications company Nokia will invest HUF 2.5 billion in Hungary under a 5G R&D program, creating 150 jobs for highly trained workers in the capital, Minister of Foreign Affairs and Trade

Péter Szijjártó said on May 31, according to origo.hu. The state is supporting the project with a HUF 633 million grant, Szijjártó said. He noted that more than 2,000 people work at Nokia’s Budapest R&D base.

www.bbj.hu

Budapest Business Journal | June 17 – June 30, 2022

of the modern building are a new EMC measuring chamber for electromagnetic compatibility and a secure data and server center.

MTel: Windfall Tax to Cost HUF 25 bln This Year Magyar Telekom said it expects a “supplementary” telecommunications sector tax to cost it about HUF 25 billion in 2022, according to an announcement on the website of the Budapest Stock Exchange.

The tax on net sales is expected to be accounted for as an operating cost.

Consequently, the company has revised its 2022 guidance for adjusted EBITDA to a “moderate decline.”

Earlier, MTel had expected adjusted EBITDA to rise 3-5% from HUF 216.3 billion in 2021.

Delta Systems-led Consortium Wins Right to Compete for HUF 500 bln of IT Orders Listed IT company Delta Technologies said on June 3 that a consortium led by its subsidiary Delta Systems had won the right to compete for HUF 500 billion of orders for IT equipment from the Digital Government Agency (DKU), according to an announcement on the website of the Budapest Stock Exchange. Delta Technologies noted that the two-year framework agreement with DKU does not “automatically” provide for orders; rather, the chosen suppliers, eight in all, will compete again to make deliveries to organizations served by DKU based on their needs.

Measures to Expand Instant Payment System Outlined by MNB Béla Zagyva, managing director of Nokia Solutions and Network Kft., speaks at a press conference announcing Nokia’s latest Hungarian investment in the Ministry of Foreign Affairs and Trade in Budapest on May 31. Photo by Zoltán Balogh / MTI

The National Bank of Hungary (MNB) outlined measures it is considering taking to expand the use of the instant electronic payment system in a report published on its website on June 8. In its latest “Report on Payment Systems,” the central bank

and financial market regulator noted that 80% of Hungary’s adult population uses electronic payments but said there is still “significant room” for further growth and presented several steps it could take to promote the system.

Hungarian banking clients who opt to use the instant payment system can make transactions electronically in under five seconds. The MNB said it is mulling raising the instant payment system transaction cap from HUF 10 million to HUF 30 mln as well as implementing a chargeback process.

It also wants to roll out a centralized QR code authentication procedure, regulate how QR code-based payment initiation is presented, allow easier identification for consumers, and give users the chance to leave positive feedback.

4iG Q1 Profits Jump 287% The first-quarter after-tax profit of listed ICT company 4iG jumped 287% to HUF 2.2 billion, as turnover was boosted by acquisitions, according to an earnings report released on the website of the Budapest Stock Exchange on May 31. Net sales revenue climbed 221% to HUF 48.9 bln. Earnings per share came to HUF 10. In a separate press release, 4iG said it is now Hungary’s secondbiggest telecommunications company and the market leader for system integration. Telecommunications accounted for 68% of net revenue and 88% of EBITDA during the quarter.

MTel Receives HUF 6.2 bln Dividend From Macedonian Unit Magyar Telekom has said it would get a dividend of MKD 980 million, or about HUF 6.22 billion, from its Macedonian unit MakTel, according to an announcement on the website of the Budapest Stock Exchange.

MakTel shareholders approved payment of a MKD 1.72 bln dividend on last year’s earnings at a general meeting yesterday. Magyar Telekom owns its stake in MakTel through its wholly-owned subsidiary Stonebridge Communications.

ADVERTISEMENT

Top Legal Executives in Hungary 2022 The Top Legal Executives magazine is a special annual publication of the Budapest Business Journal. It forms part of our “Top” brand, and is a sister publication to Top Expat CEOs in Hungary.

Like Top Expat CEOs, the magazine has a focus on people rather than policy. It presents the profiles of the most influential legal executives working in the Hungarian economy, focusing on outstanding achievements and how the Hungarian legal market is developing.

Those profiles of Hungary’s top “legal eagles” are set against a review of how the Hungarian legal system operates, including the functioning of the Curia (the Supreme Court of Hungary) and the Constitutional Court, as well as the Budapest and national bar associations, among other things.

Why Should I Subscribe?

