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BUSINESS JOURNAL BUDAPEST

VOL. 26. NUMBER 7

APRIL 6 – APRIL 20, 2018

SPECIAL REPORT

Telecoms & ITC SPECIAL REPORT

IoT Lags Behind, but Could Snowball in Coming Years

While signs of IoT progress have arisen in the country lately, Hungary has been lagging behind its peers in the field and the room for improvement is huge, market experts tell the Budapest Business Journal.  17

SPECIAL REPORT

State Attempts to Join Hungary’s Telco Sector Government comments and the sale of Telenor again prompt speculation the state may attempt to enter the country’s telecoms sector. 15

SOCIALITE

Telenor: ‘Business as Usual’

Finding Reminders of Elvis in Budapest David Holzer finds himself transported by posters for a musical back in time to when Elvis Presley sang for Hungary after the 1956 Uprising, raising millions, and ensuring a small park would be named for him.  21

NEWS

GDP Growth: Erase and Revise

LR EC I A

EPOR

Telenor Hungary CEO Alexandra Reich asks customers to “give us the chance to show you that you can keep on trusting us and stay with us”, but details of future plans remain BUSINESS few.13

Tungsram Returns to Independence

Tungsram officially announced its return to the market as a standalone, innovative global brand, headquartered in Hungary on April 4.  10

2 | 1 News THE EDITOR SAYS

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

Holzer, Christian Keszthelyi, Gary J. Morrell, Rob Smyth, Bálint Szőnyi, Ágnes Vinkovits. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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BUSINESS TITAN LEAVES HIS MARK ON BUDAPEST Hungary lost one of its business titans at the end of March, with the death of Sándor Demján, aged 74. As our obituary on page six makes clear, his was a remarkable rags to riches story. But if his early years were something of a series of trials, he seemed to develop a Midas touch for business. With his father killed in World War II, and his mother struggling to support the family, Demján apparently spent time in an orphanage. But he managed to get to the Budapest Trade and Tourism College on a scholarship, and soon after he graduated, at the tender age of 24, he took on running a failing cooperative. He did so well in turning that around, that he was picked to open and run what became a chain of department stores called Skála in 1973. It might be strange to think so today, but the concept of a department store was revolutionary in Hungary back then. From there he would go on to be a pioneer in banking, but most of all he would build. Whatever you might think of him as a man or a business person, his companies changed the cityscape of Budapest, with the Bank Center, the WestEnd Shopping Mall (the biggest in the region when it opened), and the Palace of Arts all opened by him. I have seen suggestions on some internet sites that he rose suspiciously quickly, bearing in mind he started working in communist, not capitalist times. Perhaps he did. Perhaps he just happened to have an innate gift for business. Although he has spoken on government stages,

he never seemed to be a particularly voluble political figure. I know people who had business dealings with him and who talk of an extremely hardnosed negotiator. Yet in recent years he has spoken of leaving much of his fortune to charities, and he founded a prize for entrepreneurs and the arts. His was, without doubt, a life more interesting than many. As far as I know, Sándor Demján never had interests in the telecoms field. This government certainly has. It taxed it in 2010 – and still does – to help fill budget holes in the crisis. It tried to build up its own company, although that fell foul of the courts and was abandoned. But government spokespeople still talk of the need for a state player, and I was told at an off the record briefing a while back that the telecom sector was likely to be an area the government would continue to look at after the election. For now, Telenor’s sale to the Czech company PPF Group, should it go through (it will be subject to regulatory approval) would seem to close down the option of the government acquiring that business. Except that PPF’s owner, Petr Kellner, is said to be close to the Mayor of Felcsút Lőrinc Mészáros, a key ally of the prime minister, and a billionaire investor with a Midas touch of his own, seemingly. Perhaps it is worth watching this space for a while yet…. Robin Marshall Editor-in-chief

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Originally drawn from pagan roots, the Easter sprinkling in Hungary is meant to bring fertility and cleansing to women over the holiday, as portrayed in the color picture taken in Kiskunmajsa on April 2. Although still maintained, the water tradition appears to be losing ground nowadays, replaced in many cases by the spraying of perfume on the hair. In the black and white picture taken in 1937, children are gathering ready for their Easter sprinkling session.

Photo: MTI/Sándor Ujvári.

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News

///macroscope

GDP Growth: Erase and Revise Upward

Reacting to the good start to the year, analysts and economists have raised their growth projections for 2018, with some now even saying that the Hungarian economy will expand way above 4% this year. If a 4.5% growth rate projected by a couple of analysts becomes a reality, Hungary might top the growth list in the region for the very first time. ZSÓFIA CZIFRA

Economic research company Századvég has raised its GDP forecast to 4.1% based on better-than-expected industrial output and retail sales data released at the beginning of the year. The revised forecast, however, is still under the government’s official projection of 4.3% GDP growth in 2018. Századvég now projects a

7.2%

investment

growth for the full year, factoring in EU-funded capital expenditure and new home construction. The research organization expects exports to climb to 5.7% and imports to rise by 6% this year. As for average annual inflation, Századvég forecasts 2.6%. Another research institute, Pénzügykutató, has also revised its forecast upwards, although it remains below 4%. Researcher Éva Várhegyi said that the projected 3.9% growth for 2018 is supported by a favorable external environment, accelerated absorption of EU development funding, and also by the performance of the agricultural sector, loose budgetary and income policy, and monetary policy stimulating the economy. Pénzügykutató sees that inflation could be around 2.3% this year, with unemployment possibly falling as low as 3.5%, while investments could grow by 9%.

Revised growth forecasts for 2018 Takarékbank

4.5

Ministry of National Economy

4.3 4.2

MNB Századvég

4.1

Raiﬀeisen Bank

4.0

Pénzügykutató

3.9 3.8

GKI BBJ Infographic

Least Optimistic

Usually the least optimistic, GKI research institute once again projected the lowest growth rate for 2018. Even so, it now predicts a

3.8% expansion.

Although Hungary’s GDP expanded last year by 4%, faster than expected and considerably faster than the EU average, its growth rate remained comparatively moderate in the CEE region, GKI noted. The institute therefore is not changing its GDP growth forecast of 3.8% and investment growth forecast of 9% for 2018.

The most optimistic revision among domestic economists, however, comes from Takarékbank. According to its analyst Gergely Suppan, the growth rate of the Hungarian economy may continue to accelerate this year, and he is now expecting a 4.5% growth in GDP in 2018, up from the 4.2% predicted three months ago. Like last year, it predicts industry will expand by 5% in 2018. Compared to its previous projections, GKI has cut its inflation forecast from 3% to 2.7%, and its unemployment forecast from 4% to 3.7%. GKI also mentioned that the three main problems of Hungarian economic policy are the elimination of competition, the erosion

GDP growth for 2018 (%)

3.4

3.6

3.8

4.0

4.2

4.4

of human capital, and international isolation. In its note, it says that after the elections on April 8, it will be necessary to reconsider Hungary’s European policy, including the introduction of the euro, which will inevitably affect the Hungarian model as well, GKI notes, adding that its forecast does not deal with the outcome of the elections. Raiffeisen Bank is being more optimistic when it comes to the Hungarian economy. At a recent press event, the bank noted that it expected the favorable economic conditions to remain for 2018, which will result, according to the bank’s estimate, in 4% GDP growth on a year-on-year basis. The bank’s analysts still forecast a belowthe-target inflation rate and stable forint exchange rate for the year. The National Bank of Hungary (MNB) has also raised its growth projections. In its latest Inflation Report, the central bank is predicting 4.2% GDP growth this year, up by 0.3 of a percentage point compared to its earlier forecast. The 3.3% growth expected for 2019 is also 0.1 of a percentage point higher than the December projection. For 2020, the MNB is expecting GDP growth to slow to 2.7%, in line with its earlier prediction. The Ministry for National Economy is a bit more optimistic than the central bank, putting GDP growth at 4.3% this year, 3.8% next year, and 3.7% in 2020.

