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al Hungary’ Building ‘DigitCV

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, Christopher Mattheisen der CEO of market−lea talks Magyar Telekom, of about the direction the his company, and in telecoms business exclusive Hungary, in an Budapest interview with Business Journal.

Christopher Mattheisen of Magyar has been CEO 2006. Before Telekom since Officer that, he was Chief in of T−Com, starting of Officer 2005 and Chief Residential the company’s Services in 2002−2005. in Mattheisen’s career 1993, telecoms started and when he was Sales of Marketing director TOM POPPER Budapest, in 900 Westel for and he also worked the telecoms Czech How have the general telecoms in Poland, UK. market and in Hungary Republic and the business climate days, when studied the old changed since Westel on Budafoki Born in 1961, he at that you worked economics at Indiana think back then are? út? Did you you up where of a University of Bloomington you would end were the beginning ons, University. A: Those days and at Columbia in telecommunicati we but real revolution

since then, which has lastedkeep pace with market to have managed changes and retained today, especially and technology position amidst the technologies available will also meet the our leadership g market competition. 4G network. They next development ever−intensifyin are things that have the of the which Telekom Of course, there example, that I have requirements LTE Advanced, for very phase, already as a first not changed, runner since a tested successfullyis nothing to stand been a passionate not miss this year’s has So there I did As of today, spring. in Hungary. early age and City Run in the mine in the way of 4G expansion. first 4G of Telekom Vivicittá the country’s favourite hobby we have made for 54% of Hungarians, And another available This year I performed by increase to 80% remained: music. Telekom Volt Festival. network we would like to the with my band at 20 years which Putting to use the new frequencies, inconceivable running 2015. build the country’s 4G network However it was able to track my we will offering the ago that I’m now a mobile application the largest coverage, Due performance with also the revolution of with speed of this technology. 800 And called Futótárs. mobile broadband has maximumfavorable features of the and country to some smartphones and broadband, remote anywhere in the MHz mobile can be covered enabled people performance through sparsely populated areas dynamic to follow our band’s continuing the be able efficiently too. By live streaming. coverage, we will age in 4G of expansion a new on winning services that bring Congratulations customers. Users in late to offer internet for our world the new frequencies those be mobile able connect to the digital will be September! Will and it may enhance services? speed, higher internet used for mobile have ultimately been with equal opportunities too. we A: I am glad blocks we digital the frequency calls seem to the able to acquire Mobile telephone source of we can use them need the most and The successful to be MT’s leading in other, newer benefit of our customers. revenue, but a major milestone to – for like tender is also growing faster where Hungary. We’d services are TV, achieving a Digital of our broadband instance mobile internet and recently. accelerate the expansion as possible, increasing you have made acquisitions growth? coverage as soon and bandwidth, Where do you expect the most number high our network capacity ever become to rollout the Will 4G services primarily in order which is the key one or two in revenues? seeking further digital speed mobile internet, and the upcoming A: We are constantly targets and driver of growth we have won are value−generating investment world. The frequencies the best broadband suitable to carry

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A tough market Christopher Mattheisen, CEO of market−leader Magyar Telekom, says the telecoms business in Hungary ‘still shows signs of reduced growth’, but that doesn’t mean there aren’t big opportunities. Read our exclusive interview. 10

NEWS

SPECIAL REPORT

BUSINESS

Bad numbers ruin IMF’s good news

Another player to join mobile competition

From young moms to startup founders

Car manufacturers hit the brakes over the summer – causing Hungary’s production and exports to slow down for the first time in months and casting a pall over expectations for strong GDP growth this year. 03

In the latest tender for open frequencies, cable company Digi scooped up some bandwith. While the company is not saying much about its plans, observers expect shifts in the local market. 12

A Hungarian woman, who started an online platform that helps mothers turn maternity leave into a chance to create a whole new career, has encouraged an army of entrepreneurs and garnered an EU prize. 06

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Budapest Business Journal | October 17 – October 30, 2014

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Building ‘Digital CV Christopher Mattheisen, CEO of market−leader talks Magyar Telekom, of about the direction the his company, and in telecoms business exclusive Hungary, in an Budapest interview with Business Journal. TOM POPPER

Hungary’

TELECOMS

and the telecoms Czech How have the general telecoms in Poland, UK. market and in Hungary Republic and the business climate days, when studied the old changed since Westel on Budafoki Born in 1961, he at that you worked economics at Indiana think back then are? út? Did you up where you of a University of Bloomington you would end were the beginning University. A: Those days and at Columbia in telecommunications, we real revolution since then, but which has lastedkeep pace with market to have managed changes and retained today, especially and technology position amidst the technologies available will also meet the our leadership market competition. 4G network. They next development ever−intensifying are things that have the of the which Telekom Of course, there example, that I have requirements LTE Advanced, for very phase, already as a first not changed, runner since a tested successfullyis nothing to stand been a passionate not miss this year’s has So there I did As of today, spring. in Hungary. early age and City Run in the mine in the way of 4G expansion. first 4G of Telekom Vivicittá the country’s favourite hobby we have made for 54% of Hungarians, And another available This year I performed by increase to 80% remained: music. Telekom Volt Festival. network we would like to the with my band at 20 years which Putting to use the new frequencies, inconceivable running 2015. build the country’s 4G network However it was able to track my we will offering the ago that I’m now a mobile application the largest coverage, Due performance with also the revolution of with speed of this technology. 800 And called Futótárs. mobile broadband has maximumfavorable features of the and country to some smartphones and broadband, remote anywhere in the MHz mobile can be covered enabled people performance through sparsely populated areas dynamic to follow our band’s continuing the be able efficiently too. By live streaming. coverage, we will age in expansion of 4G a new on winning services that bring Congratulations customers. Users in late to offer internet for our world the new frequencies those be mobile able connect to the digital will be September! Will and it may enhance higher speed, internet services? used for mobile have ultimately been with equal opportunities too. we A: I am glad blocks we digital the frequency calls seem to the able to acquire Mobile telephone source of we can use them need the most and The successful to be MT’s leading in other, newer benefit of our customers. revenue, but a major milestone to – for like tender is also growing faster where Hungary. We’d services are TV, achieving a Digital of our broadband instance mobile internet and recently. accelerate the expansion as possible, increasing you have made acquisitions growth? coverage as soon and bandwidth, Where do you expect the most number high our network capacity ever become to rollout the Will 4G services primarily in order which is the key one or two in revenues? seeking further digital speed mobile internet, and the upcoming A: We are constantly targets and driver of growth we have won are value−generating investment world. The frequencies the best broadband suitable to carry

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Christopher Mattheisen, CEO of market−leader Magyar Telekom, says the telecoms business in Hungary ‘still shows signs of reduced growth’, but that doesn’t mean there aren’t big opportunities. Read our exclusive interview. 10

NEWS

SPECIAL REPORT

BUSINESS

Bad numbers ruin IMF’s good news

Another player to join mobile competition

From young moms to startup founders

In the latest tender for open frequencies, cable company Digi scooped up some bandwith. While the company is not saying much about its plans, observers expect shifts in the local market. 12

A Hungarian woman who started an online platform that helps mothers turn maternity leave into a chance to create a whole new career has encouraged an army of entrepreneurs and garnered an EU prize. 06

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Congratulations Fidesz, now please choose well Prime Minister Viktor Orbán has been enjoying a well−deserved celebration over the October 12 municipal elections, in which Hungarians overwhelmingly chose members of his ruling Fidesz party. Now that the noise of campaigning is out of the way, Orbán says it is time to make the tough choices that will guarantee Hungary’s future prosperity. It is worth asking whether his party’s tough choices will be the right ones for the country. In their campaigning before the elections, Orbán and members of his party were touting their economic success, a bit prematurely it would seem. Growing automotive production and exports had been pumping up Hungary’s GDP this year, but both fell flat recently as a general slowdown in Europe seems to have deflated the demand for cars over the summer. Hungary is getting a (thus far) small taste of the lesson that the Czech Republic learned rather painfully during the financial crisis a few years back: Car factories hire, but they can also lay off. Nonetheless, the government seems convinced it knows how to grow an economy, and it says it will do this through the annual budget, which was delayed until after the elections. We are now expecting to see the government budget in its final form some time around October 20. There have been hints in the media about what this budget will contain, including vocational training, a tax cap for car makers, something vague to do with banks and cuts in already bare−bones social spending. Rather than try to guess what the government will finally decide to do, we will offer some helpful suggestions, on the off chance that our country’s leaders have run out of ideas and are reading this column. We would like to see: • A simplified tax structure. Hungary has the highest VAT in Europe and a bizarre array of special sectoral taxes that are off−putting to anyone considering doing business here.

Making taxes transparent and payable, and generally reducing red tape, is an obvious fix that no leadership in Hungary has had the stomach to pull off. • Support for good education. Orbán has hinted at a new program to have students undertake on−the−job vocational training as soon as they get past grammar school. Trades are useful, especially for ensuring that everyone has basic employment, but Hungary has also been famous for its excellent higher education. These days, universities seem to be receiving less support and suffering more unnecessary government meddling. As a result, many of the best and brightest are opting for schooling abroad. • An end to renationalization. The country has already blown through more than 85% of its 2014 budget, which means we need to tighten our belt. One way to do this is to ask whether the government really needs to get into private enterprise by buying companies, including utilities. Sure, the government loves to be able to say: “Look, we’re keeping utility prices down for the average worker!” But are we not supposed to notice that the average worker has to pay more taxes to support the utility that lost money because it sold fuel at below−market rates? • Leave the banks alone. Bankers are richer than most of their customers, and their free−spending ways helped bring on the financial collapse of 2008, which makes them a fun target for populist anger. They also provide the loans and credit that a healthy economy needs to survive. Special taxes and borrowers’ relief can provide some quick cash for the government and consumers, but if it means driving out banks, the move is shortsighted. These are some of the tough choices we would encourage. We’ll be watching to find out what choices our leaders make.

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Above is a crowd around a destroyed Soviet tank at Budapest’s Móricz Zsigmond körtér during the 1956 Uprising. Hungary marks the 58th anniversary of the Uprising on October 23. At left is the new Metro station at Móricz Zsigmond körtér, which is a major transportation hub in Buda.

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Foreign policy: All business 05

macroscope

Good news, bad numbers

Speaking X of ﬁgures

Just as the IMF was seeing improvements, Hungary was hit with a record price drop and the worst figures in months for production and exports.

The Budapest Business Journal presents some of the most important macro data of the past fortnight.

3.3%

GABRIELLA LOVAS

DOWNSIDE RISKS The IMF warns that the return of market turbulence and a weaker euro area recovery continue to be the main risks to the outlook. It also notes that a large stock of significant foreign−exchange− linked domestic debt makes the region susceptible to other adverse shocks. To manage such risks, the IMF recommends the flexible use of monetary and exchange

Year−on−year decrease in agriculture prices in August, according to the KSH. Crop products fell 4.9% and livestock Not so fast: Audi cut back on production.

One thing is for sure, the previously expected 10% growth (in output) should be forgotten. rate policies and the enhancing of private sector debt resolution frameworks as well as labor market reforms and improvements in the business climate. On the same day, the Central Statistics Office (KSH) published the first of a series of unfavorable macro indicators. Preliminary figures show that Hungary’s industrial output increased only 0.5% year− on−year in August. “This has been by far the worst data this year, in January−July monthly growth ranged between 6.4% and 12.3% compared to the corresponding month of the previous year,” said K&H Bank chief analyst Dávid Németh. He added that the 8.7% rise in January−August was due to the performance of the first seven months of the year. Németh stressed that this was a surprise by all means, although a certain slowdown was expected partly due to the Ukrainian conflict and the faltering eurozone recovery. The main question is whether growth will revive in September or this is the beginning of a more serious slowdown. “One thing is for sure, the previously expected 10% growth should be forgotten,” he added.

The next surprise, the 4.1% drop in exports to €6 billion in August, came two days later. Analysts blamed the monthly decline primarily on the three−week summer break in Audi’s Győr engine plant as well as a four−week break in the car plant. Still, the fact the summer break at a single factory has such a huge impact on the country’s industrial growth should be rather worrying. News of other cutbacks followed. A week later came the news that Suzuki has reduced production – from one shift to two – at its plant in Esztergom, and will continue that way for most of this year. And Opel, as well as certain companies in the chemical sector and the food industry, said they shut down for some time in the summer, too. With imports dropping 0.5% to €5.7 billion, the €270 billion trade surplus was significantly less than the €400 billion forecast. Inflation was next; it sank to a historic low in September. Consumer prices dropped by 0.5% compared to the same month in 2013, the lowest annual level since the transition in 1989. The decrease was primarily due to decreases in the price of electricity, gas and other fuels. In turn, the prices of food, services, alcoholic beverages and tobacco increased. The central bank (MNB) said the decline in inflation was mainly due to the fact that the increases in the financial transaction tax and the retail margin on tobacco products dropped out from the base. Buda−Cash analysts say the increase in tobacco prices slowed down to 3.3% in September from 6.4% the previous month, while the price of services rose only 1.6%, down from 2.7% in August. Analysts agree that recent utility price cuts continue to be a dominant factor behind deflation. As a result of low inflation, combined with the loose monetary policy of the FED and the European Central Bank, there is a higher chance of further base rate cuts by the MNB.

and animal−product prices fell 0.8%.