• Provides an essential overview of how Hungary’s legal system operates.

• Get an insight into the biggest cases of 2020, and likely legal developments in 2021.

• Get to know the personalities behind the legal business.

• Read personal accounts from the country’s top lawyers, detailing how they got into law in the first place and what prompted their choice of specialty.

Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at bbj.hu

www.bbj.hu

Budapest Business Journal | June 17 – June 30, 2022

3

Digital Customer Service Firm FaceKom Says Will go Public After Record Year FaceKom, a Hungarian-owned company that is a market leader in corporate remote digital customer identification, has said it plans to go public after closing 2021 with record revenue and profits.

Special Report | 17 procedures being worked on now, as well as the development of new products and services.

FaceKom has increased its sales revenue more than fivefold to HUF 1.6 billion, while its after-tax profit has grown more than eightfold to HUF 717 million in the last three years.

Founded in 2012, the firm has become the market leader in corporate remote digital customer identification in Hungary in recent years, which forms the basis on which the company’s outstanding growth is built.

The real breakthrough came

in

RENÁTA KÓNYA

The IT service provider, which has grown from a startup to a mid-sized company in the last three years, provides solutions for digital customer identification, electronic signatures, and related digital customer services to actors in the financial, fintech, and public administration sectors. These include the most significant domestic and international banks, like OTP, K&H, MKB, Raiffeisen, UniCredit, and Budapest Bank.

“In recent years, we have laid a solid foundation for FaceKom, earned remarkable references, and achieved a leading position in several fields.

As a result, our sales revenue and profit have increased significantly, which allows us to step up to another level of dynamic growth,” said Zsigmond Bodnár, founder of FaceKom. “From 2023, we want to expand further, increase our sales revenue and profits, and gain a dominant or even market-leading position in new fields.”

Bodnár went on to add, “This is a year of development: we are planning to introduce services that will be pioneering in the international markets, which are currently being developed.”

The firm aims to further increase its sales revenue and profits in the coming years, while also planning to enter the Budapest Stock Exchange.

2020,

after the coronavirus pandemic outbreak, when the demand for digital customer service channels grew enormously, mainly in the banking, public utilities, and government sectors, the company says. The introduction of digital customer service solutions has Zsigmond Bodnár, enabled reliable administration and founder of FaceKom identification that does not require a personal presence.

FaceKom, which now employs more Growth Trajectory than 40 people, introduced new services The company’s goal is to continue its in 2021 and attracted funding from growth trajectory by moving into the the Central European Opportunity international arena and the Budapest private equity fund managed by Equilor Stock Exchange within three years, Fund Manager to support growth. So Bodnár explained. FaceKom noted far, FaceKom has identified more than that the specific preparation process 600,000 clients and helped to sign more would start later, with the preliminary than 80,000 documents.

PRESENTED CONTENT

Yettel Strengthens Business Offering with M2M Improvements Yettel, the Hungarian telecommunications services provider that recently rebranded from Telenor Hungary, has been improving its machineto-machine (M2M) communication offering and related services to better serve future businesses.

CHRISTIAN KESZTHELYI

Yettel is a market leader when it comes to the share of active SIM cards used for M2M communication, according to the most recent survey by the National Media and Infocommunications Authority (NMHH).

Nevertheless, the telco is strengthening its position in M2M; the provider has made Long Term Evolution Machine Type Communication (LTE-M) technology, developed explicitly for M2M and internet of things (IoT) communications, available on its network.

Such developments go beyond Yettel’s narrow-band (NB) IoT coverage, which has already reached 70% in Hungary, and the provider’s ability to quickly react in installing technology to add NB IoT coverage to isolated, previously uncovered areas in need.

“Adjusting our mobile network to suit M2M communications is essential in today’s business landscape,” Gábor

Fülöp, business sales and marketing director at Yettel Hungary, tells the Budapest Business Journal.

Vast numbers of devices with low data traffic and bandwidth requirements (such as sensors in the meters of a utility company, for example) are being connected to mobile networks, Fülöp explains.

“Such devices can only remain affordable if their capabilities are just sufficient enough to serve their purpose, without adding extra features that are not used,” Fülöp says.

Keeping technology prices at affordable levels has proven to be essential for the success of a piece of technology; this is how early adopters of an initially costly technology pass on cheaper, more advanced versions for mass adoption.

Exponentially Expanding

Beyond sensors in utility meters, however, M2M communication solutions in use and development extend into other areas, such as healthcare,

transport safety, and cybersecurity.