Base Rate Kept on Hold The MNB’s Monetary Council decided to keep the central bank’s key rate on hold at 0.9% at its rate-setting meeting at the end of March. The council has left the base rate on hold at the record low since signaling an end to an easing cycle at a policy meeting in the spring of 2016. In a statement released after the meeting, the council said that “maintaining the base rate and the loose monetary conditions at both the short and long ends for an extended period is necessary to achieve the inflation target in a sustainable manner,” which is basically the same message it has been relaying for a number of months. “The council will closely monitor developments in monetary conditions and will ensure the persistence of loose monetary conditions over a prolonged period by using the extended set of monetary policy instruments,” the statement added.

expects that household consumption will expand by 5% this year. Also way above the market consensus, UniCredit Bank has released an upbeat prognosis for the Hungarian economy. Analysts at the bank now say that the Hungarian economy could grow by 4.5% this year. In its regional review, it expects a 4% plus growth for Bulgaria, Poland, Romania and Turkey as well, so it expects the CEE region to perform really well in 2018. However, the prognosis for the Hungarian economy is outstanding in the region, and if the bank is right, Hungary could produce, for the very first time, the fastest growth rate in the CEE region. Online financial journal Portfolio noted that Hungary’s GDP growth was the second highest in this region in 1998 and 2014, but it has never been the highest. Quite the contrary, Hungary came last in the growth ranking in 2016, an unwanted position it also picked up in 2006 and 2007. But while UniCredit expects a high growth rate for 2018, it also notes that the growth rate could fall sharply to 3.4% in 2019.

Most Optimistic

4.5% growth

in GDP in 2018, up from the 4.2% predicted three months ago. Suppan says that with domestic wages rising significantly, he

Numbers to Watch in the Coming Weeks The Central Statistics Office (KSH) will publish how consumer prices changed in March on April 10, followed by the second estimate of industrial output on April 12. The KSH will report on construction sector data and earnings on April 13 and 20, respectively.

4 | 1 News

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Budapest Business Journal | April 6 – April 20, 2018

Hungarian CEOs Retain Optimism Despite Concerns Germany remains by far the most important target for growth for Hungarian CEOs, while Romania has climbed to second place in one year, according to the latest PwC Hungarian CEO survey. Company bosses are optimistic about the future, although they acknowledge major challenges such as the labor shortage, changing workforce demographics, and an increasing tax burden on labor. Here are some of the key findings. The full survey report in Hungarian and English and further details are available on PwC’s Hungarian CEO Survey. For the seventh year, PwC Hungary has surveyed the opinions of Hungarian CEOs. The local study of 165 company leaders was done in cooperation with the Confederation of Hungarian Employers and Industrialists, and ran in parallel to PwC’s interviews with nearly 1,300 CEOs worldwide.

Eighty-nine percent of Hungarian CEOs are confident about their own revenue growth (the same as last year); their outlook for the Hungarian economy has not changed significantly, but the percentage confident about global growth has risen to 47% (up from 39%)

CHART SHOWS PERCENTAGE OF RESPONDENTS SAYING THAT A GIVEN TREND WILL BE DISRUPTIVE

Changes in core technologies of production or service provision (e.g. artiﬁcial intelligence, robotics, blockchain)

70% 27%

HUNGARIAN CEOS

Changes in customer behaviors 84

Changes in distribution channels

55 47

46 39

Increase in number of signiﬁcant direct and indirect competitors

Changes in industry regulation

2013

2014

52% 35%

64 55

2012

51%

72 60

59%

2015

2016

Conﬁdent about own revenue growth Global economic growth Hungarian economic growth

Globalization Gaps Both Opening and Closing According to Hungarian CEOs, the key benefits of globalization are easing the movement of capital, people, goods and information, and enabling universal connectivity. However, the majority of respondents agree that globalization has not helped close the gap between the rich and the poor, nor has it helped improve the integrity and effectiveness of global tax systems.

2017

2018

51% 29% 49% 59%

2018

2017

Disruption Threats CEOs’ opinion on responding to disruptions has changed markedly since the last survey. While in 2014 changes in industry regulation and customer behavior were the least predictable factors, the majority of respondents now think that changes

in core production technologies are the most disruptive. More than half of the CEOs in this year’s survey are concerned about an increase in the number of competitors, changes in distribution channels, and changing customer behavior.

“The positive and negative effects of globalization can be felt in all aspects of life, especially in the economy. Globalization has helped free up flows of money, people, goods and information, and has contributed to the improvement of infrastructure, data protection, and services. However, the negative effects on the economy are also apparent: for example, it is increasingly difficult to strike a balance between open competition in global markets and more restrictive national legislation.” Dr. Péter Futó, President of the Confederation of Hungarian Employers and Industrialists.

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What are the Challenges?

Photos by Szilárd Nagyillés.

While CEOs across the world are increasingly anxious about broader societal threats, according to the results of PwC’s 21st Annual Global CEO

Where the Growth Lies Survey, Hungarian CEOs are markedly more concerned about domestic issues, especially in connection with their employees.

“The percentage of CEOs saying they would like to increase their staff numbers has been over 50% for years now. The biggest challenge, however, is what HR strategy they should put into practice to reach that goal. They recognize that in order to attract talent, companies need to make the right value proposition. As a result, many employers help their employees acquire the flexibility to meet future workplace demands. Ninety percent of respondents believe they need to strengthen soft skills (e.g. teamwork, communication) in their organization alongside digital skills.” Anita Mekler, PwC Hungary tax partner HOW CONCERNED ARE YOU ABOUT THE FOLLOWING FACTORS? (CHART SHOWS PERCENTAGE OF RESPONDENTS CONCERNING ABOUT A GIVEN ACTIVITY)

Availability of key skills

Rising employee beneﬁts

73%

Over-regulation Populism

WITH REGARD TO YOUR COMPANY’S LOCAL GROWTH PROSPECTS, WHICH COUNTRIES, EXCLUDING THE COUNTRY IN WHICH YOU ARE BASED, DO YOU THINK WILL BE THE MOST IMPORTANT IN THE NEXT YEAR?

48 % 1. Germany

27 % 2. Romania

24%

20%

3. USA

4. Slovakia

6. United Kingdom

11 %

68%

-8

9. Russia

73%

16% 5. China

13%

14%

92% 76%

places from last year). The largest fall in rank is that of Russia. Despite the uncertainty surrounding Brexit, the UK’s importance has not lessened.

95%

Changing workforce demographics

Nearly 50% of Hungarian CEOs picked Germany as their most important foreign market, followed by Romania and the United States (swapping

12 %

7. Czech Republic

-3

8. Austria

-1

10. Poland

57%

Change from 2017 Protectionism Geopolitical uncertainty

Cyber threats New market entrants Future of the Eurozone Technological change

52% 58% 50% 58% 50% 49% 49% 46% 49% 61% 48% 40%

2018

2017

“For Hungarian companies, Germany has traditionally been the most important target for market growth. Romania now ranks as the second most important country… In addition to geographical proximity, the key drivers here are easier networking among the Hungarian minority, and a market twice the size of the Hungarian market.” László Urbán, economist

6 | 1 News

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Hungaryʼs second richest man, entrepreneur, business magnate and chairman of real estate company TriGranit dies at age 74. CHRISTIAN KESZTHELYI

Sándor Demján, the prominent Hungarian entrepreneur and business magnate who was ranked as the second richest person in the country according to Forbes with a net worth of HUF 192 billion, died at the age of 74 on March 26. He had been Hungary’s richest person from 2007 to 2011. His was a true rags to riches story: Demján was born on May 14, 1943 in Börvely in what was then the Kingdom of Hungary (present-day Berveni, Satu Mare County, Romania) to a father of Székely descent and a Danube Swabian mother originally from Etyek. A difficult childhood as his mother struggled to support her children (his father died on

the Eastern front) apparently saw him placed in an orphanage for a while. In 1965, he graduated from the Budapest Trade and Tourism College, on a scholarship. From 1968, aged 24, he was appointed president of the Gorsium ÁFÉSZ cooperative, which he held until 1973, when he took on the role of co-CEO until 1986. But it was in launching the Skála department store chain in 1973, well before the change to a free economy, that he first came to international notice.