€980 mln First tranche of foreign exchange liquidity that the MNB made available on October 13, so that Hungarian banks can meet the demands of borrowers’ relief legislation.

12.1%

Estimated amount of cigarette sales in Hungary that are made on the black market, according to a September 13 report by market research company GfK Hungária.

HUF 339 mln Amount of government/EU development funding awarded to the second−hand clothes retailer Háda for their new clothes sorting branch, which is expected to employ 150 people in Kisvárda in eastern Hungary.

Source: KSH, MTI

The International Monetary Fund (IMF) raised its economic growth forecast for Hungary in its annual World Economic Outlook report published on October 7. Hungary’s statistics office, however, played spoilsport by releasing a series of unfavorable macro indicators on production, exports and prices. The IMF raised its GDP growth forecast for Hungary from the previous 2% to 2.8% for 2014, “supported by significant monetary easing and higher public spending.” For 2015, the IMF expects growth to slow to 2.3% with the projected tightening in fiscal and monetary conditions. Growth in the group of countries called ‘Emerging and Developing Europe’, where Hungary belongs, continued to be uneven with growth remaining strong or accelerating in Hungary, Poland, and Turkey, but slowing in southeastern Europe. The IMF notes that the region has thus far been resilient to the geopolitical tensions in Russia and Ukraine. The IMF foresees declining unemployment in Hungary, at 8.2% in 2014 and 7.8% in 2015, but it notes that the national definitions of unemployment may differ. Inflation is expected to drop to 0.3% this year and climb back to 2.3% the next. The IMF sees the current account balance narrowing from 2.5% of GDP in 2014 to 2% in 2015. The government was quick to react to the raised growth forecast by saying that the IMF “must recognize that the Hungarian economic model is functioning well.” According to the official statement, “long− term economic growth is ensured without financial constraints, the unemployment rate has been on a falling trend, while financial stability is increasing.” And all this with a budget deficit below 3% for the fourth consecutive year.

MACRO

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Budapest Business Journal | October 17 – October 30, 2014

NEWS OFFICIAL: HEALTH CARE REFORM TO INCLUDE MORE SCREENINGS The government is planning major health care reforms, which will include increased funding as well as more screenings as a way to prevent illnesses and improve the macro−state of public health, Gábor Zombor announced at an October 15 press conference. Zombor said the health care program that the government is planning will put an emphasis on prevention of illnesses that threaten the overall population. According to the state secretary, the government is planning to set up a sustainable public health care system, making it available in schools and for workers. When asked about the funding set aside for the health care program, Zombor could not give numbers as “the budget is still under the phase of planning”, though he said that “the sector envisages additional resources”. Zombor hinted that significant changes would affect the sector in structure and financing, in order to motivate general practitioners to engage in more definitive care. Judit Paller, chief medical officer of the National Public Health and Medical Service (ÁNTSZ) said her agency had launched a program for the renewal of screening exams, for which they were given HUF 1 bln in EU grants. CONSTITUTIONAL COURT HEARING CONTRACT DEFENSE CASES Hungary’s Constitutional Court on October 14 started hearing cases on unilateral changes to loan contracts referred by lower courts, but took no decision on the matter, Constitutional Court’s general secretary, Botond Bitskey, told MTI. The court will continue discussing the cases soon, Bitskey said. The Constitutional Court has 90 days to pass a decision in the cases, that is, it has to arrive at a decision in the first half of December. Including a decision taken by the Budapest Municipal Court of Appeals ADVERTISEMENT

on Tuesday, five cases were referred to the Constitutional Court to clarify whether the law on refunds due from banks to borrowers violates the principle that legislation cannot be applied retroactively. The former four cases – three first−instance court decisions and one appeals court decision – had been merged into a single procedure. Dozens of lenders have defended such contract changes in court recently to avoid paying refunds to affected retail clients under he borrowers’ relief legislation approved in the summer. On October 2, Justice Minister László Trócsányi said that the appeals cases were expected to be completed by mid−November. The judges asked the Constitutional Court to clarify whether the law on refunds due from banks to borrowers violates the principle that legislation cannot be applied retroactively. They also said that the refunds law harms legal safety, the requirement that norms should be made clear, and unnecessarily curbs the appellant’s right to a fair procedure. In a letter sent to the Constitutional Court after the first court reference, in September, the Justice Minister defended the constitutionality of the summer law and argued that the judges’ initiatives were baseless. The Hungarian Banking Association also sent its detailed opinion, arguing that the law violates the constitution, to the Constitutional Court. Legislation allows the minister as well as professional associations to send their opinion to the Constitutional Court. SHUTDOWNS SLOW VEHICLE MANUFACTURING OUTPUT IN AUGUST Output growth of Hungary’s vehicle manufacturing companies – which is inevitably the main driver of growth in Hungary’s industrial sector – slowed to 4.3% y.o.y. in August from 32% in July, a second reading of data released by the Central Statistics Office (KSH) revealed on October 14. KSH speculates the slowdown is due to

Photo: MTI: Zoltán Máthé

IN BRIEF FIDESZ ROMPS IN MUNICIPAL VOTING Prime Minister Viktor Orbán celebrates with victorious Budapest Mayor István Tarlós after Tarlós won re−election handily on October 12. Fidesz swept elections around the country in municipal voting. The following day, Orbán addressed Parliament, saying: ‘The Hungarian people acknowledged our work in yesterday’s election.’ Now that elections are over, Orbán said that the government’s main objective is to bring ‘full employment’ to Hungary. He said the fact that four million people currently work and pay taxes, and 57,000 Roma families have just started working for the first time, reveals that people have finally learnt that ‘a better life cannot be built on speculation and debts.’ He closed his speech by sending a message to all those voters who decided not to support him and his party, promising unity and adding: ‘They can count on us too.’ summer shutdowns at automotive industry plants. On the positive side, output of the computer, electronics and optical equipment segment, which accounts for a large slice of the industrial sector, was up by 1.4%, the detailed data shows. Output of food companies was down by 0.3%. Total industrial output saw a rise of 0.5% y.o.y. in August, while the workday adjusted index rose by 2.9% from a year earlier, KSH reported. Domestic sales decreased by 2.4%, while export sales increased by 1.3%. According to a month−on−month comparison, industrial output fell by 5.7% in August, adjusted for seasonal and workday effects.

SURPLUS ON TRADE NARROWS, AUGUST C/A FIGURES SHOW Hungary’s surplus on external trade – especially the trade of goods – saw a sharp decrease in August, and was the main factor in the €110 mln drop of the c/a surplus from July to €264 mln, fresh monthly balance− of−payment figures published by the National Bank of Hungary today show. The surplus in the trade of goods was down both from July and compared to the averages recorded in the second quarter of 2014 or in the third quarter of 2013, the figures demonstrate. Summer shutdowns in the car industry could have affected exports as

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Budapest Business Journal | October 17 – October 30, 2014

SZIJJÁRTÓ: U.S. IS HUNGARY’S FRIEND Hungary’s Foreign Affairs and Trade Minister Péter Szijjártó said that the United States is Hungary’s friend and they “pay attention to the voices of friends”, answering the recent criticism of American President Barack Obama and former President Bill Clinton. Giving interviews to Hungarian dailies Népszabadság and Napi Gazdaság, the newly inaugurated minister reacted to questions concerning recent criticism by American officials. Szijjártó told Napi Gazdaság: “Whoever told them that there are general government restrictions in Hungary and pressure being put on civil organizations is not telling them the truth and are misleading them.” Concerning criticism by Victoria Nuland, assistant secretary of state for European and Eurasian affairs at the U.S. state department, the minister said: “Our region is inhabited by freedom−loving people, who do not tolerate anyone who would try to restrict their freedom or rights.” He told both papers that Hungarian−U.S. relations are good and that American companies provide jobs for 50,000 people in Hungary.

LÁZÁR TO OVERSEE PAKS EXPANSION PROJECT The Prime Minister’s Office is expected take control over the entire Paks nuclear plant expansion project from state− owned Hungarian Electricity Works (MVM), Hungarian business daily Napi Gazdaság reported today citing unidentified independent industry sources. Shareholder’s are scheduled to decide the issue at MVM’s upcoming extraordinary meeting on October 16, the daily reported. Preparations for the expansion are currently made by MVM Paks II. Atomerőmű Fejlesztő, a unit MVM set up in the summer of 2012. Napi Gazdaság argued, however, that the professional supervision of the project was already under the control of the Prime Minister’s Office since Attila Aszódi was appointed government commissioner in charge of maintaining the performance of the Paks nuclear power plant in July. In line with the agreement of the Hungarian and Russian governments made in January 2014, the Russian state−owned nuclear energy company Rosatom is responsible for building to new reactors at the nuclear power plant located in Paks. Russia has promised to provide Hungary with €10 bln in loans for the construction of the reactors. The Prime Minsiter’s Office is currently headed by Minister János Lázár. The Paks Nuclear Power Plant is part of the MVM group.

Many long−time diplomats will likely lose their jobs under new boss Péter Szijjártó, who says he is planning to replace three−quarters of his staff as he remakes his ministry to emphasize a focus on increasing trade. ZSÓFIA VÉGH

The foreign ministry is open for business. That was the message that the government sent in September when it announced the long anticipated appointment of Péter Szijjártó as the new head of the ministry. The new name of the ministry is another indication: the Foreign Affairs and Trade Ministry. In parliamentary hearings before his September 24 swearing in, Szijjártó explained his role as he sees it, noting “Hungary’s foreign policy needs to be reformed in order to meet the requirements of the new world order and that foreign policy must strive to enforce Hungary’s economic interests,” according to the government website, kormany.hu. As he retools the ministry for its new business−oriented role, Szijjártó is reportedly planning to replace three quarters of the diplomatic staff, a move that has critics worried he will be dismantling key diplomatic networks. In the new ministry, the employees’ work will be measured by the amount of new market/businesses they acquire, the investments they attract and the volume of export they encourage, Szijjártó has said. The ministry, which has employed 925 people, including 405 staff members in Budapest, will be trimmed down, with 200 of the staff in the capital reportedly being laid off. In foreign outposts, the ministry is planning to add more than 100 trade diplomats, according to some suggestions. Not everyone is in favor of the personnel shifts. Former Foreign Affairs minister and EU commissioner Péter Balázs said in an interview given to 168 Óra, a liberal political weekly, that the government is about to destroy the professional apparatus that has been working for 25 years. But for Szijjártó classic diplomacy is now just a means to achieve his key goal: doing more business abroad. During his first official visit to neighboring Slovakia, he placed business projects ahead of national(ity) issues. Common success stories in the economy – like the so−far biggest business project: doubling the number of border crossings between the two countries – must come first to build trust, then we can discuss more delicate topics, he said. In mid−October, he is heading to North America to attract more U.S. and Canadian investment to Hungary.

Photo: MTI: Szilárd Koszticsák

ILLEGAL CIGARETTE SALES SAID TO EXCEED 12% The black market for cigarettes and tobacco in Hungary has grown to 12.1% of total sales, market research company GfK Hungária revealed on October 13. One year ago GfK Hungária reported that illegal cigarette sales accounted for 7.7% of the total turnover. By the end of last year the figure had grown to 11.8%, but GfK noted than that there had been a “restructuring” on the market due to the tobacco concessions introduced last year. Hungary initiated a state monopoly on retail tobacco sales in July of 2013, sharply reducing the number of outlets where smokers could buy cigarettes. A guaranteed margin for retailers also increased cigarette prices. The government’s rationale for the monopoly was the need to keep tobacco away from children. GfK Hungária was commissioned by tobacco industry companies to survey the market. It conducted the survey by counting cigarette packets discarded in public places, an approved method in the European Union, it said.

New foreign minister is all-business

Getting a grip: Szijjártó with Thomas K. Quartey, Ghana’s FM ...

Photo: MTI: Csaba Krizsán

HUNGARY PAYS €7 MLN TO BUY OUT BOMBARDIER Hungary will pay €6.9 mln to buy out the foreign−owned stake in Bombardier Transportation MÁV Hungary, a joint venture between the rolling stock maker headquartered in Germany and the Hungarian railway company, Hungarian daily Népszabadság said on October 8, citing shareholding employees of the joint venture. The National Development Ministry announced the decision late in September, but did not disclose the purchase price for the 64.9% foreign−owned stake. MÁV holds 25% of the joint venture. The joint venture had a net loss of HUF 260 mln on revenue of HUF 6.7 bln last year. It finished the year with net assets of HUF 3.2 bln (€10.4 mln).

GOV’T: CENTRALIZED PR OFFICE STARTS OPERATIONS A central communications organization called the National Communication Office will carry out communications−related public procurement for tasks related to marketing, public relations, research and communication activities for central budget−funded institutions, such as ministries, as well as from directly or indirectly majority state−owned companies, according to a decree published in the official gazette Magyar Közlöny on October 3. The office will not be responsible for the PR of independently run state administrative institutions or bodies such as the central bank or regulators. The decree said that the National Economy Ministry, the National Development Ministry and the Prime Minister’s Office will fund the office. János Lázár, the head of the Prime Minister’s Office, will run the National Communication Office.

... Miroslav Lajcák, Slovak FM ...