This technology needs reliable network connections and continuous growth.

“Network capabilities today are exponentially expanding to adjust to more complex solutions, moving beyond occasional one-off communication of sensors and meters,” Fülöp adds.

The rolling out of fifth-generation connectivity today allows for streaming high-quality audio-visual content and the complete mobility of two-way M2M communications.

“Understandably, the adoption of more complex sensors and devices are increasing production costs, which is driving purchasing prices higher.

However, technology developers and manufacturers are working on assembling these novel constructs of cheaper, already well-tested parts to keep costs at affordable levels,” Fülöp says.

Yettel’s network service offering caters to these high-demand operations. Yettel Hungary has recently introduced its LTE-M connection, which enables the sending and receiving of short message system (SMS) data and voice calls between machines. This feature was impossible on the earlier NB-IoT networks.

“These functions by Yettel Hungary are significantly expanding the possible application of new technologies. Our LTE-M coverage extends to almost 60% of the whole country, delivering significant added value to any business subscribing to our services,” Fülöp adds.

Gábor Fülöp Yettel, which eyes a dynamic expansion of its network’s capabilities, believes that both the NB IoT and LTE-M deliver significant strength to its network offering in Hungary.

“While our most recent developments are expected to enhance the game predominantly in the corporate users’ landscape, LTE-M is compatible with smart devices, which will seep into the vertical of residential use, and take-up will become more significant there as well,” Fülöp concludes.

Opening a business doesn’t make you a businessman.

3

www.bbj.hu

Budapest Business Journal | June 17 – June 30, 2022

Special Report | 19

Telecom Service Providers

1

magyaR Telekom nyRT. www.telekom.hu

2

vodaFone magyaRoRSzág TávközléSi zRT. www.vodafone.hu

3

yeTTel magyaRoRSzág zRT. www.yettel.hu

4

digi TávközléSi éS SzolgálTaTó kFT. www.digi.hu

5

anTenna HungáRia zRT. www.ahrt.hu

6

inviTeCH iCT SeRviCeS kFT. www.invitech.hu

700,120

5.73 million

283,029 (2020)

A

199,669

3,306 million

60,802

41,269 (2020)

28,748

A

A

A

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ –

✓ ✓ – ✓ –

–

– ✓ –

–

✓ ✓ – ✓ ✓ – ✓ ✓ ✓ ✓

–

–

– ✓ –

–

✓ – ✓ – ✓ –

4G. 4G+, 5G

5G

–

–

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ –

– ✓ ✓ –

–

✓ ✓ – ✓

Broadcasting, telecommunications, multimedia, WiFi services, – ✓ ✓ ✓ – ✓ – ICT solutions, mindigTV, program production WiFi services, data center and ICT solutions

– ✓ –

–

–

7

inviTel TávközléSi zRT. www.invitel.hu

13,881

A

✓ – ✓ ✓ ✓ ✓ ✓ – ✓ –

–

– ✓ ✓ ✓

8

TaRR kFT. www.tarr.hu

11,849

A

✓ ✓ – ✓ ✓ – ✓ ✓ ✓ –

–

– ✓ ✓ –

9

HungaRo digiTel kFT. www.hdt.hu

neTFone TeleCom kFT. 10 www.netfone.hu

aCe TeleCom kFT. 11 www.acetelecom.hu

dRávaneT zRT. 12 www.dravanet.hu

13

oPenneTWoRkS kFT. www.opennetworks.hu

5,734

2,400

1,783

A

A

A

–

–

–

–

–

–

✓ ✓ ✓ ✓ ✓ –

✓ –

–

–

–

–

–

–

–

–

Satellite data transmission, satellite broadcasting, WiFi central infrastructure

– ✓ ✓ –

–

– ✓ ✓ –

Data centre solutions, WiFi, virtual and physical subcenters, domain administration, web hosting

448

3,955

–

– ✓ –

–

–

– ✓ ✓ –

–

364

A

–

– ✓ –

–

–

– ✓ ✓ –

Virtual subcenter, call center, Teams gateway

–

–

–

–

–

–

– ✓ –

–

–

–

–

✓

–

CAT-M, NB IoT

–

–

–

Microwave connection

–

DVB-T, VoIP, IP VPN, optics, satellites, microwave, wireless wireless network

✓

–

✓

✓

–

✓

–

–

✓

✓

–

✓

–

–

ComPany PaCkageS

QuadRuPle Play (inTeRneT, Tv, landline PHone, mobile)