News///in brief

MNB Sets up Fintech Innovation Hub

The Hungarian National Bank (MNB) has presented its innovation hub to incentivize financial technology businesses, according to a press release posted on its website. The hub, dubbed the Financial Innovation Platform, was rolled out by deputy governor for oversight László Windisch and managing director Anikó Szombati at a meeting with industry representatives. Earlier research proved that there is significant demand for, as well as supply of, innovative financial solutions. MNB says the innovation hub, accessible from its website, will support the realization of innovative ideas and also work as a platform to provide information on regulatory issues. Fintech businesses can use the hub to get guidance and assistance from the central bank and financial market watchdog. Later, the MNB will set up a regulatory sandbox for fintech businesses.

HUF 12.3 bln Gene Program Lauched Minister of Agriculture Sándor Fazekas announced the launch of a HUF 12.3 billion program on March 28 that will preserve the genes of plants and animals native to Hungary, vg.hu reported. The program allocates an annual HUF 50 million for breeding dogs native to

Man of the Year

According to the website of asset management firm Thomas White International, “Skála’s triumph, growing into a chain of 67 stores spread across the country, was also a personal achievement for Demján, earning him the TIME Man of the Year prize in 1980 for being the most successful businessman among the Iron Curtain nations.” Demján founded Gránit Bank in 1985 and the Hungarian Credit Bank in 1986, holding the position of president of the

latter institution until 1990. According to Bloomberg, he helped created the Central European Investment Corporation (CEIC) in 1990 and established the Central European Development Corporation (CEDC). In 1996, he became the chairman of TriGranit. Buildings constructed under his leadership include the Bank Center, the National Theater and the Palace of Arts. In 1999 he inaugurated the WestEnd City Center mall, which was at the time the largest mall in the region. In 2000 he took part in inaugurating the Polus City Center in Bratislava, and in 2005 with the Silesia City Center in Katowice. He was also the founder of the Prima Primissima Award in 2003, which is dedicated to strengthening arts and culture, the development of domestic science and the protection of Hungarian intellectual achievements. Its annual awards have, by tradition, been given out on national Entrepreneurs’ Day. He offered a significant part of his wealth and assets for charity in 2012. In keeping with his early roots as a businessman and a banker, he held high office in both the National Federation of Entrepreneurs and Employers (VOSZ) as well as the National Association of Savings Cooperatives (OTSZ). In 2014 he announced he would gradually retire from business life due to his age, and he said that the management of his subordinate companies would be passed on. In the same year, an influence barometer by online daily napi.hu calculated that he was the sixth most influential person of Hungary.

Onyx Receives Second Michelin Star The Michelin Main Cities of Europe Guide 2018, which was presented at Várkert Bazár in Budapest on March 26, has made Onyx the first restaurant in Hungary to receive two

Michelin stars. Costes Downtown, Costes and Borkonyha all retained their one Michelin star. Photo shows a delighted Ádám Mészáros, the chef of Onyx restaurant at the event.

Photo: MTI/Tamás Kovács.

Photo MTI/Tibor Illyés.

Obituary: Entrepreneur Sándor Demján

Hungary. The number of pedigree dogs of the nine Hungarian breeds has fallen to critical levels in some cases: last year just 52 Transylvanian Hounds and 200 Kuvasz dogs were registered. The fiveyear program will involve the participation of the Center for Plant Diversity (NÖDIK) and the Research Center for Animal Gene Conservation (HÁGK), as well as a number of other scientific and academic institutions and national parks, Fazekas said. NÖDIK boasts the 13th-biggest plant gene bank in the world.

Staff Shortages Hitting SSC Expansion Shared service centers in Hungary are now having difficulty finding employees with sufficient knowledge of languages and IT and have started recruiting workforce from abroad, napi.hu has reported. The proportion of foreigners working in SSCs grew to 13% last year from 9% in 2016. The number of days to fill a position also increased from 45 days in 2013 to 49 days last year. Currently there are almost 6,000 vacancies in SSCs in Hungary, 15% of the total number of positions. The roles which are hardest to fill are those where a low level of qualifications but good language skills are required, particularly if a second language is needed beside English.

CEE to Develop Selfdriving Vehicle Jointly Hungary, Austria and Slovenia have signed a memorandum of understanding on cooperation in the development of selfdriving vehicles in Budapest, Hungarian news agency MTI reported. The cooperation gives the three countries, all of which have big automotive industries, a competitive advantage, said Minister for National Economy Mihály Varga at the signing. The partners aim to develop intelligent mobility devices and self-driving vehicles as well as

the necessary communications networks and infrastructure in joint projects, he added. The construction of the self-driving vehicle test track in Zalaegerszeg (227 km southwest of Budapest) played a key role in the signing of the MoU, Varga said. Austrian Minister for Transport, Innovation and Technology Norbert Hofer said the MoU is a big step “toward a positive future” for the European Union. Slovenian Minister of Infrastructure Peter Gaspersic said preparations are being made at government level for changes that will come with the spread of electric and selfdriving vehicles.

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Business

International Interest in Hungary Gaining Ground

The 95 delegates and exhibitors from Hungary reported a notable improvement in sentiment at MIPIM 2018. Around 26,000 delegates from over 100 countries attended the 29th staging of MIPIM, the largest commercial property investment forum in Europe at the Palais des Festivals in Cannes. GARY J. MORRELL

This number included 5,400 investors according to REED Midem, organizers of the event. The four-day annual expo on the Côte d’Azur is a barometer of how a particular market and region is viewed by international investors and developers. “With regard to inward investment, Hungary has an additional advantage in that it is cheaper than other CEE countries and the risks associated with investing are not really higher than other CEE markets, therefore the country offers a premium and the combination of these

factors makes Hungary very attractive,” said Lóránt Kibédi Varga, managing director of CBRE Hungary. “The yield gap between Hungary and Czech Republic remains at around 100 basis points for every asset class. Whether this is fair or not is not very interesting; what is interesting is that if you believe that the risks are the same as with Czech Republic and Poland, as many investors do, then you still get a 1% extra return on investment,” Varga added. The world-wide trend is that investors are seeking to release more funds. CBRE recorded that 33% of surveyed investors intend to deploy more capital in 2018 than in the previous year, with 70% of investors asked actively pursuing “alternative assets”. Mike Edwards, head of capital markets at Cushman & Wakefield, estimates a similar investment volume for Hungary as last year at EUR 1.7 billion-1.8 bln. Whether the

EURmark 2 bln

will be broken depends on whether some big-ticket items will be traded.

Looking at Hungary

“The big funds that have not been in Hungary for a while are certainly now looking at Hungary. The key challenge that we have got is actually providing the products on their wish lists, such as buildings between EUR 20 million-50 mln in the CBD with excellent tenant line-ups and realistically they are not going to get this,” he said at a promotion reception at the Budapest-Hungary stand. “We have had a very limited supply over the last seven-to-eight years and there is not the good product that is readily available. The best opportunities are in buying product that is just coming out of the ground,” Edwards added.

GalCap Europe Purchases Centrál Udvar GalCap Europe, a Vienna-based international investor and asset manager, has acquired the 17,000 sqm Centrál Udvar office complex, located in the historic center of Budapest, from Goldman Sachs, who acquired the property in 2017. GARY J. MORRELL

This is the second acquisition by GalCap in Budapest after the purchase of the Merkúr Palota from Galeon Capital. The purchase of Centrál Udvar was made on behalf of a separate account for a German pension scheme, administered by Institutional Investment Partners. The transaction was an off-market deal; CBRE advised GalCap Europe and legal advice was provided by CHSH Dezső & Partner.

The 17,000 sqm Centrál Udvar is located in District VII and

provides

13,000 sqm

of office space in three buildings, storage and hospitality space and 215 deep parking places. UNICEF is the largest occupier in the classic renovated building. “Centrál Udvar perfectly fits our strategy of high-quality assets in the most central locations. We will further expand our investment activities in Budapest, Warsaw, Prague and Vienna

this year. The dynamics in these markets remain exceptional, underpinned by strong fundamentals,” said Marco Kohla, managing director of GalCap Europe.