Photo: MTI: Csaba Krizsán

indicated in the Statistics Office’s external trade statistics. Exports also fell in the longer comparison. August imports fell in comparison with July, but rose both from the average in the previous quarter or one year earlier. This rise in imports could reflect rising domestic consumption. The surplus on the trade of goods fell by almost €200 mln from July to €88 mln, which is less than half of the Q2 average and less than one−fourth of the respective average recorded in July−September 2013. The surplus on trade of services also decreased from July to €450 mln. A rising tourism surplus did not compensate for decreasing revenue from other services. However, the drop was smaller and the services surplus still exceeded the Q2 and Q3 2013 averages. The August c/a surplus was in line with the average monthly c/a surplus in the second quarter but was just half of the average c/a surplus in Q3 last year. Hungary’s external financing capacity – a combined surplus of the current and capital accounts – was down €77 mln from July, but, at €658 mln in August, was still up both from the monthly average in the second quarter or in July−September 2013. The surpluses continued to be helped by net transfers from the European Union which reached €493 mln in August, practically level with July, exceeding the April−June monthly average by €86 mln and one year earlier average levels by €170 mln, indicating the accelerated utilization of EU funding before the end of the current seven−year budgetary period.

... and Robert Fico, Slovak PM.

Szijjártó replaces short−timer Tibor Navracsics, who is in limbo as he waits to see if he will be accepted as a European commissioner after being rejected for the portfolio of Education, Culture, Youth and Citizenship. The new trade−promoter−in−chief already has a big head start on making business connections abroad. The youngest MP in parliament, Szijjártó was a party spokesman and later the prime minister’s spokesman before being placed in charge of the country’s “Opening to the East” strategy in 2012. In that role, he sought to build trade with non−EU partners, including Russia, China, Turkey and Arab countries. In his new job, he will be expanding on those networks, including some opening to the west, during his upcoming trip to North America.

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2Business Local website that helps young moms start businesses wins EU prize Working and having children is not supposed to be a daunting challenge in the 21st century. Yet for all the policy changes and concessions companies have introduced, juggling a job and kids is still not easy. In Hungary, where the law requires businesses to hold a new mother’s position for an unusually long period of up to three years while she takes maternity leave, it is estimated that half of the mothers with small children ﬁnd they are not able to return to their old job. Employment of mothers with children less than three years of age is well below the EU average. On the positive side, three years is long enough to learn something new and start over. This is the idea behind Gazdagmami Kft., a ﬁrm that encourages business start-ups by mothers with young children and helps mothers to acquire the

entrepreneurial skills and mindset needed to start a business. Gazdagmami’s idea has impressed a lot of people, and on October 2, it was named the winner of the Grand Jury Prize of the annual European Enterprise Promotion Awards (EEPA). The company was recognized for trying to solve a problem that exists in every developed country. Gazdagmami’s training consists of a four-month online course and numerous backup materials that tell future businesswomen how to do market research, set a target group, develop a product and kick-start their enterprise. Though the focus is on this special group, the skills taught would beneﬁt any enterprise. In Hungary, where SMEs contributed to roughly 70% of the GDP last year, most new enterprises still go bankrupt as they lack the necessary business and marketing skills. Since its start by an enterprising mom in 2008, Gazdagmami has trained more than 4,000 women (and some men too). They don’t keep track of how many of their former students

COMPANY NEWS

NNG HUNGARY WINS AT STEVIE AWARDS Hungarian navigation ﬁrm NNG Llc. became a Gold Stevie Winner at the 2014 awards in the category of “Fastest−Growing Company of the Year in Europe”, it was announced on October 9. The Stevie Awards are described as the world’s premier business awards, created in 2002 to honor and generate public recognition of the achievements and positive contributions of organizations and working professionals worldwide. Stevie has quickly become one of the world’s most coveted prizes, according to the website of the International Business Awards. Hungarian navigation software developer NNG, which makes the iGO navigation application, recently announced that it would open a development center in Szeged this fall. SGH AVIATION ACQUIRES HÉVÍZ AIRPORT Hungary−based SGH Aviation Kft. purchased the assets of Hévíz Airport in Sármellék at the western end of Lake Balaton, CEO Gábor Széles said on October 3. The assets were originally owned by two companies liquidated by receiver company Vectigalis. SGH Aviation came second in a

tender earlier this year, however the winner Imre Linusz failed to pay the asking price. According to Politics.hu, Széles said he was “planning to cooperate with Debrecen as a first step, and then with Budapest Airport as the second step”. His dreams of expansion go further, and he said “It’s not a secret that we want to have our own fleet.” PATEC TO BUILD PLANT IN HUNGARY Singapore−based Patec will build its first plant in Europe, to make car components, in the Hungarian city of Miskolc, Hungarian news agency MTI reported on October 10. Andy Wong, managing director of Patec’s Hungarian unit, and Miskolc mayor Ákos Kriza signed a declaration of intent on the investment. Wong noted that Patec had been present in Miskolc for five years. He cited the stable and well− trained local labor force, the infrastructure and the knowledge base provided by the city’s university as reasons for investment in Miskolc. About 400 people will work in the 15,000 sqm plant and it will manufacture stamped parts, window wipers, and exhaust systems for the Volkswagen group.

Ágnes Vida, above left, puts young mothers to work with Gazdagmami.

make it, although they estimate about two-thirds start enterprises – the bestknown is probably Meshka, a webpage selling handmade designer products. “It was the National Economy Ministry who advised us to enter the contest. We did not expect to win,” Ágnes Vida, founder and owner of Gazdagmami told the Budapest Business Journal. Apparently she hit on an issue that is much bigger than Hungary alone. “People think women face this problem here due to the long maternity leave but that

is not the case,” Vida said. “In France, women are granted 24 weeks leave after giving birth, but still they have difficulty returning.” Gazdagmami won the prize because it provides an example that can be replicated – and is needed – all around the EU. Vida has already given presentations on the system to eager audiences in many other countries in Europe. The company’s bright idea may spawn an army of entrepreneurial young mothers around the continent.

HONEYWELL PLANS €10 MLN EXPANSION IN HUNGARY American multinational conglomerate Honeywell will spend €10 mln to expand its base in Nagykanizsa in western Hungary, Foreign Minister Péter Szijjártó said on October 7. The government decided to allocate a HUF 761 mln grant for the project, which is expected to create 109 jobs, Szijjártó said. The investment will add 5,000 sqm to the base’s existing 12,000 sqm. Honeywell employs 550 people in Hungary, at its base in Nagykanizsa and in Budapest. Its products and services in Hungary include: consumer & home, safety & security, industrial process control and ﬁre protection & ﬁrst responder.

ALDI FINED ON CHARGE OF FALSE ADVERTISING Hungary’s Competition Office (GVH) reported today that it ﬁned the local unit of German− owned supermarket chain ALDI HUF 10 mln for what it deemed to be false advertising, Hungarian news agency MTI reported on October 13. GVH said it decided to ﬁne ALDI as the chain advertised the sale of a certain type of Canon multifunctional printer for HUF 11,900 for several days in the fall of last year, even though the supplier was not able to deliver the product to Hungary. According to the office, ALDI knew that the printers would not arrive and the company failed to replace the printers with another, similar device.

ADMINISTRATIVE HURDLES CLEARED FOR APOLLO TIRE PLANT The government has declared a HUF 146 bln plant owned by India’s Apollo Tires will be built in Gyöngyöshalász in northern Hungary, as an investment of “elevated importance” for the national economy, a designation that eases the administrative tasks necessary for the investment. The declaration was made in a decree published in the Hungarian official gazette Magyar Közlöny on October 9. Company and government officials announced the planned construction of the plant in September. It will create 975 jobs. The government is awarding Apollo a cash investment subsidy of HUF 16 bln for the project. The cornerstone of the plant is expected to be laid in the spring of 2015, and the ﬁrst tire could roll off the production line early in 2017.

VODAFONE FINED HUF 110 MLN ON MISLEADING ADVERTISING CHARGE Hungary’s Competition Office (GVH) said that it ﬁned Vodafone Magyarország HUF 110 mln for misleading advertising, Hungarian news agency MTI reported on October 9. In advertisements of its Vodafone RED VitaMAX package run over about four months from late 2012 to early 2013, the company failed to inform subscribers that top−ups made before the switch to the package would become non−transferable after a period of just 30 days, according to the charge by GVH. The GVH said it counted as aggravating factors in its assessment of the matter the broad scale of consumers affected as well as the fact that it believed Vodafone had misled consumers on eight separate occasions in the past ﬁve years.

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2 Business

Budapest Business Journal | October 17 – October 30, 2014

Domestic oil: a golden reserve MOL is well known as a Hungarian multinational energy company that possesses oil and gas fields from Pakistan to the North Sea. Few people realize, however, that 40% of MOL’s production comes from domestic upstream. What is more, $7 per barrel is the unit cost of the hydrocarbon produced in Hungary. There is only one problem with the Hungarian upstream business: namely that production is on the decrease. The Budapest Business Journal asked Tamás Szakál, MOL Hungary’s exploration and production vice president, about the prospects. ANDRÁS ZSÁMBOKI

MOL Hungary’s upstream profile is famous for providing 40% of the MOL Group’s upstream EBITDA. What is the proportion of the production in Hungary within that? A: True, upstream is a very successful part of MOL’s business, as is usually the case with big oil companies. Out of the $1,610 mln MOL Group Upstream EBITDA last year, Hungarian Upstream brought in $630.8 mln, while 42% out of the total MOL Group hydrocarbon production comes from Hungary.

Does that mean that we are a great power in oil and gas drilling? A: I would be reluctant to say that MOL is a domestic upstream driven company. Not because it is factually not true, but because of the terms of the role upstream plays in the company’s operation. MOL is not an upstream giant. We have mature production assets. Let me quote an example: Our most important oil field is the Algyő field in southeastern Hungary. That field is turning 50 years old next year, which means that it has arrived in the final phase of its lifecycle. That, however, does not at all mean that it is a near−exhausted field: it still provides 39 to 40% of Hungarian production.

Will we then have to say farewell to a Hungarian legend? Are the Algyő fields going to be closed down in the not too distant future?

A: Not at all; on the contrary, we are planning to prolong the lifecycle of the Algyő field and of other similar mature fields. According to our plans, that may mean additional years or even decades. In the case of Algyő, the life span of the field may get prolonged by as many as 15 to 20 years.

is a high efficiency layer treatment method that was developed in Hungary, because there are higher pressure and temperature conditions in the reservoirs here than in other parts of the world due to Hungary’s extremely high geothermic gradient.

How shall we imagine that? As a facelift, or a rejuvenation therapy? A: The therapy is rather complex. Its main element is the introduction and application of new technologies by which it is possible to bring those oil and gas reserves to the surface that could not be exploited by any other means. Technically, these methods are called EOR/IOR applications (an acronym for Enhanced Oil Recovery/ Improved Oil Recovery). Hungary has a pool of outstanding experts, including several excellent oil engineers, who are well versed in EOR/IOR. The research and development profile of MOL is concerned primarily with the development of technologies that are able to bring the last, captured reserves to the surface. MOL has very good relations with some Hungarian universities, and through its Exploration & Production R&D is financing the launch of projects that involve either scientific background or knowledge of EOR/IOR applications . A: EOR/IOR applications cover a wide range of methods from water, polymer flooding, through CO2 injection to enhance recovery of oil and gas fields. The most cutting−edge technology

Are you thinking in terms of operating and entering new fields? A: Of course we are. MOL has won a concession for the exploration of the area called Szeged basin−West, which may yield new reserves. The re−evaluation of seismic data will take place this year, and the exploratory drilling will begin next year. Yields can be expected within one or two years. There are other important new fields that are in the first phase of their life cycles. Since 1990, when the exploration of the so−called Paleogene Basin (about 40 km east of Budapest) began, oil and gas yielded by that area has been playing an important role: it has given about 20% of domestic oil production, and exploitation in this area – in the vicinity of Gomba, Nagykáta and Tóalmás – has been on the rise. What can be expected from domestic oil and gas exploitation? A new era, or a more or less prolonged withdrawal? A: To tell the truth, Hungary is unlikely to discover a new Algyő field. By using various EOR/IOR practices, however, it is possible to reach a condition in which Hungary remains a solid hinterland for MOL Upstream. It is our task to produce an amount of profit from which MOL’s International Upstream will be able

Tamás Szakál.

to invest into new oil and gas fields that will in the long−term make up for capacities lost in Hungary. We, the domestic upstream are responsible for MOL’s domestic gold reserves.