PaCkage TyPe Sold TRiPle Play (inTeRneT, Tv, landline PHone)

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mobile neTWoRk

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mobile inTeRneT

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mobile voiCe TRanSmiSSion

landline TRanSmiSSion

no. oF aCTive SubSCRibeRS

ComPany WebSiTe

ToTal neT Revenue in 2021 (HuF mln)

Rank

SeRviCeS

✓

✓

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

Peter gažík József Takács Mohamed ElSayad

2045 Törökbálint, Pannon út 1.

(20) 930-4000 –

✓

2004 2,094

Antenna Hungária Zrt. (100) –

istván király Sándor Gurbán –

1134 Budapest, Váci út 35.

(1) 707-0707 ugyfelszolgalat@ digikabel.hu

–

1992 529

4iG Nyrt. (76.78), state (23.22) –

aladin linczényi Krisztián Rathmann Anita Fuzik

1119 Budapest, Petzvál József utca 31–33.

(1) 464-2464 antennah@ahrt.hu

✓

2016 599

Antenna Hungária Zrt. (100) –

gerald grace Dániel Majubu Orsolya Hladics

2040 Budaörs, Edison utca 4.

(80) 820-082 kapcsolat@ invitech.hu

1995 398

DIGI Távközlési és Szolgáltató Kft. (100) –

lászló blénessy, Csaba gergely, gyöngyvér Papp-gerlei – –

1134 Budapest, Váci út 37.

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

Individuals (100) –

János Tarr – –

7100 Szekszárd, Kadarka utca 18.

(74) 416-000 info@tarr.hu

Péter krisztián Fekete, gyöngyvér Papp-gerlei, istván Sárhegyi, lászló blénessy Éva Illés Csíkné –

2310 SzigetszentmiklósLakihegy, Komp utca 2.

(1) 488-8500 info@hdt.hu

✓

–

–

✓

✓

✓

–

–

–

Microwave infrastructure

–

–

–

–

1999 A

1990 A

✓

1990 40

Portuguese Telecommunication Investment Kft. (75), Antenna Hungária Zrt. (25) –

–

2012 38

Netfone Invest Kft. (34), István Kun (10) Scanwinavia AB (56)

istván kun, Csaba andrasek Zsolt Racskó István Kun

8900 Zalaegerszeg, Nefeljcs utca 2/A (1) 878-1800 info@netfone.hu

✓

1997 70

Individuals (68), ThreeF Kft. (32) –

attila Farmosi, gábor varga Gábor Varga Péter Németh

1037 Budapest, Zay utca 3.

(1) 999-1000 office@ acetelecom.hu

CubeComp Zrt. (62.56), New-Lease Kft. (19.02), other (18.42) –

zsombor attila Papp Rezső Dunay Csaba Csizmadia

7624 Pécs, Budai Nagy Antal utca 1.

(80) 811-118 info@dravanet.hu

András Beliczay (100) –

andrás beliczay – Judit Stark

1125 Budapest, Kiss Áron utca 9.

(1) 999-6000 info@opennet.hu

– ✓ –

–

–

–

–

–

✓

1996 11

–

–

–

–

–

–

✓

2004 18

–

–

1097 Budapest, Tibor Rékasi Könyves Kálmán Dana Dodonova körút 36.

Melinda Szabó (1) 458-0000 –

1993 1,735

✓

✓

–

addReSS PHone email

1095 Budapest, Lechner Ödön fasor 6.

(1) 288-4288 sajto@ vodafone.com

✓

–

1991 6,786

Free float (36.40), Own shares (4.39) Deutsche Telekom Europe B.V. (59.21)

ToP loCal exeCuTive CFo maRkeTing diReCToR

amanda nelson Cüneyt Avci Balázs Révész

✓

Satellite data transmission

oWneRSHiP (%) HungaRian nonHungaRian

– Vodafone Europe B.V. (100)

Microwave connection

–

yeaR eSTabliSHed no. oF Full-Time emPloyeeS on may 1, 2022

Ranked by total net revenue in 2021 (HUF mln)

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 17 – June 30, 2022

ERP Companies softWaRE tyPEs distRibutEd in 2021

3,752

3,752

SAP

yEaR EstablisHEd no. of full-timE EmPloyEEs on may 1, 2022

total nEt REvEnuE in 2021 (Huf mln)