Local Partner

The company was founded in 2015 as a specialized investment and asset manager for Austria and the CEE region. It acts as a local partner in Central Europe for pension funds and insurance companies from the German-speaking countries, and American and U.K.-based private equity funds. The investment strategy of GalCap is to initially target the Austrian, Polish, Czech, Slovak and Hungarian markets, with Slovenia, Croatia, Serbia and Romania regarded as secondary markets. “The property market in CEE, and in particular in Budapest, still offers strong purchase opportunities and attractive risk/ return projections. We have a number of deals in the pipeline for our clients and will further increase our activities in CEE,” added Kohla

As with the Czech Republic and Poland promotion agencies, the Budapest-Hungary stand was established by the Budapest City Municipality, the Hungarian Investment Promotion Agency and the Association of Property Developers’ Round Table in order to promote projects in Budapest and four provincial university cities. Róbert Ésik, president of HIPA, commented that the goal of his agency is to make sure international audience are aware of the property markets in the capital and beyond. “This year, not only the major projects in Budapest but the investment and property development opportunities of four university cities – Debrecen, Miskolc, Pécs and Szeged – were presented as well. The organizers emphasize that beside the capital, rural investments also have good return potential, the regulations are predictable, corporate income tax is the lowest in the EU and stable economic growth provides a favorable investment environment,” Ésik said. “Having just returned from MIPIM, my firm belief in Hungary’s development and investment potential has been reconfirmed,” concluded Attila Kovács, managing partner at Horizon Development and vice president of the Hungarian Real Estate Developers’ Roundtable Association. He presented the Szervita Square project in Budapest, emphasizing the responsibility of developers to create buildings that regenerate areas of the city. With regard to new development projects Atenor also showcased

the

72,000 sqm

Aréna Business Campus, its latest largescale Budapest office project.

Zsolt Jakab, senior investment consultant at CBRE, says the deal is an example of how an experienced investor can acquire outstanding properties, even in a competitive real estate investment market. CBRE has

traced

EUR 83 mln

in investment deals as of the end of February. The Centrál Udvar deal is an indication that there are investment possibilities available at all levels of the markets in Hungary, although competition for product is strong as a wider pool of investors is showing interest across the various sectors.

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Save and Earn by Sharing Your Car Air passengers arriving in Budapest and in need of a mobility solution can benefit from super-low car rental rates by using the vehicles of fellow travelers. BeeRides, operator of the scheme, recently received a new capital injection from innogy Innovation Hub, a German VC fund, and says it is ready to move forward with its Europe-wide expansion. BÁLINT SZŐNYI

Could you make money with your car while you are away on vacation? That was the question the BeeRides team tried to answer when it started working on its car sharing service. The deal they offer is simple: park for free at the airport, let others rent your vehicle till you get back, and you share the revenues with the service provider. “The logic of the car rental market has remained relatively untouched unlike, for instance, the taxi market, which was disrupted by ride-hailing services,” Gergő Kalcsics, co-CEO of BeeRides tells the Budapest Business Journal. “We believe there is room for improvement and changes in user experience are bound to trigger a shift towards innovative schemes like ours,” he adds. Kalcsics gained hands-on

entrepreneurial experience by running a startup for German e-commerce giant Zalando in Berlin for the past three years. Renting a car with BeeRides is a fully automated process that is able to serve

clients

24/7,

with the concept of “waiting in line” being non-existent. The paperwork is all done online beforehand and the auto can be picked up by accessing the key from a smart box. The vehicle is checked for damage by a person on the premises upon return. “Certain limitations apply, though, as far as what kind of cars are accepted,” explains Kalcsics. “The maximum vehicle age is set at 15 years, while the driven mileage cannot exceed 350,000 km.” Rental fees are higher for cars that are considered new, that

Gergő Kalcsics, co-CEO of BeeRides. is those under eight years of age; however, on average rates are 70% lower than conventional auto rental services.

Vast Pool of Demand

BeeRides is tapping into a vast pool of potential demand. In Budapest alone, the peak season sees some 7,000 cars parked and unused for the duration of the travelers’ trip. Those air passengers spend nearly

HUF 2 bln on parking.

Many of them would presumably be happy to say good-bye to paying for parking; what is more, they can start cashing in. “Cars are divided into two categories depending on whether they are left with us

for more or less than 30 days. In the latter case there is no guarantee that owners will actually get paid, but they still park for free and get their vehicle washed,” explains Kalcsics. However, if the car does get rented, value of up to HUF 40,000 per week is created at the Budapest venue. In Dortmund, the other spot where BeeRides operates, the amount is double that. “The ratio of our repeat customers is more than 50% and owners tend to leave their cars for ever longer,” says Kalcsics. Some customers actually even buy cars for investment purposes and strike a special deal with BeeRides. For such commercially-minded partners, a customized product is under development. The business strategy has embraced some core principles from the traditional rental model, which generates a high percentage of revenues from upselling. Accordingly, BeeRides also offers add-ons like GPS, child seats, mobile internet or freeway vignettes, but at a more reasonable rate than usual. Its extra insurance offer is also a lot more wallet-friendly: from EUR 2.5 per day you can secure coverage by limiting your own contribution to EUR 600. “That daily premium is usually a two-digit figure elsewhere,” points out the co-CEO. The next target to set up shop is Düsseldorf, with good reason. Its airport has two and half times more air passengers than Budapest; yet, its car rental market is seven times bigger. S TA R T U P S P O T L I G H T

PROMOTION

Take a ʼSafaryʼ Around the Coolest Startups Hundreds of companies and ideas will be introduced when the Budapest Startup Safary returns organized for the third time on April 19-20. More than 4,000 visitors are expected this year, not only locals but also people from the region and across the world; students, parents, job-seekers, experts, and anyone interested in the innovation scene in Budapest, at 100 different locations all over the city center. Besides the well-known companies of the startup ecosystem (Prezi or LogMeIn) visitors can get to know innovative Budapest-based ventures and projects, just like Shapr3D, a 3D modelling tool for iPad Pro, which has just raised a USD 1.3 million in investment last year; Turbine. AI, an AI-based cancer research solution; or Publishdrive, a global e-book publishing platform. Visitors who are not mainly interested in tech topics will also find interesting events around HR, coaching, gastronomy, education and lifestyle: participants can learn about burnout, employer branding, vegan and “free” lifestyle businesses, meet digital nomads and get information about women’s employment situation in the innovative sector. Some big corporates that are active on the local market will also introduce the digital products and services they provide to the startup world, such as OTP, NN Insurance, SAP Labs, Morgan Stanley, as well as government agencies whose task is to support the local innovation ecosystem, for example the Hungarian National Investment Agency (HIPA) and the Hungarian Intellectual Property

Office. Some of the events will be organized outside of the classical office environment, for example on the A38 boat, which was chosen as best bar in the world in 2012 by Lonely Planet.

VIP Guests

Several globally recognized names will visit Budapest for the first time for the Budapest

Safary, with whom participants can chat professionals, potential investors, jobduring the events. Among the guests will be: seekers and students. Since its launch, more Tanya Soman from the Bay Area-based than ten European cities have organized 500 Startups, an early-stage focused their own “safary”, from Paris to Athens. The VC fund; Eddie Arritea from Colombia, Budapest edition has grown into Europe’s co-founder and president of Publicize, which most successful and most visited Safary. brings innovation into PR services; and With a turnout of more than 3,200 people Ernest White II, from Florida, founder of Fly in 2017, around 4,000 visitors are expected Brother, a TV and radio travel-show. this year, 30% of them from abroad. Organizers are making the life of “For these two days Budapest’s downtown participants easier by categorizing all turns into a huge start-up festival, you’ll run 300 events into 13 thematic journeys, into the Startup Safary logo everywhere,” making the event selection easier. says Zsófia Fekete, project manager and The detailed program and tickets are head of operations. “Groups of people available on www.budapestsafary.com wander the streets and you can tell by their The first Startup Safary was organized smile that they are Safary participants. in 2012 in Berlin. The goal of the event Presentation, breakfasts, workshops, was to advertise the start-up world and office-tours, and parties lead you into create networking opportunities. For this world, where you can bump into two days companies open their doors for a new job opportunity or see what jobs will be in demand in the future,” she adds

Future Focused

Some 429 high school students, specializing in system administration and software development, and their 41 teachers will visit the event from all over the country, from Komló (213 km southwest of Budapest) to Mátészalka (276 km northeast). This is made possible by the Infotanár (Info teacher) Mentor Program. “This is an excellent opportunity for us to experience the startup scene firsthand, so these teenagers can see what their future might hold, if they are smart and persistent. They can also see the job market, and what skills they need to be competitive,” says Csudinka Csudotov, a volunteer of the program.