VILLA RESIDENCE FOR RENT THE BUILDING IS LOCATED IN THE 12TH DISCRICT AT KŰTVÖLGYI ÚT 93. THE AREA IS KNOWN AS ONE OF THE MOST ELEGANT AND QUITEST PLACES IN THE BUDA HILLS. The house is easily reachable from the city, even by public transportation. The house is perfectly suited for any luxury requirements. On the ground floor there is a large salon for many visitors and an extra sized dining room for 20 persons. The villa faces to south, so it is very sunny and bright. All the rooms are air conditioned. The beautiful garden is 1591 sqm. There is a flagpole in the garden and good parking possibilities. The estate used to be let out as an ambassador’s residence and for CEO’s of multinational companies. Type of property: villa residence • Size: Size:560sqm • Number of levels: 3+1 Garage: 184 sqm (even for 5 cars) • Security: video door phone and camera system Garden: automatic watering system, professional maintenance

F o r m o r e i n f o r m a t i o n c a l l : Ta m á s S a s s : P h o n e : + 3 6 3 0 4 3 0 4 5 0 5

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08 2Business

Budapest Business Journal | October 17 – October 30, 2014

Doing business in a volatile world CEOs now have to cope with far more variables than was previously the case, and with volatility in global markets likely to remain, that won’t change anytime soon, warns Dennis M. Nally, the head of PwC’s international network in this exclusive interview.

trade agreements benefit smaller companies, they enable them to trade in new markets. If you think about it, big companies can do that anyway, they have the resources, the clever lawyers; they can navigate their way through the problems. If you are a small company, you can’t afford all of that.

I take it PwC is a supporter of T−TIP [the proposed EU−U.S Transatlantic Trade and Investment Partnership], then? A: Absolutely! We believe in it 100%. We have seen the benefits of how companies, how countries can compete when they start to operate to a global standard. From a regulatory stand point that has to be a positive. I think the global slowdown has clouded people’s thinking about whether this is good or not. There are some regulatory issues to work through, of course, but it has been demonstrated time and again that opening markets generate jobs, create new markets and generate investments, and that has to be good.

ROBIN MARSHALL

Hungary may be a small market, but it is still important to the PwC network, as evidenced by the fact that the regional partners’ meeting was held here in early October. And the trends that will impact global markets will hold just as much potential and challenge for this country, as Dennis M. Nally, chairman of PricewaterhouseCoopers International Ltd., told the Budapest Business Journal.

Can we finally say we have recovered from the slow down? A: Recovery has taken longer than anybody could have imagined. That we are already six or seven years into it goes back to the volatility that exists in the world. Parts of Europe are a real concern. Germany just released figures that should concern everyone. I was in France a couple of weeks ago; it has growth of 0% to 0.5%. That is very concerning, and those are two of Europe’s powerhouses. Spain, on the other hand, is very positive, and who would have thought that to be the case three years ago?

You are now working on the 2015 global CEO survey. Looking into your PwC−issue glass ball, what do you expect to be the main themes? A: The global economy is pointing in the right direction but there is a tremendous amount of volatility out there, whether it is Russia, the Middle East, China; you can rattle all of them off. One of the biggest challenges facing businesses and countries is how to effectively deal with that volatility and uncertainty. How do you make long−term commitments? That’s the environment right now and I don’t expect that to change in the next three or four months. I expect another of them to be around the megatrends [technology, urbanization, demographic changes, climate and resources, and shifts in economic power] we have talked a lot about: how companies adapt to new technologies and what that means in terms of business opportunities or challenges created by the shifting economic picture from the developed to the developing world. Last year, regulation was front and center, and I think it will be right up there again as we continue to see new rules and regulations proposed. Talent will form a big part; as companies seek to deal with the megatrends, they raise the whole issue of whether you have the right people, with the right skills, in the right place. That will be at the top of the mind for many CEOs.

Presumably they all hold implications for PwC, also? A: I think two of the megatrends will be most applicable to PwC, and they involve technology and developing markets. Today, 20% of our revenue comes from developing markets. That will grow

Q Dennis M. Nally at the PwC CEE Partners’ Conference.

to 35−40% in the next five years. That is a huge change. But that should not be a surprise, because at PwC we follow our clients, and many more of those are moving into the developing markets. Technology, data digitalization, cyber security: these are trends that clearly we can see will have a massive impact on professional services. The technological breakthroughs of today are, I think, equivalent to – and maybe more important than – the industrial revolution. I really mean that. The two trends are very interconnected, very intertwined. But that makes this a really exciting period to be in.

Hungary is a relatively small market. How often does it ‘ping’ up on your radar?

A: When we look at markets like Hungary, which is a developing market, it is clearly in the sites of the PwC network, with its great central location in terms of what we are doing in Central and Eastern Europe. It is clearly on our radar screens, and that is why we have 250 partners here for our partners’ conference. It is a small market, but when you think about what is happening globally, market size is no longer the governor it once was. If you are a mid−size company and you want to go global, the technology today can open up markets for you. If you have a great idea, that gives you a competitive advantage. Free trade agreements are making it easier to cross borders. When people say they are really for the big companies, I believe it is just the opposite; free

It started from a low base. A: Yes, but its figures are now going in the right direction. The UK is seeing strong growth. So we have pockets that are doing better than expected, and others that you put in the “concerning” category. Overall, I think it feels better today than it did a year ago, but we have to be prepared for the next several years to be dealing with volatility. That is the new reality. Look at the BRICs: If we were talking five years ago there would have been a pretty consistent positive message around all of them in terms of growth. Today, look at Brazil: very low growth, if not recession. Look at Russia: we know all about that. Look at India: it has 5−6% growth, but that is not what we have come to expect from it. China has 7.5−7% growth, down from three years ago. Now look at Indonesia, parts of Africa, the Philippines, Vietnam, etc. It is definitely a changing world.

Is that not an inevitable result of the BRICs maturing as markets, with Indonesia and the others becoming the “new BRICs”? A: Each one of the traditional developing countries that we talk of as the BRICs is reaching maturity in its own right and each is different. Indonesia is still in the developing category, and will have strong growth for a period of years.

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2 Business

Budapest Business Journal | October 17 – October 30, 2014

How does business respond to this “new reality”? A: I actually look at where the economy is today, being very volatile, and expect it to continue, whether you focus on geo−politics, technological improvements, or the megatrends that result. That creates a challenging environment for CEOs to manage. Businesses prefer stability and consistency, but the situation is not like that, there are too many factors and variables, and that requires CEOs and boards of directors to think in different ways, to respond to the new paradigm We need to develop organizations that have the ability to move quickly, to have agility, to respond as unknown things become known. Agility is a word that gets used a lot, but being able to make mid−course corrections, positive or negative, upside or down, and responding appropriately to this environment is a real skill.

How do you teach that? A: It is getting to the stage where you are talking about a critical behavior trait. I do not think you can mandate that. There is no way you can govern for all the potential issues out there, positive or negative. You have to create a culture of empowerment that permeates, where your people are empowered to respond, and that is embedded in thought processes throughout the organization. You can’t refer everything up to the CEO all the ADVERTISEMENT

Dennis M. Nally

time. Frequently the people who have the best information are those closest to the ground, closest to the customer.

Is that how PwC acts? A: We endeavor to make decisions as close to the ground as possible, and to work with great flexibility. That is one of the reasons why PwC sees the developing markets as being so important. You have got to have people as near those markets as possible.

What surprised you most from the 2014 survey? A: The one thing that really surprised me last year was that regulation was the number one issue on the minds of the CEOS. That was the first time it has

We endeavor to make decisions as close to the ground as possible, and to work with great flexibility. That is one of the reasons why PwC sees the developing markets as being so important. ever been in that position. Think of all the things we have talked about: the business environment, the megatrends. To have that issue at the top demonstrates that concerns exist around some things you cannot control, and therefore you move on to something that should be predictable. When it comes to regulations, tell me what the rules are, tell me what the standards are. If I know the basic liabilities, then I can plan, I can make decisions about the future. That this is not an issue that is unique to any one place in the world, I find fascinating. What CEOs are saying is to do our job we need clarity. If we can take some clutter out of the system, that will go a long way. The adage is: be cautious until you have clarity.

Sudden changes in legislation and special sectoral taxes have been an oft−criticized part of the Hungarian economy for the past several years. A: What we see more and more today on the whole issue of global competitiveness is that governments, in particular, have to work with stakeholders to ensure the competitiveness of the country. Investors look at any one country and compare it to all the others before deciding where to make their investments and create new jobs. If a country raises barriers, will that attract investors and jobs in the future? It is a different way of thinking about the challenge. You cannot just shut it off.

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3Special Report Telecoms

Building ‘Digital Hungary’ Christopher Mattheisen, CEO of market−leader Magyar Telekom, talks about the direction of his company, and the telecoms business in Hungary, in an exclusive interview with Budapest Business Journal. TOM POPPER

How have the telecoms market and the general business climate in Hungary changed since the old days, when you worked at Westel on Budafoki út? Did you think back then that you would end up where you are? A: Those days were the beginning of a real revolution in telecommunications, which has lasted since then, but we have managed to keep pace with market and technology changes and retained our leadership position amidst the ever− intensifying market competition. Of course, there are things that have not changed, for example, that I have been a passionate runner since a very early age and I did not miss this year’s Telekom Vivicittá City Run in the spring. And another favourite hobby of mine remained: music. This year I performed with my band Bonus Track at the Telekom Volt Festival. However it was inconceivable 20 years ago that I’m now able to track my running performance with a mobile application called Futótárs. And also the revolution of smartphones and mobile broadband has enabled people anywhere in the country to follow our band’s performance through live streaming.

Congratulations on winning the new frequencies in late September! Will those be used for mobile internet services? A: I am glad we have ultimately been able to acquire the frequency blocks we need the most and we can use them to the benefit of our customers. The successful tender is also a major milestone in achieving a Digital Hungary. We’d like to accelerate the expansion of our broadband coverage as soon as possible, increasing our network capacity and bandwidth, primarily in order to rollout the high speed mobile internet, which is a key driver of growth and the upcoming digital world. The frequencies we have won are suitable to carry the best broadband

Christopher Mattheisen has been CEO of Magyar Telekom since 2006. Before that, he was Chief Officer of T−Com, starting in 2005 and Chief Officer of the company’s Residential Services in 2002−2005. Mattheisen’s career in telecoms started in 1993, when he was Sales and Marketing Director of Westel 900 in Budapest, and he also worked for telecoms in Poland, Czech Republic and the UK. Born in 1961, he studied economics at Indiana University of Bloomington and at Columbia University.

technologies available today, especially the 4G network. They will also meet the requirements of the next development phase, LTE Advanced, which Telekom has tested successfully already as a first in Hungary. So there is nothing to stand in the way of 4G expansion. As of today, we have made the country’s first 4G network available for 54% of Hungarians, which we would like to increase to 80% by 2015. Putting to use the new frequencies, we will build the country’s 4G network with the largest coverage, offering the maximum speed of this technology. Due to some favorable features of the 800 MHz mobile broadband, remote and sparsely populated areas can be covered efficiently too. By continuing the dynamic expansion of 4G coverage, we will be able to offer services that bring a new age in mobile internet for our customers. Users will be able connect to the digital world with higher speed, and it may enhance digital equal opportunities too.

Mobile telephone calls seem to be MT’s leading source of revenue, but other, newer services are growing faster – for instance mobile internet and TV, where you have made acquisitions recently. Where do you expect the most growth? Will 4G services ever become number one or two in revenues? A: We are constantly seeking further value−generating investment targets and

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opportunities. In the fixed−line market, TV continues to be the main driver. We have expanded our TV product portfolio with innovative services like Interactive Sat TV, Moziklub (video−on−demand), and with the TV GO service, we made available our TV program choice on every platform. Another promising area is mobile internet: There we expect further growth, and our aim is to retain Telekom’s strong market leadership position. That position is supported primarily by our integrated multi−play offers, smart devices and further expansion of 4G penetration. There is an enormous growth potential offered by 4G, as almost all new smartphones support this new technology, and at Telekom, seven out of ten postpaid smartphones are already 4G enabled. In the future, the increase in mobile data usage can become the main growth driver, along with video and shared content. I also expect that, beyond traditional devices, an increasing number of things will be connected to the mobile network, such as cars, energy meters, health appliances or body−worn smart devices.

How did you achieve such dramatic growth in 4G market share in the last year? Do you expect your share to keep growing? A: 4G is strengthening Telekom’s unique position as an integrated service provider. In Hungary, only Telekom offers a full− range service portfolio that can be accessed at home and on the move at any time and on any platform with any device. The expansion of 4G may turn mobile internet use into a real experience for all, without any limitations in space and time. This can improve the efficiency of work of individuals and businesses, as well as opportunities for work, study, job−search and employment, as digital literacy will hopefully expand at a faster pace. The result I hope for will be a considerable improvement in people’s quality of life. For example, 4G enables video conferencing through mobile phones with excellent quality. At Telekom, more than 250,000 customers have already decided to use 4G mobile internet, which amounts to a six−fold growth within a year, while 4G data traffic has quadrupled during the same period. Of course, beside a quality network and the latest 4G−enabled devices, 4G success also requires a good service package, and we have made a leap forward on that side as well. In addition to a range of devices that enable a full 4G experience, and to our Next packages containing unlimited calls and messaging, we have introduced the unlimited thematic data options. To put it briefly, unlimited calls are now completed with unlimited data. Here again we moved forward in line with customers’ user habits and the mobile internet market trends.

What is your opinion on T−Systems, are they a good candidate for more rapid growth in the future? A: Infocommunication, or ICT services also play a decisive role in our strategy and in this field the central role belongs to T−Systems Hungary, our subsidiary that serves our large company customers and the public sector and leads the market in SI/IT services. The separation of IT and telecommunication

Budapest Business Journal | October 17 – October 30, 2014

as has been stipulated in the agreement. Due to the public utility tax, for example, optical cable rollout practically came to a standstill in Hungary, although the country’s growth and competitiveness require that broadband access should reach everywhere.