ComPany WEbsitE

nEt REvEnuE fRom ERP softWaRE salEs in 2021 (Huf mln)

Rank

Ranked by net revenue from ERP software sales in 2021 (HUF mln)

oWnERsHiP (%) HungaRian non-HungaRian

toP loCal ExECutivE Cfo maRkEting diRECtoR

addREss PHonE Email

1999 79

– Techwave Consulting Inc. (100)

Péter fárizs – –

1138 Budapest, Dunavirág utca 2–6.

(1) 237-1730 info@techwave.hu

Forrás.NET, Forrás KÖR

Lechner Kft., Külgazdasági és Külügyminisztérium, Magyar Államkincstár, Szabályozott Tevékenységek Felügyeleti Hatósága, kormányhivatalok

2000 168

Other (59.51), György Szajbély (40.49) –

imre sándor ferenczy István Bokor –

1041 Budapest, Görgey Artúr utca 69–71.

(1) 450-2200 info@griffsoft.hu

Garantiqa Hitelgarancia Zrt., Heineken Hungária Sörgyárak Zrt., Porsche Finance Zrt., GIRO Zrt., Seven-Up Bottling Company Ltd. Nigeria, Prímaenergia Zrt.

1997 126

Individuals (100) –

Csaba Rozenberszki Judit Andráskó Zsolt Rozenberszki

1038 Budapest, Ráby Mátyás utca 7.

(1) 436-7850 info@rrsoftware.hu

majoR CliEnts in 2021

A

3,389

1

tECHWavE HungaRy ZRt. www.techwave.hu

2

gRiffsoft infoRmatikai ZRt. www.griffsoft.hu

3

R&R softWaRE ZRt. www.rrsoftware.hu

2,316

3,631

ERP, BSS, CRM, BA (BI-EPM-DWH), EDM, SFA, FFA, Big Data, Machine Learning, e-Gov, e-Court

4

s&t Consulting HungaRy kft. www.snt.hu

2,308

31,301

SAP, Infor

Boschung, Tolnatej, Hungrana

1998 366

– S&T AG (100)

Péter szabó Sándor Kulcsár Tímea Soós

2040 Budaörs, Puskás Tivadar út 14.

(1) 371-8000 info@snt.hu

5

libRa sZoftvER fEjlEsZtő ZRt. www.libra.hu

1,373

1,381

Libra3s, Libra11, LibraMI

A

2006 60

Individuals (89), Volán Elektronika Zrt. (11) –

kálmán faur – –

1113 Budapest, Karolina út 65.

(1) 255-3939 info@libra.hu

6

multisoft kft. www.multisoft.hu

Gábor Kelemen (73), Judit Gyenes Kelemenné (27) –

gábor kelemen – –

1115 Budapest, Bartók Béla út 105–113.

(20) 330-0220 sales@multisoft.hu

7

infoConsulting HungaRy kft. www.infoconsulting.com/hu

8

isys-on infoRmatikai tanáCsadó kft. www.isys-on.hu

9

E-bEst tanáCsadó kft. www.ebest.hu

10

llP HungaRy kft. www.llpgroup.com/hu

NR

NR

3,389

1,279

Microsoft Dynamics

A

1991 65

885

IFS Applications ERP/EAM/ESM system

BioTechUSA Kft., Wellis Magyarország Zrt., ANY Biztonsági Nyomda Nyrt., VAJDA-PAPÍR Kft., FÉMALK Zrt., Inno-Comp Kft.

2000 28

– InfoConsulting Group (100)

imre sturcz Cecília Léber Gábor Halász

1132 Budapest, Váci út 22–24.

(1) 236-3700 infohu@ infoconsulting.com

1,659

QAD Enterprise Applications, Qlik Sense

Metál-Sheet Kft., Cascade Engineering Europe Kft., Agrikon-Alfa Kft.

2002 86

BeXt Kft. (50), QuNst Kft. (50) –

lajos beck, istván kucsera Zoltán Horváth Lajos Beck

1134 Budapest, Kassák Lajos utca 19–25.

(1) 555-7270 info@isys-on.hu

389

ORACLE JD Edwards

Andritz, Gyermelyi, Fornetti, Arriva, Immergas, Zalaco

A

Imre Kereki (100) –

imre kereki – –

1148 Budapest, Nagy Lajos király útja 24.

(30) 927-7255 ebest@ebest.hu

351

351

Infor SunSystems, Infor EAM, systems@work

HBO Holding Zrt., GlaxoSmithKline Kft., PAS Inc., KPMG, Mitsubishi UFG Fund Services Holdings Ltd.