Company ///news Stadler to Invest HUF 10 bln in Szolnok Swiss rolling stock maker Stadler will invest HUF 10 billion to double its capacity at its train body and bogie plant in Szolnok (119 km southeast of Budapest), chairman of the supervisory board of the Hungarian unit Zoltán Dunai said, magyaridok.hu reported. HUF 1 bln of the total costs will be spent on technological developments. The expansion will be implemented at the site of a former sugar refinery in the town. Stadler will first build an 8,000 sqm plant, 7,000 sqm of which will be dedicated to production and the remainder to office activities. Later, it will construct a warehouse building to serve the unit that has been operating since 2013 in the local industrial park. The investment will be completed by the third quarter of 2019. Headcount is expected to be increased by 15.

Ongropack Opens HUF 9.1 bln Plant Hungarian family-owned plastics manufacturer and distributer Ongropack inaugurated a HUF 9.1 billion plant in Szirmabesenyő (186 km northeast of Budapest, close to Miskolc) on March 27, Hungarian news agency MTI reported. Ongropack executive manager László F. Kovács said the government provided a

Business | 9

Foundation Stone Laid for Miskolc Battery Plant Japanese battery manufacturing specialist GS Yuasa is constructing its first factory in Europe in Miskolc’s southern industrial park; the foundation stone of the new facility, which will be completed by 2019, was laid on March 25. At the ceremony, Minister of Foreign Affairs and Trade Péter Szijjártó told reporters: “The government is assisting the HUF 8.8 billion (EUR 28

HUF 1.053 bln grant for the project and the company used a fixed interest rate loan from the National Bank of Hungary’s Funding for Growth Scheme (FGS). Last year the company made 24,000 tonnes of products, exporting 90%. Revenue was HUF 13.5 bln and headcount reached 240. Revenue has been rising for the last nine years by around 9% annually.

Hankook to Start EUR 290 mln Expansion South Korea’s Hankook Tire Magyarország will start the fourth stage of the expansion of its plant in Rácalmás (75 km south of Budapest), this year, Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó said on March 23, vg.hu reported. The fourth stage will be a unit for the production of heavyduty tires, which will cost HUF 89 billion. The government will give a HUF 2.97 bln grant for the project, which will create 150 high valueadded jobs, Szijjártó said. The new addition is scheduled to start production in the middle of June 2020 with an annual capacity of 550,000, Hankook Tire director for Europe Kim Han-Jun said. Hankook has invested a total of EUR 880 million at its Hungarian plant and has turned out 120 million tires since production started there in June 2007. Hankook produces 19,000 tires a year and employs nearly 3,300 workers at the plant.

CooperVision to Create 400 new Jobs in Gyál U.S.-based contact lens maker CooperVision will spend more than HUF 8 billion to turn its production base in Gyál (22 km southeast of Budapest) into a distribution center for the region, Minister of Foreign Affairs and Trade Péter Szijjártó announced on March

million) project with non-returnable funding of HUF 465 mln; the new plant will employ over 50 people”. The plant in Miskolc will produce Lithium batteries of the kind also used in electric and hybrid cars. Elsewhere in Hungary, South Koreanowned Shinheung Sec has completed its HUF 8 bln battery parts plant in Monor, near Budapest, with a government grant of HUF 769 mln, magyarhirlap.hu reported. The plant makes parts for batteries for electric cars. The investment will create some 300 new jobs by the end of 2019, Szijjártó told reporters. Kim Girin, owner of Shinheung Sec EU Kft., said the plant is the company’s first in Europe and it plans to purchase 80% of its feedstock from Hungary from 2019. 26, napi.hu reported. CooperVision will add 30% to the area of the base over two years, creating 400 jobs, Szijjártó said. The investment will double annual output at Gyál to 1.2 billion contact lenses. CooperVision says it wants to expand the production capacity of its Clariti contact lenses to meet increased global demand. The company’s products are sold in more than 100 countries.

Your essential Guide to Investing in Hungary including articles looking at the benefits available, case studies, EU funding, and commercial property investment.

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10 | 2

Business

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Budapest Business Journal | April 6 – April 20, 2018

Tungsram Returns to Independence Tungsram officially announced its return to the market as a standalone, innovative global brand, headquartered in Hungary on April 4.

WHO’S NEWS

OrienTax Promotes Two Directors Two experienced managers have been promoted to directors at independent tax advisory firm OrienTax with

1862 Béla and Bernát Egger found the predecessor of Tungsram in Vienna 1896 Bernát Egger and the Pest Hungarian Commercial Bank form Egyesült Izzólámpa és Villamossági Rt. (United Electric Incandescent Light Factory Co.) 1901 Building of the Budapest factory

ROBIN MARSHALL

In February, GE Lighting announced the sale of its business in Europe, the Middle East, Africa and Turkey, as well as its Global Automotive business, to an entity controlled by Jörg Bauer, a former leading GE executive based in Budapest (and the BBJ Expat CEO of the Year in 2017) with more than 20 years of multinational company experience. On April 4, the first milestone of that proposed sale was realized when Tungsram Group assumed ownership of Tungsram Operations Kft., which included GE Lighting’s Hungarian-based operations, employees, assets and contracts. This represents a majority of the proposed sale. The sale of the remaining GE Lighting operations across the region is subject to local agreements. Before entering into these agreements, where appropriate, a consultation process with relevant employee representatives will be completed in accordance with local laws. “We are both proud and humble to have the chance to restart the long history of Tungsram as a globally successful, innovationdriven brand,” Bauer, President & CEO of Tungsram Group, said at the press launch. “We aspire to continue the tradition of industrial legends like Aschner Lipót, who dedicated his life to Tungsram and the community of world-class researchers like Zoltan Bay, Mire Bródy, Tivadar Millner or György Szigeti working in Europe’s first industrial research laboratory, which was set up in 1923 following the example of Thomas Edison.”

Tungsram Timeline

The Tungsram Group Management Team.

Speaking of future plans, Bauer said: “We plan to invest in all our active locations and develop distinct technological capabilities for the factories, all while strengthening customerfacing distribution partners. The whole organization will be refocused to support our customers and partners, following the principle of ‘what more can we do for your success’, with the flexibility and the agility of a startup company.”

Smooth Transition

Tungsram says its most important nearterm goal is to assure a smooth transition, continuing operations as a standalone company, albeit with secured transitional support from GE for some time. Tungsram vows that customers, employees and suppliers “will experience uninterrupted deliveries, timely payments and exceptional quality” from day one. The automotive division has proved successful in the world market for 60 years, both with original equipment manufacturers (OEMs) and in the aftermarket. “We would like to strengthen our current position, and we are planning serious development in LED (light emitting diodes) solutions, since this technology is taking a bigger chunk of the industry each year,” said Gabriella Mózes, the general

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

effect from March 1, according to a statement by the firm. Péter Kiss (left) joined OrienTax in 2012 and served as a manager from 2014 onward. His expertise includes advising on general taxation processes as well as planning and managing the tax strategy for complex transactions. He has gained wide experience in aggregating and implementing the taxation of large volumes and multicountry transactions. “I intend to place emphasis on making customer relationships more efficient by looking at the business as a whole and advising clients on their specific business goals by answering questions regarding the day-to-day business of the company, as well as outlining the optimal opportunities that have been studied in many ways,” he said of his goals. György Boár (right) joined OrienTax in 2014. He has been focusing mainly

manager of Automotive. She has worked in the industry for more than 40 years, and was at Tungsram at the time of the GE acquisition in 1989, and had been with the GE Lighting organization ever since. Tungsram was originally established in 1896, in the year of Hungary’s Millennium celebration. “At the time of its founding, Tungsram, along with Budapest, successfully embraced the opportunities of its time and rapidly grew to a global technology leader,” the company said in a press statement. “Likewise the Tungsram Group of today, now revitalized, will invest into futuresafe technologies and dynamically growing global markets, while still strengthening the Lighting core of its business.” The company says the core belief of the new management of Tungsram Group is contained in the slogan “Innovation is our heritage”, continuing a 120-yearold tradition of Hungarian creativity and innovation. Tungsram says it exports more than 95% of its production, and will look to leverage sales into more than 100 global markets. It has five factories in Hungary and a network of 500 local suppliers and partners. On the world market, Tungsram will continue to be represented as a premium European brand with design, development and manufacturing all undertaken in Europe.

on customer relationship management, transaction tax planning, corporate restructuring and tax planning, and tax litigation. “As a director, my duties will be expanded: my primary task - besides strengthening our market position - will be to develop our customer and international relations, and the encouragement of further product development,” he said.