Magyar Telekom’s HQ on Krisztina körút in Budapest.

We are rather optimistic seeing the current figures, however foreign investor confidence in Hungary is still lower than in the region’s other countries. services is no longer clearly possible. Current technology mega trends, like cloud or Big Data, rely on solutions of both areas. In such market conditions, Magyar Telekom and T−Systems Hungary excellently complement each other. The significant increase in SI/IT services is a result of investments related to health and transport, as well as corporate IT projects aimed at cost efficiency. And, thanks to 4G, new options and corporate mobility solutions become available for entreprises and the SMB segment as well. We are happy about successful T−Systems projects completed in public transport, like Futár, Bubi and MÁV wifi, and we’ll continue to actively contribute to strengthening of digital economy as well as leveraging of EU funds slotted for ICT e.g. in the area of e−government.

How is the company’s foray into the energy sector going? Can you explain the synergy there? Do you expect the newly proposed state utility will impact your energy business? A: Our energy retail service has primarily significance in customer retention, as it favorably affects customer satisfaction. We have contributed with our energy services and discount prices to reducing the costs of Hungarian households since 2010, and I believe our market presence in energy makes sense as long as we can sustainably maintain the discounts we have been offering. Due to the changing business

environment, we are continuously reviewing our options.

What about your holdings in South−Eastern Europe? Is that still an area for growth for MT? Are more acquisitions possible there? A: In these markets, our primary aim is to stabilize our achievements and retain market leadership. Magyar Telekom’s subsidiaries in Macedonia and Montenegro have to cope with strong competition. Moreover, the unfavorable economic and regulatory environment has adversely influenced our results. As far as acquisitions are concerned, we follow closely every value−creating acquisition opportunity, but none is in sight currently in the region.

It seems the special telecoms tax introduced a couple of years back is here to stay, and may grow. Are you concerned about new taxes? Are the taxes now acceptable as an extra operating cost? A: Our partnership agreement signed with the government of Hungary last February set forth several important targets for enhancing the country’ digital development. A key goal of a Digital Hungary is that high−speed broadband internet will become accessible for every Hungarian household. The implementation of broadband investments, amounting to hundreds of billions of HUF, requires however, the revision of the industry’s regulatory and tax environment

Where do you see Hungary’s telecoms market going in the future? A: The telecoms industry is undergoing major changes globally. The international trends point in the direction of an integrated telecoms, IT, media and entertainment market. The market in Hungary still shows signs of reduced growth, rearrangement of market segments and a drop in profitability levels. The key service element of the fixed line portfolio is increasingly broadband. In the mobile market, virtual operators and flat rate offers have appeared, accompanied by strong competition in broadband and content services. What we expect is that mobile broadband, broadcasting and IT services will see further growth in the coming years. We have expanded Telekom’s traditional core activities with related services in order to provide unique customer experience, and it is a key advantage that differentiates us from competitors. Another goal in our mid−term strategy is to simplify our product portfolio and promote doing business online to make it quicker and more comfortable.

What do you think about the Hungarian economy in general? Are you anticipating steady growth for the near future? A: Significant growth in investments, increase in domestic consumption, improving employment figures and a low inflation rate all point in the right direction, so we have reason to be confident that Hungary’s economic indicators are improving and GDP increases. We are rather optimistic seeing the current figures, however foreign investor confidence in Hungary is still lower than in the region’s other countries. In addition to a favorable environment for investments, confidence is indispensable too. It is especially important that the rate of private investments in GDP should improve. For the time being, it is a question whether the promising macroeconomic figures are one− time achievements resulting from the government’s measures or growth will really become permanent.

Is there anything else you would like to add? A: Our network developments to be implemented in the coming years will promote the convergence of fixed line and mobile services and enable us to satisfy the booming market demand for data and multimedia services. At the same time, Magyar Telekom as a leading market player has to face not only local competition but also global market processes and challenges. In the online advertising market, for example, an increasing share of revenues goes to operators that are not physically present in Hungary. We have to pay attention to these trends, because we must be able to get ready in time to face future challenges. We can only do this if we not only rely on our existing strengths and new business opportunities but also have more efficient operations, an innovative product range and excellent customer relations.

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Budapest Business Journal | October 17 – October 30, 2014

New player eyes mobile market The big surprise in the latest tender for frequencies was that cable provider Digi joined the existing three mobile companies in buying frequencies. Insiders speculate that they could be planning a partnership that would reshape Hungary’s mobile landscape.

HIGH FEES IN THE WAY OF MOBILE BROADBAND PENETRATION

ANDRÁS ZSÁMBOKI

The National Media and Communication Bureau (NMHH) sold mobile frequency blocks in nine packages in a tender that ended September 29. To the great surprise of the mobile profession, Digi, which has up until now only been a cable provider, was one of the winners, alongside the three great incumbent providers Magyar Telekom, Telenor, and Vodafone: For HUF 10 billion, Digi acquired a significant number of frequencies in the 1800 MHz range. While the companies themselves are not saying very much, experts in the market who were interviewed say that the most likely scenario would be for Digi to partner with Telenor, creating a mobile voice and internet service that could challenge the dominance of current market leader T−Mobile. At the inquiry of newswire HWSW.hu, Zoltán Teszári, head of Digi’s owner RCS/ RDS, announced in a laconic communiqué that his company was seriously considering entering the mobile market. According to the October 2 statement, the company is planning to provide voice and data services, that is, mobile phone as well as Internet services using its frequency. This move would be technically impossible without a partner, experts familiar with the mobile market told the Budapest Business Journal. Teszári said it has been defined as the long−term goal of Digi to develop a national network; an additional aim is the establishment of a 40 mb/sec mobile Internet network based on the freshly gained frequency. Teszári did not disclose the exact date of the launch of the service. “After acquiring the necessary permissions from the authorities, we will immediately start constructing the network,” he said. “As far as Digi’s expertise is concerned, the thing is not at all implausible,” Péter Kerekes, co−owner of Kerekes and Co. Law Office explained to the BBJ. “Digi is a multinational firm in this region, already operating a mobile phone network in Romania. Using the roaming method, that network could easily be extended to include Hungary.” According to the telecommunication expert, the relatively narrow range of the recently won frequency causes a bottleneck; the second most problematic aspect is capital leverage. “The range is too narrow to provide a basis for voice and Internet data communication simultaneously. Digi has been faced with

Grabbing mobile frequencies, Digi joins the big three.

the same problem in Romania, where the company was only able to use frequencies in the 2.1 GHz UMTS range until 2013. That is why it signed a roaming contract with one of the local incumbent operators, which worked perfectly until 2014; that year, Digi acquired a frequency of its own in the 900 GHz range,” Péter Kerekes explained. He implied that Digi might repeat its strategy used in Romania: that is, it might possibly sign a roaming contract with one of the big mobile providers. LIKELY PARTNERS So far, all Hungarian mobile providers have been reluctant to say anything concrete about a potential partnership with Digi. “In the past several years, the market shares of the three incumbents have not changed much: T−Mobile has had 45% of the market, Telenor 33%, and Vodafone 22%. Digi’s entrance may significantly transform the market conditions, and the biggest loser of that process might be the market leader, T−Mobile,” a source unwilling to be identified told the BBJ. At the frequency competition this September, the most new frequencies were won by Vodafone Hungary. That is the company that has the largest amount of free capacities right now. “As far as mobile Internet is concerned, Vodafone has a well− functioning partnership contract with UPC, which we are planning to broaden in the near future,” László Szűcs, technical director of UPC told the BBJ. UPC’s expert thought it highly unlikely that Vodafone would wish to establish a similar partnership with Digi, let alone sign a roaming contract. As

far as UPC is concerned, Szűcs refuted the assumption that the company was planning to add mobile services to its already existing network of cable−based Internet. “We have a partnership contract with Vodafone Hungary for the mediation of mobile Internet services. All that means, however, is that our own cable clients, for reasons of convenience, are offered the opportunity to use Vodafone’s mobile Internet services.” This summer, UPC started its first mobile virtual network (MVNO) in Switzerland. Experts do not think it probable that UPC would soon become a MVNO in Hungary as well, in which its partner would be Vodafone. Telenor seems to be the likeliest partner for Digi, experts interviewed by the BBJ said unanimously. The lawyer Kerekes emphasized that Telenor and Digi have already signed a partnership contract for the provision of MVNO. What is more, Telenor also serves Digi’s mobile Internet customers. “If Digi and Telenor joined to form an alliance, then, given the 1800 MHz frequency recently given to Digi, 40% of the 1800 MHz range would be concentrated in one place. That would make it extremely easy technically for Telenor to provide roaming together with Digi,” a source wishing to remain anonymous related to the BBJ. Upon being asked by HWSW newswire, Digi’s leadership explicitly refuted the assumption that the company is planning to establish a roaming partnership with any of the incumbent providers. The company says that its future network will be fully designed, constructed, and operated by it alone.

High fees and sectorial taxes are putting a brake on mobile broadband penetration expanding in Hungary, which lags far behind OECD countries according to a survey by OECD. In Hungary, mobile broadband penetration is only at 27.7% compared to the Organization for Economic Cooperation and Development average of 72.4%, the survey reveals. While in seven member states (Finland, Australia, Japan, Sweden, Denmark, South Korea, and the USA) the mobile broadband subscription per capita is higher than one per person, in Hungary every fourth person has such a subscription. The country ranks lowest among European member states and, not surprisingly, doesn’t fare any better in the region: in Slovakia 55.3 people out of 100 have a broadband connection; in Poland it is 61.3; and in the Czech Republic it is 62.5 people, according to Internetet.hu. Both the OECD and analysts point to high mobile data prices that account for 6.8% of local average salaries. This compares to prices which are almost half that in Slovakia, where mobile penetration is two times that of Hungary. High levies on the sector don’t help either. With 60% of taxes included in the overall fee, service providers have a limited influence on prices. Since the number of clients is low, they can’t afford to lower the prices, explained Adam Solt, an analyst with Internetet.hu. Cable broadband is less expensive, and thus more popular, here. Widening mobile broadband coverage, development of the 4G network, and the lowering of smartphone costs could help boost penetration, he added.

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Budapest Business Journal | October 17 – October 30, 2014

Hungary’s Cellum leads the revolution in mobile wallets Within a decade, smartphones will replace your entire wallet, including your identity cards. The local firm Cellum has been a leading innovator in the field, and remains on top globally, thanks to a carefully crafted strategy and highly committed staff, CEO and President János Kóka says. He explains more in this interview with the Budapest Business Journal. LEVENTE HÖRÖMPÖLI-TÓTH

Cellum Mobile Next, your mobile wallet solution, was recently launched in Thailand in cooperation with Telenor’s local subsidiaries, having some 28 million subscribers. Was the number of potential clients the only factor that encouraged you to start operations there? A: Southeast Asia is the most promising region in the world for expansion in the field of remote payments. Countries there not only have large populations, dynamic economies, and a huge number of mobile phones, but also poor access to financial services. Thanks to us, topping up your cell takes seconds and your bills can be settled by scanning a QR code. This is a crucial advantage since in these areas almost only pre−paid mobile subscriptions exist.

Vast distances must make transactions extremely difficult without such services too. In Indonesia alone some 250 million people are spread on nearly 1,000 islands. A: Our peer−to−peer solution is also aimed at making life simpler in such an environment. Breadwinning males usually work in remote cities and send money back to their families on a weekly basis by relying on bus drivers to do the job. We offer a secure real−time transfer instead. Owing to mobile technology,

such countries can skip certain stages of development. With low barriers of entry, these services are easily embraced.

What about perspectives for Hungary? Nine out of ten people still walk to the post office to pay their bills. A: Cellum Group has a predominant share on the domestic market for remote payments. We work together with banks and mobile providers, and our payment services are used at major festivals. The peculiarity of this technology is that it takes the same effort to have your infrastructure up and running regardless of market size. And on markets several times bigger than Hungary the number of transactions grows exponentially.

To what extent does Cellum pursue market− specific strategies? A: In Hungary, telco companies and banks need to offer their clients value− added services. Merchant enablement is sought in America that allows stores to reach customers with personalized offers by applying the tools of loyalty, couponing and geofencing. In underdeveloped economies it is rather the lack of access to financial services that can be overcome with the help of digital technology.

János Kóka worked in senior positions at one of Hungary’s first Internet service providers, Elender, and its legal successor, PSINet, Inc. for several years. In the early 2000s, he served as a board member and then President of the Association of Hungarian ICT companies. From 2004 to 2008 he was Minister for Economy and Transport and he led the parliamentary group of the now defunct liberal Alliance of Free Democrats (SZDSZ) until 2010. Since 2011 he has been President and CEO of Cellum Global, a top mobile wallet provider. He holds a medical doctorate degree.

Your partnership with Apple is yet another indication that Cellum is capable of fulfilling the needs of A−league companies. A: We managed to come up with a solution with a very strong security level that is also available for iPhone 6 users. The emphasis is on integration. First we achieved it with MasterCard, as a result of which a Cellum client can pay their bills anywhere in the world where MasterPass is offered as a payment option. Thanks to our invention, Apple Pay now provides the ability to securely integrate bankcards into users’ PassBook system, a general storage application for coupons, e−tickets and loyalty cards. Those bankcards can then be used for purchasing. Do you detect a trend in this regard for major global players? A: They have realized that phones also serve as a transaction center. They are therefore redesigning their devices in a fashion that will allow everybody to use any of their gadgets for mobile transactions of any kind. But integrators like us will still be needed since it is through our solutions that customers can be addressed with targeted services. Global level interoperability and the ability to meet the special needs of specific markets together guarantee a leading role that only a handful of companies should be predestined to assume.