1991 7

– LLP Praha s.r.o (100)

barbara dreska Edit Szekretár-Tóth –

1124 Budapest, Németvölgyi út 114.

(30) 966-9042 contact@ hu.llpgroup.com

4ig nyRt. www.4ig.hu

A

72,062

A

A

1995 848

Individuals (100) –

gellért jászai – –

1037 Budapest, Montevideo utca 8.

(1) 270-7600 info@4ig.hu

oRaClE HungaRy kft. www.oracle.com

A

23,875 (2020)

A

A

1993 249

– Oracle Nederland B.V. (100)

titusz Csaba Puskár – –

1112 Budapest, Balatoni út 2.

(1) 224-1700 –

A

1,457

sERPa, Nagy Machinátor

A

1992 77

Progen Holding Zrt. (100) –

sándor komáromi – –

1118 Budapest, Homonna utca 8/A (1) 481-9000 info@progen.hu

1,006

PRogEn méRnöki fEjlEsZtő NR és sZolgáltató kft. www.progen.hu

800

554

389

2002

NR

REvolution softWaRE kft. www.revolution.hu

A

1,706

deep.erp system, Microsoft Dynamics Business Central

Abroncs Kereskedőház Kft., RSM Hungary Zrt., BAHART Zrt., KALL Ingredients Kft.

1992 59

Individuals (100) –

lászló szalóki – Norbert Somkutas

1133 Budapest, Váci út 76.

(1) 461-8030 revol@revolution.hu

NR

saP HungaRy kft. www.sap.hu

A

47,625

SAP

A

1997 1,490

– SAP SE (100)

szabolcs Pintér György Simon –

1031 Budapest, Záhony utca 7.

(1) 457-8333 –

2,764 (2020)

Microsoft Dynamics 365 for Operations, Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics CRM, SmartBiz 365, XPRM, AgilePoint, JetReports, D365, Atlas, Power BI, O365

2000 108

Ardbeg Vagyonkezelő Zrt. (A) New Frontier Investment AG / Holding GmbH (A), Techno serv Consulting LLC (A)

Zoltán schvarcz – –

1118 Budapest, Rétköz utca 5.

(1) 889-2900 hucontact@xapt.com

NR

xaPt sZoftvER kft. www.xapt.com

A = would not disclose,

NR = not ranked, NA = not appliacable

A

A

This list was compiled from responses to questionnaires received by June 15, 2022, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies’ voluntary data submissions. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14, or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

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Olaszrizling, Gamay Noir, Succession and More As the weather heats up, wine columnist Robert Smyth discusses quality white wine offerings from Olaszrizling and rose from Gamay Noir, a French wine more usually associated with Beaujolais.

A vineyard near Eger. Photo by Menno van der Haven / Shutterstock.com One of the standout wines at the Eger wine region tasting, held at Société Budapest on April 26, was an Olaszrizling from Eger: Lajos Gál’s Kántor-tag Egerszóláti Olaszrizling Grand Superior 2021. It was fermented in oak barrels and then aged in them for two months. Positively oozing pineapple and tropical fruit, it is also full-bodied, oily and waxy, layered and complex, with integrated oak and the alcohol level of 14.87% not sticking out.

This wine is everything one could wish for from the supposedly humble Olaszrizling, which on its day and in the right place of growth can every bit match the more fashionable Furmint grape.

Imagine my disappointment on catching up with Gál in Eger recently, while heading to Egerszólát to judge in this year’s edition of the Aranytőke borszemle wine competition, when he told me that the 2021 is the last of this wine as he has sold his plot in Kántortag, which has predominantly volcanic rhyolite tuff soil. The winemaker, 68, has decided to spend more time with his grandchildren and scale down somewhat on the winemaking.

However, continuity appears to be assured, as he has sold his plot to someone after his own heart: Attila Dobos, who makes wines under the new Eger Soul label, to be launched on the market soon.

On arriving at the Egerszólát Közösségi Ház (Egerszólát Community Center) the day before it hosted the Aranytőke borszemle tasting, as buckets of sawdust were being placed by each tasting desk, I was handed a glass of

welcome wine, which just so happened to be from Eger Soul: “Ceres” Olaszrizling from Egerszólát.