HB Reavis Appoints CEO

Integrated real estate developer HB Reavis has appointed Marian Herman (pictured) as its new CEO. Herman will take over the position from Pavel Trenka, who will remain at HB Reavis as a non-executive board director. Herman joined HB Reavis more than eight years ago as head of investment management and divestments and had been group chief financial officer and member of the board since December 2014, according to his LinkedIn profile. Prior to joining HB Reavis, he worked for RREEF Infrastructure, based in the

1904 Sándor Just and Franjo Haneman invent the tungsten filament light bulb that becomes the main product of the company 1921 Lipót Aschner becomes the CEO; he had come up with the name Tungsram; had founded factories and the world-famous research lab. 1923 A world famous research team is set up, including Pál Selényi, the ’father of xerography” and the inventor of light measurement for photography 1934 Imre Bródy, a researcher at Tungsram invents the krypton light bulb 1937 Tungsram opens a television laboratory 1946 Zoltán Bay, the technology officer of the company founds radar astronomy in a world famous experiment 1989 GE purchases the majority of Tungsram shares, later 100%. 1998 The first international SSC in Hungary is established at the GE/Tungsram EMEA HQ in Budapest 2018 Tungsram Group is founded

United Kingdom, from 2007-2009, and for Deutsche Bank in London from 20052007. He has a Masters in Finance from the London Business School. HB Reavis currently has several developments, including the first phase of Agora Budapest on the Váci office corridor, and other projects in London and Warsaw.

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Budapest Business Journal | April 6 – April 20, 2018

Special Report Telecoms & ITC

With talk of the IoT and 5G, the telecoms sector is always to the forefront, especially now, given the sale of Telenor’s Hungarian business.

Gearing up for the 5G Leap: Legislate, Test, Educate

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Telenor Sells Regional Units to PPF Group for EUR 2.8 bln

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EIT Digital Budapest Making R&D&I Work For All



Calming Fears Around the AI Future

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Special Report

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Budapest Business Journal | April 6 – April 20, 2018

Gearing up for the 5G Leap: Legislate, Test, Educate 5G dreams look set to turn into reality in Hungary thanks to pilot projects and highly trained brains. BBJ STAFF

With the global 5G technical standard set to be finalized by 2020, Hungary is heavily preparing by drawing up a detailed strategy. Input stems primarily from the Hungarian 5G Coalition, which now numbers

member

organizations and 120 experts. The coalition called for partners form both domestic and multinational companies, university and academia, professional organizations, chambers, ministries and government institutions to come together for the sake of joint work. Recommendations are drafted in five working groups that meet once a month. As working group chair and head of digital intelligence at Nokia, Zsolt Marosvári tells the Budapest Business Journal that such consultations are key for network building purposes, since every stakeholder needs to be kept up-to-date about how the national strategy is being shaped. “The essence of it will be how the different sectors will be transformed as a result of 5G, which provides an opportunity to implement new things,” he says. “But in order to achieve those novelties, industrial players need to

planned high-speed Wi-Fi network will allow visitors to have a truly cyber age experience. Seamless indoor and outdoor navigation will become self-evident, just like online schedule planning. Lockers and restrooms will open with a code and smart benches will be equipped with mobile phone chargers. There are even plans in the pipeline for an autonomous shuttle service to be launched from Heroes Square. “The date of global technical standardization is getting closer and by then we need to be prepared for every aspect of the 5G breakthrough: frequency, regulatory environment, eligible funds, tax regime and education,” Mácz explains. “But one thing is sure: the ongoing 5G Coalition discussions, which started back in the summer of 2017, will secure an enormous edge for Hungary in the race for embracing 5G-based solutions.”

be integrated in the process in an appropriate way.” Ákos Mácz, an expert of the government’s Digital Success Program agrees that many players are concerned about the upcoming transformation: from equipment manufacturers and telco providers to authorities. They must all take measures now in order to be ready when the time comes. The intention of the 5G Coalition is to bring together the key 5G-related players of the domestic digital economy and deepen the dialogue between them.

Pioneer Country

“We need to determine how our 5G objectives can be implemented,” Mácz says. “The bottom line is that Hungary should be among the pioneer countries where the technology is introduced. It should also become an innovation hub, which hosts pilot projects that can pave the way to going global with 5G-driven solutions, therefore helping Hungary reach the aimed-for position of a major European center for 5G developments.” A few such test environments already exist or are due to appear soon. An

Ákos Mácz, of thegovernment’s Digital Success Program. technology, not least because it will be fully 5G compatible.”

Industry

4.0

test lab at the Technical University of Budapest (BME) is under construction, but the flagship project remains the open track in Zalaegerszeg to be used for testing autonomous (self-driving) and connected cars systems. “Only South Korea has such a test track in the world,” Mácz points out. “The Zalaegerszeg investment will outshine other similar European venues like those in Hamburg and Barcelona in terms of

Smart Liget: a Showcase Pilot Project However, automotive is just the start. A brand-new pilot project, Smart Liget is set to serve as the perfect incubation environment to try out state-of-the-art IoT and partly 5G-based tech. The rebuilding of the Budapest City Park (Városliget) has stirred lots of emotions on part of environmentalists; yet, the

“We need to determine how our 5G objectives can be implemented. The bottom line is that Hungary should be among the pioneer countries where the technology is introduced. It should also become an innovation hub, which hosts pilot projects that can pave the way to going global with 5G-driven solutions, therefore helping Hungary reach the aimed-for position of a major European center for 5G developments.”

New Breed of Students Needed to Tackle the 5G Challenge When discussing the 5G revolution, which promises super-fast response times and super-sized bandwidth, less is talked about the necessity of having enough properly educated professionals who can actually operate the new networks and the gadgets connected to them. Hungary is actively preparing to tick that box, though. ELTE University, a member of the 5G Coalition, offers, together with the Technical University of Budapest (BME), master and doctoral programs of EIT Digital, a pan-European digital innovation and entrepreneurial education organization. Participating students can sign up for the latest IT topics and gain key business skills so that they can become tech entrepreneurs or ‘intrapreneurs’; that is, people who are capable of turning ideas into a product in a corporate environment.

Dr. Zoltán Horváth (pictured), Dean of the ICT Faculty of ELTE University, who set up the Budapest node of EIT Digital, explains that students work in project labs where prototypes are made and tested, while they work with industrial partners on real-life projects.

Software Intensive

“Special models need to be designed to achieve compatibility with the 5G software architecture, since we are talking about a very software intensive system here,” says Horváth. “We propose measurement methods and we evaluate how appropriate relevant software technology solutions are. Case studies are made to assess the potential areas of use of 5G technology and in what service segments it can bring the most benefits.” In total, up to 18 universities in nine European countries are

part of the EIT Digital education network. During the master program, students enjoy the opportunity to study at two different universities. ELTE and BME offers the second year of studies, which includes an internship at a leading telco or ICT partner of EIT Digital. Horváth is also head of the 5G Coalition’s International Working Group, set up under the government’s Digital Success Program. The job of the working group is to analyze foreign best practices and strategies, functioning pilot ecosystems and the application priorities of other countries, as well as to join international projects. That gives Horváth deep insight of what is truly needed internationally in the 5G realm. “Being a member of the EIT Digital ecosystem, ELTE is proud to be home to education programs that prepare a new breed of professionals who

will be equipped to tackle the challenges of the most up-todate ICT matters, among them 5G,” Horváth concludes.

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Budapest Business Journal | April 6 – April 20, 2018

Telenor Sells Regional Units to PPF Group for EUR 2.8 bln Norway’s telecommunication giant Telenor Group has agreed to sell four units in the Central and Eastern European region to Czech investor PPF Group for EUR 2.8 billion, the companies announced in a statement.