Was your firm affected by the centralization of some segments of the mobile payment industry such as parking and motorway tolls? A: We weren’t concerned by the nationalization that much. The only difference is that now we receive mobile payment data from a single source, whereas previously we were linked with several providers. Even though I am fully committed to liberal economic values, this particular centralization may have positive effects. This way tickets for public transportation or public bike sharing could all be bought via mobile applications in the near future and data can be managed by one center. We are talking about regulated markets here where the state has an important role. But could this government effort go wrong? A: President Ronald Reagan said in 1986: “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help’.” In general, I completely agree with this. So it must be done wisely. The national mobile payment system may turn out to be a success. It may help Hungary to go down the road it started out on in 2006 when the world’s first mobile parking system was introduced in Budapest.

Cellum has a rich development portfolio in which the motion−dynamic QR seems truly groundbreaking.

CV A: In the effort to replace your wallet with your mobile, IDs, certificates, medical records, and event tickets are reproduced by a special QR code at near military grade security. Due to the physical limits of a normal QR, a motion−dynamic version was developed storing a lot more information that can be checked in an offline environment as well. We also expect this technology to spread in third−world economies that lag behind in using secure methods of official documenting.

How fast do you expect such radical changes to take place? A: As a result of a natural technical evolution, keeping all plastic cards in your wallet will have become unnecessary within ten years from now. Cards compress digital data that are then retransformed into digital format when they are checked. This is inconvenient, expensive and not environmentally friendly. Everything will be moved to your phone or some other portable, next generation communication tools.

Hungary faces the dangers of a brain drain, and yet Cellum seems to be immune in delivering true excellence. How can you keep the best brains in the long−term in order to stay ahead of competition? A: Many come to work for us because they truly believe that wallets will move into phones. IT developers are said to have the choice of either joining the ranks of a multinational giant with the promise of an international career or becoming part of a Hungarian story that has the potential to make it really big. It all comes down to believing that we can achieve something extraordinary. We are inspired by that thought and that is what I also work for.

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Budapest Business Journal | October 17 – October 30, 2014

Telecoms still favor Hungary f Centers that provide back−office services for the major corporations also provide plenty of work for Hungarians. GERGELY HERPAI

When the big boom in shared service centers hit Hungary about 10 years ago, the synergy seemed obvious: The corporations establishing SSCs here get low−paid, reasonably well−skilled workers and Hungarians get decent jobs. These days the arrangement still makes a lot of sense, and it is especially common for telecoms to set up here. Vodafone, Telenor, BT and IT−Services Hungary always seem to be hiring people for their SSCs, offering generally good working conditions, a decent salary and many possibilities for young people to advance their career. But the market appears to have shifted a little. While they are still hiring, and are still a good source of ADVERTISEMENT

work for competent school leavers in Hungary, the boom in growth is not what it once was. Another change seems to be a tendency to open centers outside of Budapest, notably in Debrecen, Hungary’s second largest city. If the move away from the capital, fuelled by lower operating costs, continues, it would be bad news for the Budapest’s office market, which was buoyed by the growth in SSCs during the economic crisis while other real estate business had slowed down. In a typical SSC arrangement, a major corporation will concentrate many of its back−office functions – like IT services, human resources or customer service – in one place, and that SSC will serve all the corporations’ offices around the region. For instance, Vodafone’s SSC, which opened in Budapest in 2007, says it provides financial, procurement, partner customer service, IT and HR services to Vodafone companies around Europe. Last year Vodafone Hungary founded another SSC office in Miskolc, investing HUF 450 million and providing 240 jobs. Ákos Kriza, the city’s mayor said the city granted

Vodafone a subsidy of HUF 130 million to develop the center. VENTURING TO THE COUNTRYSIDE Like Vodafone, ever more telecom companies seem ready to open their second or third SSC outside of the capital. György Beck, president of Vodafone Hungary, said the company’s management had already decided in 2009 to create a regional customer service center in the city of Miskolc, which was supposed to create about 300 jobs. He recalled that five cities have competed for the investment. “In the provinces, the workforce is more motivated and better prepared regarding technical knowledge,” Beck explained. British Telecom, which started with a Budapest SSC, established a center in the eastern Hungarian city of Debrecen back in 2008. BT has been hiring, and as of May 2014, some 1,000 Hungarians are working for the company in this country. Along with technical knowledge, the ability to speak foreign languages is also a requirement from the company, since employees are serving more than

3,000 international clients, residing in several countries. “Hungary is very strong in regards to language skills,” said Elaine Budd, Chief Operating Officer of the European Region of BT Global Services. “The Hungarian employees speak an average of three languages, but there are many who speak even more; we have one worker at BT Hungary who is fluent in nine languages.” BT boasts that its facility in Hungary “has grown to become one of the biggest, most complex business support centers in Hungary serving BT affiliates, internal business partners and more than 3,000 customers across Europe. Our service portfolio includes Service Assurance, Service Delivery, Finance Shared Services, Service Design Center of Excellence, Technical Design Center, Contract Delivery Shared Services and various other business support services.” But even with 1,000 employees, BT’s is not the largest SSC run by a telecom in Hungary. IT Services Hungary Ltd., a subsidiary of Germany’s T−Systems International, tops that list with more than 3,500 employees. They have two shared service centers: one in

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Budapest Business Journal | October 17 – October 30, 2014

for shared service centers Budapest and, like BT, another in the city of Debrecen. While they may be going outside of the capital, SSCs are still finding synergy in Hungary. As a publication by PwC notes, this country still has a skilled workforce that is available for very low salaries by European standards, and the IT, telecommunication, logistics and transport infrastructures are excellent. However, other countries in the Central and Eastern European region are beginning to heavily challenge Hungary’s strong position. While several SSCs were established in the middle of the 2000s, the expansion of the sector with new centers has significantly slowed since then. Although the service centers are relatively isolated, the global economic developments and the volatile domestic business environment have affected the competitive position of the country. While Hungary can still offer excellent opportunities, both for setting up new centers and for further growth of existing SSCs, the country has to find a way to better position itself within the region.

Aréna Corner, the site of Vodafone’s SSC in Budapest.

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Budapest Business Journal | October 17 – October 30, 2014

Tesco plans aggressive mobile marketing As questions about their presence in the local market arise, the firm announces it is doubling down in the local telecoms competition. CHRISTIAN KESZTHELYI

Look out T−Mobile, Telenor and Vodafone – here comes Tesco. The major UK retailer, which has had a presence in Hungary and the rest of Central Europe with hypermarkets since the mid 1990s says it is ready to play with the big telecoms. In fact it has been in the mobile phone business for a couple of years. Alongside groceries, sporting goods, home appliances and affordable clothes, Tesco also sells telephones and the prepaid packages that go with them. With a new offer that gives Tesco shoppers free minutes in exchange for their purchases, the company says it is ready to go big in the local market – even as a report by analysts at investment house Morgan Stanley questioned whether Tesco should

Tesco’s in-store promotion, above.

stay in Hungary at all. Tesco launched Tesco Mobile in Hungary in 2012, receiving network access by partnering with Vodafone and using the prefix +36− 31. On January 30, Tesco Mobile started offering 4G service for its Pay Monthly and Sim Only customers at no extra cost, extending the service to Pay As You Go customers on July 24.

Though he did not give exact numbers, Tesco spokesman Péter Mamusits said that Tesco has the largest number of mobile customers after Hungary’s big three, T−Mobile, Telenor and Vodafone. And with their latest offer, Tesco claims they are ready to become a major competitor in the telecoms market. On October 7, Tesco Mobile announced

it would give away free calling minutes for every Tesco Clubcard owner, the loyalty card program for Tesco, distributing the minutes based on the purchases made in Tesco stores. In Hungary, 2 million people own a Tesco Clubcard and their purchases make up half of the annual HUF 700 bln revenue of Tesco Hungary. The store sees this as a huge built−in customer base for their mobile services. In what would seem like a case of poor timing, the rollout for the new Tesco phone program in Hungary came out just before a report from Morgan Stanley analysts recommended that Tesco pull back its foreign investments and focus on maintaining its competitive edge in the retail scene. The report, published on nol.hu on October 14, suggested that, if the situation in foreign markets improves, and Tesco share prices rise, the company could benefit from divesting of its foreign properties and focusing on the UK market. Morgan Stanley also said that there is only a 50% chance of this happening. According to Mamusits, the report is merely speculation and would not impact a plan that is run through Vodafone, implying that the plan would be a valuable asset that could easily be sold to another firm.

Doing business in Hungary Hungary has been attracting foreign workforce and entrepreneurs for the last couple of years as foreign capitals invested in Hungary indisputably boosts the domestic economy. When businessmen arrive to Hungary from within the European Union – as the EU provides freedom of movement for its citizens – they do not need to apply for any permits. However, whereas the U.S. uses the green card to control admission of immigrants, the European Union has introduced the Blue Card. The main objective of the EU Blue Card Scheme is to make Europe a more attractive destination for highly educated and influential people from outside of the European Union. All EU member states – with the exception of the United Kingdom, Denmark and Ireland – participate in the EU Blue Card Scheme. The European Union intends to make the area the most favorable migration destination by offering working and salary conditions on par with international level, free movement within the Schengen area, entitlement

to socio-economic rights, favorable conditions for family reunification, the possibility of permanent residence status and freedom of association, all through the EU Blue Card Scheme. The EU Blue Card network enables immigrants to create a profile that potential employers can consult, and a platform to electronically submit the Blue Card application. Three key conditions are required for being eligible for the EU Blue Card: the applicant must be of nonEU citizenship, must have completed higher-education and must have a work contract or binding job offer. The very first Blue Card in Budapest was acquired by Expat Center Hungary as it was issued to one of the organization’s clients. The EU Blue Card is one of the most difficult relocation licenses to acquire, as the applicants need to comply with strict requirements, however it is worth

acquiring the license as it is accepted throughout the European Union. Expat Center Hungary was recently entered into the Expatriate Management & Mobility Awards (EMMAs) 2014 in the category of “Immigration Provider of the Year”. EMMAs is an illustrious award that is well respected throughout the world and distributed annually. The best professionals and businesses in the field receive awards in many categories. Expat Center Hungary was shortlisted, which means that the organization is among the ten best organizations running for the title. “It is a great honor, and regardless of whether we win the title or not, I believe that it is a great acknowledgement for our organization” said owner Györgyi Cziczárdi. “In my opinion, being on the shortlist shows that we do our business effectively and efficiently, and now it

Györgyi Cziczárdi of Expat Centre.

is internationally acknowledged by a board of professionals. That in itself is a great impetus for us to continue to do our job and keep developing and expanding our services” added the owner.

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Budapest Business Journal | October 17 – October 30, 2014

Telenor marks its 20th year here In an address before the American Chamber, Telenor CEO Jon Fredrik Baksaas says the company’s goal, here and in developing countries around the world, is to make a positive impact. ROBIN MARSHALL

The challenges of coping with rapidly changing technologies, providing data protection issues and maintaining an ethical approach – all while driving growth and helping nations develop through infrastructural investment – were among the areas cover by Telenor Group President and CEO Jon Fredrik Baksaas when he became the latest Global Leader on the AmCham Podium on September 10. The timing was apposite, as Baksaas was in the country to celebrate 20 years since Telenor started operations in Hungary. Called Pannon GSM at the time, they were Hungary’s second mobile phone operator and the first GSM operator. It was also Telenor’s first business venture outside Norway, a step that would lead to today, where it is directly present in 13 markets, and represented in another 17 through its ownership of VimpelCom Ltd. Increasingly, as it moves into previously underfunded countries like Bangladesh, or Myanmar (formerly Burma), the telecom sector can play an important role in laying down infrastructure that allows people contact with distant family members, most obviously, but also access to health advice, to education, and, yes, to entertainment, Baksaas said. But it was the human connections he was keen to emphasize. “The engagement that this industry creates is so beautiful. In short, we impact society, and of course it is our ambition to do that in a positive way.” This was telecommunications presented in its best light. “This industry is full of challenges but also opportunities. If we believe that connectivity drives better options for people, particularly in modern development, then our industry drives the positives,” Baksaas said. Much of that focus is on the less developed world, but there is plenty to be done here, too. The group president made the point that for years Europeans mocked U.S. mobile phone services for being outmoded and unwieldy.

Jon F. Baksaas on the AmCham Podium.