It was delicious, if a tad on the oaky side, being vinified in new oak and then aged there for four months; it is typical for a young winery to have to use a new oak barrel.

Farewell Victory

The winner of the Aranytőke borszemle 2020 in the main, Olaszrizling category was none other than Lajos Gál’s Kántortag Egerszóláti Olaszrizling Grand Superior 2021; a nice way to sign off. It will cost HUF 10,000 from the cellar (gallajos.hu) once it has been labeled.

For most, rosé is a wine that must be consumed within a year of the grapes being picked. Indeed, there are many such fresh and fruity rosés made in Hungary, especially from the Kékfrankos grape, whose vibrant red fruit is ideal for the purpose.

It was, therefore, an amazing experience to taste four vintages of one special rosé at the Rosalia wine festival last weekend in Pest’s City Park. Not only is the fact that four vintages are available simultaneously a rarity, but the fact the rosé is made from the Gamay grape (Gamay Noir, to give it its full name) in Hungary is also pretty special.

This French grape, which hails from Burgundy and is most widely associated with Beaujolais, is used only to make rosé at Nagygombos Borászat in the Mátra Hills.

The long-named Nagygombos Borászat Barta Anna Gamay Noir

Rosé is vinified both in stainless steel and oak, aged for six months, with the oak bringing considerable texture and spicy flavors. Indeed, it is more like an oaked white wine in terms of texture.

The grapes come from two parts of Nagygombos’ gorgeous, contiguous 90 hectares of vines: part from sandstone soils up on the hill and the remainder from below, where the earth is composed of loess and clay, with a high limestone content. (Nagygombos is not located in that part of the Mátra region where the soils are volcanic.)

The wine is made only from free-run juice, with two to four hours of skin contact before pressing.

Varietal Character

The youngest vintage, the Barta Anna Gamay Noir Rosé 2021, has a bright, pretty pink color and captures considerable varietal character with primary red fruit notes of strawberry and raspberry, with a whiff of black pepper, with a lot of body for a rosé.

The 2020 is a deeper pink color, with a plummy note, rounder and more elegant than the first. The 2019 has a salmon color, with notes of dried fruit like raisins and apricot, and has developed nicely.

The oldest, the 2018, is promising on the nose with rose hip jam and a hint of sundried tomato, the latter perhaps suggesting this wine could be past its best. That is confirmed on the slightly tired and flat palate, in which the acidity has tailed off with the passing of time.

This is not a big problem for the cellar; there are just

100 bottles

left, some will undoubtedly find beauty in the 2018, and it could be a nice component in a four-wine vertical tasting. These wines, with the exception of the 2018, are of great value at HUF 2,100. Nagygombos/Anna Barta wines are available from artizanshop.hu.

Although the 2021 isn’t there yet, it will be available soon.

While it is not unusual to make rosé out of Gamay Noir in Beaujolais, red wine made by semicarbonic maceration is more typical. When I asked why they don’t do so at Nagygombos, I was told that they have tried, but it just didn’t have enough excitement about it.

Nagygombos is owned by Anna Barta’s father Károly Barta, who also owns the top-end Tokaj cellar Barta Pince, in Mád. There, the extremely elegant, taut, and linear wines are made

by Vivien Ujvári (ujvari. wineshop.hu), who also has a hectare of her vines in Badacsony. The wine from there is as complex, textured, and layered as you’d expect from her.

When she is not making wine in Tokaj, she can be found tending a hectare of her own vines in Badacsony.

22 | 4

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From Charming Budapest Art Deco to the Social Surgery of drMáriás Wandering around the superb Budapest Art Deco.

Posters. Lifestyle and the City (19251938) exhibition at the Hungarian National Gallery I had the thought, admittedly not exactly lifeshattering, that what I saw as purely decorative was once cutting edge and contemporary.

“I’m twisting elements of classical and modern art to end up with an effect that causes the viewer to question whether there’s something wrong with their eyes. I mix two worlds: art with its beauty and the political-historical context with its horror.”

DAVID HOLZER

Exquisite as the work was, it was also aspirational and promoted products, holidays and escapist movies and theater at a time when Europe was in turmoil and things were about to get much worse.

It occurred to me then that I know embarrassingly little about contemporary Hungarian art.

Through a friend, I was introduced to the work of painter and visual

Konecsni György: Budapest Spa City

with references to artists as diverse as David Hockney, Egon Shiele, Seurat and Matisse. drMáriás cites all of these artists as influences as well as Hungarians such as Imre Bukta, László feLugossy and István efZámbó. He’s also inspired by the great punk artist Jamie Reid, mainly known for his work with the Sex Pistols.