3.4 million,

according to data on its website, while the number of its employees was slightly above 1,000. PPF Group is the largest private investment group in the Central and Eastern European region, with a portfolio that includes banking, telecommunications, biotechnology, insurance, real estate, and agriculture. It is active in Europe, Russia, the USA and across Asia with assets totaling EUR 35 bln, as of June 30, 2017. It is aiming to boost its telecommunications portfolio in the CEE region, and the newly acquired Telenor operations “are key to achieve this”, the company said in a statement. PPF Group bought O2 Czech Republic from Telefonica in 2013 and Nova Broadcasting Group in Bulgaria earlier in 2018.

PPF Expanding

“With this purchase, PPF Group is expanding its telecommunications portfolio to four more countries, and

25 years.

It first entered the Hungarian market in 1994 through the acquisition of Pannon. It later expanded its presence in the region through the launch of mobile services in Montenegro in 1996, and the acquisition of Mobi 063 in Serbia in 2006. Telenor acquired Globul in Bulgaria in 2013. Reich reassured the Hungarian clients in a video posted on Facebook they would see no changes whatsoever because of the transaction.

approximately

VERONIKA GULYÁS

“I want to underline that this transaction will have no impact for our customers and local partners, and going forward the business will run as usual,” Telenor Hungary chief executive Alexandra Reich said. The sale includes Telenor’s whollyowned mobile operations in Hungary, Bulgaria, Montenegro and Serbia, as well as technology service provider Telenor Common Operation. Telenor’s Hungarian subsidiary has been on a downward path in terms of subscribers over the past eight years, the firm’s annual reports show. Prepaid SIM cards have been steeply declining since 2008, while the number of contract clients has increased only slightly. Telenor only reveals 2015 data about its active subscribers, whose number was

expected, the two companies’ expectations differ: Telenor foresees the closing within the third quarter this year, while PPF believes it may happen already in June. The Norwegian firm noted, however, that as of the first quarter 2018, the CEE operations will be treated as an asset held for sale and as discontinued operations in Telenor Group’s financial reporting. Telenor has had mobile operations in the CEE region for

fulfilling our long-held goal to become a mid-sized European operator and to use our experience to strengthen our market position,” said Ladislav Bartoníček, PPF Group’s shareholder responsible for telecommunications assets within PPF. The Norwegian telco’s operations in the region contributed

of Telenor Group’s revenues and 8% of earnings before interest, taxes, depreciation and amortization in 2017; collectively, the CEE businesses have more than nine million customers and around 3,500 employees. “With the sale of our CEE assets, we take an important step in simplifying and focusing Telenor’s portfolio on the regions where we see the strongest potential for value creation,” Sigve Brekke, chief executive officer of Telenor Group said in a statement. Following the transaction, Telenor is set to concentrate on its integrated mobile and fixed operations in Scandinavia, and on mobile in Asia.

Alexandra Reich.

“Give us the chance to show you that you can keep on trusting us and stay with us.” coming years, we believe there will be value accretive opportunities within our core business areas and geographies,’’ Jørgen C. Arentz Rostrup, chief financial officer of the group said. Telenor’s board of directors will propose at the firm’s upcoming general meeting on May 2 to pay out a special dividend of 4.40 Norwegian krone, or EUR 0.46 per share, once the transaction is successfully closed. This would result in an altogether NOK 19 bln payout to shareholders in 2018, including the originally proposed dividend.

Jørgen C. Arentz Rostrup. “We are currently focusing on developing our existing assets and driving digital transformation. In the

Earnings and Rumors Telenor Hungary’s fourth-quarter revenues rose 7.2% year-on-year to HUF 40.2 billion, an earnings report released by parent company on January 31 showed. EBITDA rose 9.1% to HUF 11 bln. Turnover had been lifted by higher average revenue per user (ARPU) among retail post-paid subscribers and migration from pre-paid to post-paid contracts. Subscriber numbers rose to 43,000 in the fourth quarter alone, the earnings report showed. News of the possible sale first broke just prior to that, on January 26, when Telenor announced it had received “inbound and unsolicited

Special Report | 13

Deferred Purchase Price

PPF Group and Telenor have agreed on a deferred purchase price, where EUR 400 million will be paid in four instalments over four years. The transaction needs regulatory approval. On when completion should be

interest” for its mobile operations in the region. After the release of its fourthquarter results, Telenor Group also revealed that it would be laying off as many as 6,000 employees in the next three years due to automation of services and in order to eliminate overlaps, according to online news portal index.hu. The company had already cut some 2,600 jobs last year, index.hu noted. Government spokespersons had recently started talking again about the possibility of creating a national telecom operator, leading some to believe it might be interested in Telenor. Billionaire investor Lőrinc Mészáros, whose

Sigve Brekke. “Give us the chance to show you that you can keep on trusting us and stay with us,” Reich said. Despite requests from the Budapest Business Journal for more detailed information, neither Telenor, nor PPF Group would reveal further details of the transactions, or the future of the assets, beyond their general statements. Hungarian IT and telco association IVSZ also declined to comment on the matter.

wealth and business interests have mushroomed spectacularly since Fidesz took power in 2010 – Mészáros is a close ally of the Prime Minister Viktor Orbán and mayor of his home village of Felcsút – also expressed an interest, through one of his companies. On February 1, Gellért Jászai, chairman-CEO of Konzum, said the IT and telecom sector is one of the main focuses of the acquisition and development strategy of the Konzum group, and Telenor’s activities fit in well with this strategy, in response to queries from business portal portfolio.hu. Konzum is directly and indirectly majority owned by investor Lőrinc Mészáros.

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Special Report

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Budapest Business Journal | April 6 – April 20, 2018

EIT Digital Budapest Making R&D&I Work For All Telcos are eager to spot new channels for innovation where forging links with education and finding alternative funding are key. Magyar Telekom’s cooperation with the EIT Digital panEuropean network is a point in case. BBJ STAFF

Digital industry players are under increasing pressure to stay ahead of the game, pushing them to constantly seek ways to generate innovative ideas and turn them into viable products and services. One of the schemes that provides an alternative is joining the pan-European ecosystem of EIT Digital, the spin-off organization of the European Institute of Innovation and Technology (EIT) focusing on digital technology. “More than

170 partners

have signed up for membership all over Europe in ten countries, and these top corporations, startups, universities and research centers all work hand-in-hand to help European innovation projects land on the market and gain traction,” says László Gulyás, director of the Budapest Node of EIT Digital, which is also the only node in the entire CEE region. “The idea is to link business, research and education with the aim to apply an entrepreneurial approach throughout the R&D&I process and accelerate the go-to-market process of disruptive products and services.” Apart from operating a pan-European accelerator, which incubates scaleups, EIT Digital invites its partners on a yearly basis to launch innovation activities classified in five “action lines”: digital industry, infrastructure, wellbeing, cities and finance. The digital infrastructure action line proved to be of particular interest for Magyar Telekom, which is a member of EIT Digital, along with other Hungarian corporate partners such as Ericsson, Nokia, OTP, eBiz, ELTE-Soft, E-Group and evopro.

Excellent Opportunity

“This cooperation turned out to be an excellent opportunity for us. EIT

István Barta, senior service development manager at Magyar Telekom. Digital provides a unique European network by granting access to partners we can implement great projects with,” says István Barta, senior service development manager at Magyar Telekom.

“In the case of the master program, we can save the entire onboarding procedure thanks to the traineeship offered in the second year of the program. By the time the students get their degrees, they are familiar with our whole corporate structure.”

Co-funding is another appealing factor to consider. “EIT Digital has a co-funding scheme where

up to

65%

of the investment costs are advanced and you need to start paying back the refundable funds only years later, by the time the investment will have generated profits,” Barta adds. EIT Digital encourages partners to launch startups to implement a particular innovation project, and to rely on research that has reached a

László Gulyás, director of EIT Digital Budapest. phase allowing the creation of a project, Gulyás explains. “The biggest Hungarian success story so far implemented with EIT Digital funding has been OTP’s eBiz, a digital financial assistant that cuts the administrative burdens of businesses. In fact, OTP was the first fintech partner in Europe that joined EIT Digital,” he says. However, carrying out innovative projects in a European consortium is only part of the deal; EIT Digital has an entrepreneurship-oriented education program as well.