That is no longer the case. “Today the United States has a well developed national network for 4G services, driven by regulation in such a way that players in the market have invested enormously,” he said. He added that the European response had been national, rather than continental, fragmented, and non− holistic. As a result Europe has fallen back, Baksaas said. 4G IS THE NEXT STEP IN DEVELOPMENT “Development comes in stages, and the next is 4G. If a government really wanted it rolled out quickly it would use incentives. In Hungary it has been more concerned with using the sector as a taxation source rather than to drive development.” Telenor has long had a reputation for being an ethical player, and applying the same ethics wherever it operates, as far as the local laws allow. “We hope we manage the ethics side of the business well. We work deliberately on these issues; in particular where you come to a market like Myanmar you need to get this right. Already in just six months we have stumbled upon child labor and security issues.” Countries like Myanmar are on a journey, however, not everything will be perfect from day one, and companies like Telenor can help, the president believes. There was much talk about data security and privacy issues, areas that affect us all, wherever in the world we live, in myriad

FACTS ABOUT TELENOR HUNGARY • Established in 1994 (as Pannon GSM) • 100% owned by Telenor Group of Norway • CEO: Christopher Laska • Number of active subscribers: 3.5 million (2013) • Total net revenue: HUF 157.9 billion (2012) • EBITDA: HUF 50.8 billion (2012) • CAPEX: HUF 11.5 billion HUF (2012) • Number of employees (average statistical headcount): about 1,100 • Number of self−owned points of sale: 9

ways. Baksaas illustrated the point with electric cars, particularly popular in the Nordic countries. Tesla premium electric cars have a powerful processor through which their infotainment systems are connected live to Google Earth. That, for example, can give you heads up information to avoid a traffic ADVERTISEMENT

jam (a fact Google Earth can recognize by spotting that lots of GPS−equipped phones are remaining stationary for an unusual period of time). “But it is a very small step from there to Google knowing that Jon Fredrik Baksaas is sitting in a car at that exact spot. Do I like that that? No.” There are “fine lines” separating the use of personal data to help us, and the use of personal data to snoop on us, he said. Given the oft−reported role played by social media and mobile phones in the spread of the Arab Spring from 2010−12, one questioner wondered how Telenor dealt with requests from the state for intervention. “It is a dynamic issue, there are conflicts out there. The government of Pakistan will shut down mobile services because they can be used to create big groups of people in a very short time. If that happens, we are ordered to shut down in certain areas. We do not like it, but we have to because of the local laws.” Another questioner wondered how hard it was to convince more authoritarian regimes to accept more transparent methods. “At the point of entry it is not a problem. Myanmar was particularly concerned in reaching global standards. The problems usually come after a few years, when you get a change in government, then you can reach points where it is no longer as clear as before. Then we have to be ready to present out point of view, we have to be firm in creating an industrial position.”

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WWW.DIPLOMAT.VOLVOCARS.COM/DIPLOMATEDITION

WWW.BBJ.HU

Budapest Business Journal | October 17 â€“ October 30, 2014

Telecom service providers

TELENOR HUNGARY ZRT.

www.telenor.hu

VODAFONE MAGYARORSZĂ G MOBIL TĂ VKĂ–ZLĂ‰SI ZRT.

Âť

â€“

9 9

â€“

9 9

Âť

â€“

9 9 9

â€“

9 9 9

â€“

QUADRUPLE PLAY (INTERNET, TV, LANDLINE PHONE, MOBILE)

COMPANY PACKAGE(S)

ISDN â€“

TRIPLE PLAY (INTERNET, TV, LANDLINE PHONE)

ANALOG CABLE NETWORK

9 9 9 9 9

â€“

ANALOG WIRE NETWORK

OPTICAL CABLE NETWORK

â€“

PACKAGE TYPES SOLD

OTHER

9 9 9 9 9 9 9 9 9 9

MOBILE NETWORK

SATELLITE TV

VOIP

LEASED LINE

CABLE TV

IPTV

CABLE INTERNET

INFRASTRUCTURE TYPES

OTHER

www.telekom.hu

MOBILE INTERNET

6 million (approx)

XDSL

488,118

MOBILE VOICE TRANSMISSION

MAGYAR TELEKOM NYRT.

LANDLINE TRANSMISSION

NO. OF ACTIVE SUBSCRIBERS

COMPANY WEBSITE

TOTAL NET REVENUE (HUF MLN) IN 2013

RANK

SERVICES

â€“

9 9 9 9

â€“

YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON SEP. 1, 2014

Ranked by total net revenue

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

)UHH Ă RDW

Magyarcom Holding GmbH (59.21)

Christopher Mattheisen JĂĄnos SzabĂł â€“

%XGDSHVW Krisztina kĂśrĂşt 55. â€“

Telenor Hungary SzolgĂĄltatĂł .IW

Telenor Mobil Communications AS 1<( 7HOHQRU Mobil CommunicaWLRQV ,,, $6

Christopher Adam Laska â€“ â€“

7|U|NEiOLQW Pannon Ăşt 1. â€“

â€“ 9RGDIRQH (XURSH % 9

Diego Massidda David Garcia Alexandre Froment-Curtil

%XGDSHVW Lechner Ă–dĂśn fasor 6. (1) 288-4288 ugyfelszolgalat@ vodafone.hu

â€“ Zomerwind Holding % 9

Severina Pompilia Pascu =ROWiQ %RGQiU â€“

%XGDSHVW .LQL]VL XWFD Â˛ â€“

â€“ 0LG (XURSD 3DUWQHUV (51), Matel Holdings Limited (49)

David McGowan 'DYLG %OXQFN GyĂśrgyi Herenyik, Marianne Langsteiner

%XGD|UV PuskĂĄs Tivadar utca Â˛ info@invitel.co.hu

â€“ RCS&RDS S.A.

ZoltĂĄn TeszĂĄri, Ungureanu Florin, Ryszka Sambor â€“ â€“

%XGDSHVW 9iFL ~W ugyfelszolgalat@ hu.digi.tv

â€“ *76 &HQWUDO (XURSHDQ +ROGLQJ % 9

PĂŠter KollĂĄr PĂŠter Apjok â€“

%XGD|UV ,SDUWHOHS XWFD Â˛ info@gts.hu

,QGLYLGXDOV

â€“

JĂĄnos Tarr .ULV]WLQD 1pPHWK PĂŠter KuczkĂł

6]HNV]iUG Kadarka utca 18. info@tarr.hu

,QGLYLGXDOV

â€“

KrisztiĂĄn TakĂĄcs â€“ â€“

.HFVNHPpW 0LQGV]HQWL N|U~W $ info@btel.hu

1991

Âť

1999 1,654

www.vodafone.hu

UPC MAGYARORSZĂ G TELEKOMMUNIKĂ CIĂ“S KFT.

1994

Âť

www.upc.hu

INVITEL TĂ VKĂ–ZLĂ‰SI ZRT.

www.invitel.hu

DIGI TĂ VKĂ–ZLĂ‰SI Ă‰S SZOLGĂ LTATĂ“ KFT.

Âť

â€“

9 9 9 9 9 9 9

â€“

9 9 Âť 9 9 Âť 9 9 9 9

â€“

9 9 9 9

9 Âť Âť Âť Âť

â€“

Microwave

â€“

1995 1,159

Âť

www.digi.hu

GTS HUNGARY TĂ VKĂ–ZLĂ‰SI KFT.

www.gts.hu

TARR KFT.

BUSINESS TELECOM NYRT.

www.tarr.hu

www.btel.hu

HUNGARO DIGITEL KFT.

1,884

Âť

â€“

9 9

â€“

9 9

â€“

9 9

9 9 9

â€“

9 9 9

â€“

www.hdt.hu

NETFONE TĂ VKĂ–ZLĂ‰SI 11 SZOLGĂ LTATĂ“ KFT.

9 9 9 9

â€“

Server placement, cloud services, data network

â€“

Satellite telecommunication

â€“

9 9

9 9 9 9

â€“

Satellite data transmission network

Âť Âť Âť Âť Âť

â€“

Âť

www.dravanet.hu

OPENNETWORKS KFT.

124

Âť

www.opennet.hu

EPHONE MAGYAROSZĂ G 14 KFT. www.ephone.hu

â€“

9 9

â€“

Âť Âť Âť Âť Âť

â€“

Âť

â€“

Âť

6]LJHWV]HQWmiklĂłs-Lakihegy, Komp utca 2. info@hdt.hu

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Zsolt Wilhelm â€“ IstvĂĄn Kun

1\tUHJ\Ki]D 7LV]DYDVYiUL ~W $ info@ netfonetelecom.hu

Âť

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Zsombor Papp 5H]VĹƒ 'XQD\ â€“

3pFV %XGDL 1DJ\ $QWDO utca 1. info@dravanet.hu

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â€“

AndrĂĄs Beliczay Anna Kutasi Judit Stark

%XGDSHVW (QGUĹƒGL 6iQGRU XWFD & info@opennet.hu

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6]HJHG JĂłzsef Attila sugĂĄrĂşt 115. info@ephone.hu

www.netfonetelecom.hu

DRĂ VANET ZRT. 12

Antenna HungĂĄria Zrt AntĂłnio Felizardo

â€“ PT ParticipaĂ§Ăľes â€“ SGPS S.A. (44.62)

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20 3

Budapest Business Journal | October 17 – October 30, 2014

Telecommunications equipment manufacturers Ranked by total net revenue

SAMSUNG ELECTRONICS MAGYAR ZRT.

682,265

–

Data transmission solutions

NO. OF FULL-TIME EMPLOYEES IN 2014

INDUSTRY-SPECIFIC SOLUTION

MESSAGE HANDLING SYSTEM

CTI/CRM SOLUTION

VOIP

VSAT SYSTEM

CALL/CONTACT CENTER

BUSINESS PHONE SYSTEM/PBX

FAX MACHINES

ANSWERING MACHINES

ISDN PHONES

ANALOG PHONES

TRI-BAND MOBILE PHONES

DUAL BAND MOBILE PHONES (900/1800 MHZ)

OTHER TELECOM AND NETWORK EQUIPMENT

1889

YEAR ESTABLISHED

COMPANY WEBSITE

TOTAL NET REVENUE (HUF MLN) IN 2013

RANK

TYPES OF EQUIPMENT

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

ADDRESS PHONE FAX EMAIL

1989

– Samsung Electronics Co. Ltd. (100)

István Facskó – –

1138 Budapest, Dunavirág utca 2. (1) 453-1100 (1) 453-1103 –

2007

– Honhai Group (100)

Péter László Tálos – –

2900 Komárom, Bánki Donát utca 1. (34) 886-069 (34) 886-173 komarom@emea. foxconn.com

1992

– LG Electronics Europe Holding B.V. (99.99), LG Electronics Inc. (0.01)

Lee Young Woong – –

1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 (1) 455-6066 –

1990

– Telefonaktiebolaget LM Ericsson (100)

Gábor Éry – –

1097 Budapest, Könyves Kálmán körút 11/B (1) 437-7100 (1) 437-7467 –

2007

– Nokia Solutions and Networks B.V. (100)

Béla Zagyva Erzsébet Tóth Béla Király

1092 Budapest, Köztelek utca 6. (20) 977-7797 – –

2002

– NEC Europe Ltd. (100)

Nicolai Varvara Trif – –

1142 Budapest, Ungvár utca 64–66. (1) 814-6424 (1) 321-8202 telecom.info@nec.hu

Gábor Rohály, György Gombár – –

1062 Budapest, Váci út 1–3. (1) 238-8200 (1) 359-0583 –

www.samsung.com

PCE PARAGON SOLUTIONS KFT.

LG ELECTRONICS MAGYAR KFT.

www.paragon.foxconn. com

329,427

68,854

www.lg.hu

ERICSSON MAGYARORSZÁG KOMMUNIKÁCIÓS RENDSZEREK KFT.

35,184

–

604

1,673

www.ericsson.com

NOKIA SOLUTIONS AND NETWORKS KFT.

17,320

–

1,449

www.msn.com

NEC EASTERN EUROPE KFT.

8,512

–

www.nec.com

AVAYA HUNGARY KFT.

ALCATEL-LUCENT HUNGARY KFT.

–

119

1990

3,534

–

1990

– Alcatel-Lucent Participation S.A. (100)

Tamás Matusek – –

1116 Budapest, Kondorfa utca 6–8. (1) 209-9500 (1) 209-9599 info@alcatel-lucent.hu

1997

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

Evan Sloves – –

1123 Budapest, Csörsz utca 45. (1) 225-4600 (1) 225-4611 –

2006

Zoltán Havasi (90) Zsolt Mozgó (10) –

Zoltán Havasi – –

1152 Budapest, Telek utca 7–9. (1) 271-1141 (1) 271-1142 info@mohanet.com

1995

– Motorola Solutions Inc.(»), Motorola Solutions International Capital LLC (»)

Imre Bogdán – –

1027 Budapest, Kacsa utca 15–23. (1) 250-8498 (1) 250-8499 info@motorola.hu

1994

– Panasonic Marketing Europe GmbH (100)

Stanislawa Salamon – –

1117 Budapest, Neumann János utca 1. (1) 382-6060 (1) 382-6066 –

3,238

–

Desktop UC system with messaging and phone functions, video conference and telepresence systems

307

–

www.cisco.hu

MOHANET MOBILSYSTEMS 0Ŝ6=$., )(-/(6=7ł KERESKEDELMI ÉS SZOLGÁLTATÓ ZRT.

–

4,447

www.alcatel-lucent.hu

CISCO SYSTEMS MAGYARORSZÁG KFT.

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

www.avaya.com

www.mohanet.com

MOTOROLA SOLUTIONS KFT.