“I’m twisting elements of classical and modern art to end up with an effect that causes the viewer to question whether there’s something wrong with their eyes,” drMáriás said.

“I mix two worlds: art with its beauty and the political-historical context with its horror.”

Today, drMáriás’ income comes mainly from his visual art and some from his music. He’s also the editor of the website of the A38 Ship, the boat permanently moored on the Danube in Budapest which regularly hosts great music. If you’ve never checked out A38, you most definitely should.

When I mentioned to my Hungarian partner that I was interviewing drMáriás, I was surprised she knew who he was.

I thought I’d discovered a provocateur who did his subversive work deep underground but, in virtual reality, he has a large following online.

Bánhidi Andor: Lake Balaton Hungary artist, novelist and musician (he fronts the band Tudósok) drMáriás.

This polymath artist came by his name when, “In the chaotic pre-war world of the 1980s, I was studying at the University of Art in Belgrade,” he tells me. “I was protesting against the oppression led by Milosevic, and it was time I chose an artist’s name. My father, who was a doctor and the head of the hospital in Novi Sad, wanted me to become a doctor,” he continues.

“I decided to take his name but changed it by adding a small “d” and “r,” so it became an artist’s name rather than a professional title.

I play the role of a doctor who wants to heal society with his art. It’s social surgery. By becoming a musician, I was also following in the footsteps of my mother, a jazz pianist. I describe my music as kicking jazz punk.”

When he began, aged 18, drMáriás was making graffiti-like art. His work then became more meditative, symbolic, philosophical and metaphorical. But, after he realized that “there’s one topic you can’t run away from: social pressure and injustice, ideological tyranny and [the] constant lying being called politics,” he slowly began reflecting this in his work. For the past 20 years, he’s mainly been painting politicians, criminals, artists and celebrities.

Punk Gesture

“It’s a punk gesture,” he explains. “I’m showing them as they really are while protesting against their power.”

His work certainly has a rough and ready punk quality. But it also, rather deftly, acknowledges his fine art training. His satirical depictions of contemporary politicians are combined

This came about when drMáriás realized that “my art is way too problematic for the official exhibition spaces. I began publishing it on social media. In the beginning I was frustrated because I couldn’t show my work in its original quality,” he says.

“But then I understood that, because I aim to communicate and interact with people about important social issues, I should post my art online together with words. I’ve now built up a relatively large online community interested in politically critical art and in my openminded attitude.”

Not Only Online

That’s not to say drMáriás doesn’t have a real-world presence. He’s currently showing at the Godot Gallery on what I’m assured is the achingly hip Bartók Béla utca, up from the Gellért Hotel.

I’m waiting to visit the Godot, which is among the top private galleries in Hungary and has been representing drMáriás for almost a decade.

“It’s the only place in Hungary where I can regularly have completely free solo shows every year,” he tells

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drMáriás

me. “Gallery owners Gábor Kozák and Zoltán Sáfár are among the most inventive, active, free spirited and successful players on the Hungarian contemporary art scene.” drMáriás also exhibits outside Hungary. A few years ago, a young man by the name of Bálint Németh, a Hungarian living in England, visited his studio to buy a painting. drMáriás takes up the story.

“We talked and a friendship developed. Németh came up with the idea of presenting Hungarian art with a critical perspective in England, where people aren’t even aware it exists. Németh opened the 89 Gallery in London to show work by people like myself and Péter Weiler, a famous Hungarian artist.”

For people such as myself, finding interesting art and performance in a city and country we don’t know that well is always a challenge. drMáriás

Socialite | 23

suggested I head for “the outskirts of the cities and festivals like Fishing on Orfű, Ördögkatlan, Bánki Tó, Fezen, Szigliget Várudvar or, in Budapest, the Tilos Maraton at the Dürer Kert in mid-June. But there are always pop-up venues with great music and art run by young and inventive artists in places like ruin bars, art studios and pubs or even ‘music garages.’ You just have to keep your eyes open and your ear to the ground.”

You can view and buy drMáriás’ work at www.drmarias.hu.

To find out what’s currently showing at Godot Gallery, go to www.godot.hu. The wonderful Budapest Art Deco exhibition is at the Hungarian National Gallery until August 28.

Have a good swim comrade! – Stalin in Hockney’s studio