133

www.motorola.com

PANASONIC MARKETING EUROPE GMBH NR SOUTH-EAST EUROPE BRANCH OFFICE www.panasonic.com

–

BBJ

4 Socialite Wine: Olaszrizling moves onwards and upwards The annual Olaszrizling October tasting shows that this humble grape has come of age. ROB SMYTH

The idea of an entire day of serious tasting devoted to the humble Olaszrizling grape would probably have sounded preposterous just a few years ago, but there were plenty of fine wines to pleasure the palate at the Grand Tasting of Olaszrizling October. The buzzing atmosphere and considerable crowd that gathered at the Sofitel for the October 11 showcase proved that Hungary’s most planted white grape is steadily shaking off its image as an inferior variety fit only for mass production. Furthermore, the youthful turnout implied that the young generation is capable of judging every grape and the wines that stem from them on their own merits. The regions around Lake Balaton have done much to raise the profile of the pan− Central European white grape, which has long had a reputation as a journeyman compared to more glamorous grape varieties. The Lake Balaton Olaszrizling masterclass opened with a couple of lighter takes that are a good introduction to the grape variety. Figula Olaszrizling 2013 from Balatonfüred was fruity with a hint of the grape’s trademark almond note. Jásdi Csopaki Olaszrizling 2013 was a little neutral and vegetal on the palate but crispy, citrusy and thirst quenching. Incidentally, Olaszrizling has nothing to do with Riesling, the über noble German grape. Nevertheless, Olaszrizling sometimes carries the Rizling moniker. To further complicate matters Olaszrizling is often blended to good effect with Riesling, especially around Balaton. However, is this workhorse of Hungary’s former regime actually capable of producing outstanding wines? While Austrian Blaufränkisch may be ahead of its Hungarian equivalent Kékrankos, the Austrians could look at the success of Olaszrizling in Hungary as an example in making more exciting wines from its Welschriesling, opines Franz Weninger, who makes wine on both sides of the border. Olaszrizling is known as Graševina in Croatia, Ryzlink vlašský in the Czech and Slovak Republics, Laški rizling in Slovenia, Riesling Italico in northern Italy and, of course, Welschriesling in Austria. Gyula Pálffy, a maker of some good value organic wines from Köveskál in the Balaton felvidék on Balaton’s northern shore, nevertheless plays down the pedigree of Olaszrizling. He openly admits that it all too often needs acidity to be added when seeking the kind of ripeness needed to make a big wine. This is because the life giving acidity can drop off rapidly as the grape is left out on the vine to reach full phenolic

A casual way to taste wine Organized wine tastings, where the expert chooses the vintages you will sample, can be interesting and informative, but sometimes you just want to explore on your own, without a formal structure for drinking. That’s why the system at the Cultivini, which offers a concept that’s new to Budapest, is so refreshing. You buy a HUF 3,000 (~10 €) card and then use it in automated dispensers to purchase tastings of wine, by the quarter, half or full deciliter. The shop has about 60 wines on display at any time, all stored in special dispensers that keep the wine tasting as if its been freshly opened, and there is a relaxing space for sitting and chatting while you sip. A couple of wine experts are on hand, to make suggestions if you like, but you can also go it alone, picking from the bottles on display. The vintages, covering a broad price range, are all Hungarian and all very good. If you ﬁnd one you like, you can buy a bottle of it from the shop. Groups can also reserve space, but the real charm here is the ability to drop in any day of the week for an impromptu tasting. (1052 Budapest, Párizsi utca 4, cultivini.com and cultivini.hu)

ripeness, picking up rich layers of flavor in the process. Adding acid can leave the wine lacking that freshness and natural zippiness. The “Madonna of Hungarian wine”, Gabriella Mészáros, who led the Balaton tasting, opined that Olaszrizling can capture sufficient acidity when planted on the right site. It should be remembered that Hungarian white wines generally lacked freshness across the board in hot and dry 2012. Pálffy’s own wine, Káli Király Olaszrizling Válogatás, did indeed lack a bit of acidity but it was rich, yeasty and oily from being kept on the lees, and was fermented from natural yeast. Olaszrizling Rezeda 2012 from Káli Kövek, one of Palffy’s neighbors in the Káli Basin, was terrific at last year’s Olaszrizling October, but it has aged quite rapidly, mainly due to the modest acidity achieved. The 2013 version was much fresher with zestier acidity, as well as a complex combination of fresh fruit and floral notes, creaminess, richness and savory minerality. From neighboring Badacsony, Ambrus Bakó’s A Rózától 2012 from the basalt soil of the Donát vineyard was really full− bodied and concentrated. It contrasted with his light and airy basic Olasz from the 2013 vintage which oozed varietally pure green apple, pear, and primary grape notes, along with some yeastiness, nuttiness

and salty minerality. While revealing a bit of complexity, it was also juicy and a joy to drink. Bakó has recently parted company with Swedish−owned Villa Sandahl, which for its part makes some stunning Riesling, and will now concentrate on his own winery. He added that Sandahl will still be able to make excellent wines in his absence. Going solo ain’t no piece of cake, and Bakó has found that his output will be reduced by 70% due to the difficult 2014 vintage. He doesn’t actually own any vineyards but buys−in grapes, closely cooperating with the growers on the way the grapes are reared. While quantity may be low, all is not necessarily lost in a tricky vintage as recent history shows. Badacsony’s Villa Tolnay showed that you can still produce good quality from the supposedly annus horribilis of 2010, with a medium− bodied wine with a lovely structure and a wonderful waxy texture that is starting to pick up nice bottle age. Another good wine from 2010 came from fellow Badacsony producer 2HA. Owner Csaba Törö believes the concentration Olaszrizling can pick up in the best parts of Szent György−hegy, can handle, and indeed be taken further, by the influence of newish oak, though used in a lower proportion in 2010. From the Balaton environ and basalt soils of Somló came another chance to taste Imre

Györgykovács 2011. Somló is one of the few places where we can seriously compare Olaszrizling to the supposedly more noble Furmint grape; everyone is rushing to plant the latter around the country, while the former is already just about anywhere where there are white grapes, with the notable exception of Tokaj. Based on the evidence of this wine, Olaszrizling is on a level playing field with Furmint, at least on Somló Hill. Györgykovács picks early enough to capture both the grape’s varietal character and Somló’s salty minerality, before the wine becomes exaggerated and imbalanced. His wines age really well. The 2011 now has notes of white flowers, pear, marmalade and ginger, along with a distinctive savory character, and is very round and smooth. István Jásdi later showed a much richer single−vineyard bottling from the Lőczedomb vineyard, which he described as being between the reductive and oxidative schools of winemaking, as part of the Csopaki Kódex masterclass. The Csopaki Kódex is dedicated to enhancing the reputation and quality of Olaszrizling from Csopak’s red sandstone over Triasic− period limestone soils, and Szent Donát’s wines in particular dazzled with their intensity and spiciness matched with vibrancy.

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4 Socialite

Budapest Business Journal | October 17 – October 30, 2014

Dance company seeks to move ExperiDance’s artistic director and lead choreographer Sándor Román may be one of the most prolific choreographers in Budapest, with regular shows at the RaM Colosseum, but he remains focused on expanding his dance empire to Europe and the rest of the world. ANIKÓ FENYVESI

Sándor Román’s signature mix of traditional folk and modern dance styles, extravagant costumes and theatrical dance has been ﬁlling theaters for more than a decade. After forming ExperiDance in 2000, he produced a number of dazzling shows, 14 of which can be seen at the RaM Colosseum in Budapest on a rotating schedule. From his humble beginnings as a village folk dancer, Román went on to train at the State Ballet Institute. He travelled the world, ﬁrst to Cuba, then Europe, and then the United States and Canada in search of inspiration, but returned to Budapest to make a name for himself. We caught up with the man behind the scenes to discover he’s as passionate and vibrant as his visually rich performances.

How did your relationship with dance begin? A: I was born in the small village of Cigánd. Fifty years ago folk dance life was very much alive. The dancehall was the center of activity every weekend, every party, name day celebration, wedding or pig slaughter. There were lots of very important celebrations held by local farmers where dinners were followed by dancing as part of the night’s festivities. When I was young, I danced with the Honvéd Ensemble of the Hungarian Defense Forces. I learned my craft from the kind of masters who no longer exist today, a generation who taught us with professionalism, without compromise, and for the love of their craft.

What inspired the hybrid dance style you use in your shows? A: I love Western culture. In fact, I’m crazy about American culture. But I also really

love the old European lifestyle and that’s why I like to mix traditional folk dances with the new stuff from the West. My art is like a car. I use the high speed, for example the Western styles, and I step on the brake when I need time. This is where Hungarian folk dances come into play. They are two very different worlds but if you mix them, you get something quite new.

Your pieces are very theatrical, even historical. How are you able to tell stories through dance without dialogue? A: This is the ExperiDance secret. It is the essence of what separates us from other dance troupes, because we’re delivering more than just a dance on stage; the performance has content, every bit of choreography says something... it’s like a theatrical production. You have a scene and every scene has to have a meaning, which then impacts the meaning of the following scene. There’s a story arc and at the end, a period. My content has to be strong enough to work in all situations. I strive to ﬁnd something that sets me apart from other dance and theater companies. What’s amazing is that I can tell a story without words, through the bodies of my dancers, via a coded message. The whole thing is quite magical.

What do you love most about what you do? A: What happens in the rehearsal space when the creation engulfs you, that’s what makes it all worthwhile. When you’re in the middle of it and you lose track of time... When you’re with the dancers and a thought becomes physically real‥ It’s worth doing all those things you don’t like for these few precious moments.

Sándor Román in the studio.

Where do you find the inspiration for your stories? A: Actually, all these stories are creative cooperations. Either I contribute an idea or someone else comes up with an idea. In the case of Leonardo, for example, the Italians came to us and said how great it would be if we could bring Leonardo to the expo in Milan. The same thing happened with our Venice production. We’d also like to bring that to Italy and the rest of Europe.

What can audiences expect from an ExperiDance show? A: This branch of art really appeals to audiences on many levels. On the ﬁrst

level there’s the spectacle and its effect and the theatrical elements that a paying audience wants to see. The second level holds the technical and choreographic elements that need to be included. The audience doesn’t always see these but as artists, we derive satisfaction from delivering a solid performance. The third level that not everyone notices, and they don’t really need to, is my own secret code that expresses my motivation for creating a piece – every piece has a message. Those who go below the surface and see the message behind the dancers movements will receive the whole package. Those who aren’t interested in my message will get what they came for, to be entertained.

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e beyond local stage

4 Socialite

ExperiDance Releases 2000 One Thousand and One Years – A history of Hungary and more in 21 scenes 2003 Revenge – Choreographic interpretation of Mihály Fazekas’ epic poem 2005 Steel – The legend of the metal Gypsy Lords – Dance comedy based on a 16th−century gypsy legend 2007 Essence: Celebration of Rhythm Highlights of choreographer−director Sándor Román’s career 2009 Happiness: 69:09 – Two different times in history, two protagonists 2011 Source – Finding each other, ﬁnding love In the Name of the King – Based on Shakespeare’s Measure for Measure 2012 Liliomﬁ – Based on the comedy by Ede Szigligeti Toldi – The story of legendary Hungarian hero Miklós Toldi The Count of Monte Cristo – Based on the novel by Dumas Bartók II – The power of love between a man and a woman

Once Upon a Time of the Emperor, above. At bottom right, A Passionate Night in Venice.

What’s in store for ExperiDance in the future? A: It’s an accomplishment that this came to be but my goal is to bring ExperiDance to international audiences‥. We are planning to go to Germany to present Once Upon a Time of the Emperor in Bremen. This piece speaks about a kind of love that can never be realized but it suggests that even if it can’t happen for Sissy and Count Gyula Andrássy, it can happen with others, for whom the situation might seem hopeless. Right now we’re working on Leonardo, which, we’d like to

take to the Milan Expo in 2015. It shows the logic of a renaissance man. We’re not looking at Leonardo through the eyes of contemporary man; rather we are looking at Leonardo through his own eyes. Our next big challenge is to ﬁnd a market in those places where they’ll let us in. We’d like to present ExperiDance co−productions in Europe, North America, even China or Russia. We have an established style that audiences enjoy. And I’m sure if they get to know us elsewhere, we’ll ﬁnd places around the world where we will be invited back again and again.

2013 Frank Sinatra: The Voice – The man, the musician, the survivor Radnóti: Dreams in Two Acts – The story of a poet Once Upon a Time of the Emperor A story of unrequited love 2014 A Passionate Night in Venice The movement and passion of a city 2015 Leonardo da Vinci: The Water of Life An extraordinary man perceived through his own eyes

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141 SQM – 4 ROOMS + HALL, ATTILA STREET

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67 SQM – 3 ROOMS, GANZ STREET

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19.800.000 HUF

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99 SQM – 2 ROOMS, HAJÓS STREET

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53 SQM – 2 ROOMS, MAROS STREET

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26.500.000 HUF

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39.900.000 HUF

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49.900.000 HUF

11.990.000 HUF

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29.990.000 HUF

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2ND DISTRICT

4TH DISTRICT

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346 SQM – 7 ROOMS, HŰVÖSVÖLGYI STREET

73 SQM – 3 ROOMS, PICI STREET

99 SQM – 3 ROOMS, THÖKÖLY STREET

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147.000.000 HUF

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