Working With Students

“Magyar Telekom capitalizes on working together with ICT students enrolled in the EIT Digital Master and Doctoral School offered by EIT Digital partner universities ELTE and BME,” says Barta. “In the case of the master program, we can save the entire onboarding procedure thanks to the traineeship offered in the second year of the program. By the time the students get their degrees, they are familiar with our whole corporate structure.” Occasionally young talents start working at Magyar Telekom first, and only after finding their area of specialization do they decide to do a PhD at EIT Digital, among others, on

technology.

(For more on this, please see “Gearing up for the 5G Leap: Legislate, Test, Educate” on page 12.) By identifying research material together with the company, the output is bound to be something the company can use in its daily operations.

Being associated with the EIT Digital effort has other benefits as well. “Telekom takes pride in being involved as it perfectly fits the trends we aim to ride,” Barta adds. “A major corporate objective is to project a whole new image, that of a telco firm that is a lot more than just a mobile provider and fully lives up to the expectations of the cyber age.” With 5G around the corner, this ever more interconnected world cries for players in the telco arena that can fulfil elevated customer demands. That presumes providing seamless access to data-intensive services such as Netflix and allowing users to enjoy Pokémon at all times and locations.

No Room for Error

“There is simply no room for error, otherwise you are out of the race as a provider. Meeting those needs will require providing seamless connectivity with the ultimate focus on the customer journey,” the senior manager says. “The EIT Digital cooperation makes this possible thanks to the access to its panEuropean ecosystem, its funding scheme and the brightest brains.” On the other hand, forging close links with academia boosts the brand image as well. Education is headed in a whole new direction where active engagement is expected of the corporate sector more than ever. “A modern telco company cannot afford to miss this chance to reach out to students and create innovative things with them. Magyar Telekom evaluates the EIT Digital experience as a total success with a lot more to come. We see an endless number of opportunities coming; this is a cooperation that benefits all participants,” Barta insists.

Special Report | 15

www.bbj.hu

Budapest Business Journal | April 6 – April 20, 2018

Government Attempts to Enter Hungary’s Telco Sector The past years have already seen state attempts to gain ownership in one of the country’s most prosperous economic scenes, the telecommunication sector. Recent government comments and the sale of Telenor have made it a hot topic again. ÁGNES VINKOVITS

“The aim to have a state-owned mobile supplier should not be dropped,” said János Lázár, Minister of the Prime Minister’s Office at a citizens’ consultation in January, adding that in the case of a Fidesz victory at the April 8 general election, the government would make another attempt to create a supplier. He argued that privatization had pushed the oil and gas prices up high and they could only be reduced later centrally, within the framework of the so-called overhead cuts as a result of state acquisitions in the sector. According to Lázár, having a stateowned mobile supplier would be very important as broadband internet is a public service. The more disadvantaged an area is, the worse the quality of telecommunication services it has, he noted, pointing out how the new company, should it come about, would serve the public. Lázár is not the first to complain about high telco prices in Hungary; Prime Minister Viktor Orbán himself has drawn attention to it several times. It is a fact that prices are not low, yet it is difficult to make exact comparisons due to the numerous tariff packages. Still, according to a European Commission survey, broadband internet for smart phones costs double the

The Solution: Telenor?

Regarding acquisitions, there also may have been an attempt. Based on government and market sources, weekly HVG wrote that in 2013 the state wanted to buy Vodafone’s local branch and was ready to

pay

EUR 200 mln

EU-28 average

in Hungary, while internet prices for tablets and laptops also have a 10-30% surcharge here. Yet, when it comes to governmental criticism on high prices, it is important to note that the Hungarian telecommunication scene has been burdened by a special sectorial tax since 2010 and is also topped with generally high value added taxes (VAT on most telecommunication services is 27%, although it has been reduced to 5% on internet services from this year).

Previous Attempts

Lázár’s words about a state-owned telco company should not come as a surprise because there had already been attempts by the government to enter the market previously. There are basically two ways of doing so: establishing a company or buying one. Regarding the former option,

2012,

MPVI Mobil was created as a consortium of state-owned energy supplier MVM, Hungarian Development Bank MFB and

Hungarian postal service Magyar Posta with a 45-45-10 share, respectively. Back in 2012, broadband mobile internet was unavailable for 40% of Hungary’s population and the broadband mobile internet penetration was put at just 17%, the worst in Europe. Seen through this prism, initiatives to boost infrastructural developments and make such digital services accessible to a wider group of people seemed to have grounds. Still, market players and experts, such as Magyar Telekom CEO Christopher Mattheisen doubted that there was room for a new player. Imre Mártha, the head of innovative energy group ELMIB said that even if a state-owned telco company was launched, it would be loss-making for at least eight-to-ten years. Partly based on such estimations, there were market fears about the new company setting prices not according to market tendencies, since it would openly aim to increase competition, and so it could be artificially kept alive even if spending long years in the red. Further, a state-owned telco company would probably take over the contracts of other state-owned companies as well as municipalities’, meaning a significant market loss for existing market players, mostly for Telekom. However, the MPVI project was stillborn and it never started operations after the regional courts overruled its HUF 12.7 billion frequency acquisition. MPVI finally ceased to exist in 2013 when the two big investors left and the remaining shares were merged into Magyar Posta.

for it. Clearly, no deal was made, and the idea itself was later denied. Given the present options for gaining ownership in the sector, as the market leader Magyar Telekom, which as the successor of former state monopoly Matáv has the unbeatable advantage of being able to provide national full-range services with landline, mobile phone, internet and television, is not likely to change owners. Market rumors have, however, circulated about state acquisition plans focusing on a company in a more challenging situation. Vodafone Hungary has been in the red for years, and ever since its arrival to the country in 1999 it has never been able to move beyond third place behind Telekom and Telenor. At the same time, Telenor has been losing market share in past years, and instead of getting closer to the leader Telekom it was more challenged by losing its second position against Vodafone. Then, late January news about Telenor selling its CEE subsidiary appeared. It soon turned out that the branch would be bought by PPF Group, owned by Czech businessman Petr Kellner. On the face of it, the PPF Group deal for Telenor’s regional businesses kills off any further attempt at a state acquisition, but news website 24.hu has reported that Kellner is strongly connected to a key Orbán ally, the Mayor of Felcsút Lőrinc Mészáros. Mészáros, originally a gas-fitter, became the mayor of the prime minister’s hometown in 2011. Since then, he has become a billionaire business investor gaining significant ownership in several sectors from agriculture to hotels, consequently stating he was proud of “reaching all this success as a result of my hard work”, which he thinks is an option for all citizens of Hungary. Conspiracy theorists, of whom there are no shortage in Hungary, wonder what the next move from PPF Group might be.

Join us as on the seventh edition of the traditional:

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June 7th, 2018 Created and organized by Contact us to explore the opportinities to promote your company: marketing@itlgroup.hu

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 6 – April 20, 2018

Telecom and ICT ///briefs CJEU to Rule on Vodafone Hungary vs NAV Vodafone Magyarország Zrt. has brought a case against the National Tax and Administration Authority (NAV) regarding the extra tax imposed on the telecommunications sector in 2010, zoom.hu has reported. Between 2010 and 2012, the companies affected by the extra sectoral taxes paid a total of HUF 489 billion. Vodafone Magyarország finally challenged the law after eight years. The case is now at the Court of Justice of the European Union (CJEU), where the court will determine whether the act on the extra tax complies with EU rules. Vodafone said its main goal is to increase the amount of resources it can spend on developing its network. The main questions are whether the extra tax is discriminative, whether it can be deemed state aid, and whether it can be seen as a kind of value added tax. A decision by the CJEU is expected in the second quarter of 2019. If the court rules against the state, part of or the total amount of the taxes paid may have to be refunded.

Telenor Fined HUF 78 mln for Advert Hungary’s Competition Authority (GVH) on March 26 said it had fined telecoms company Telenor Magyarország HUF 78 million for comparing its prices with those of Vodafone Magyarország’s services without presenting all the relevant facts, magyaridok.hu reported. GVH found Telenor used a price comparison method for phone call costs per minute in its radio commercials and its dynamic banners even though its service and Vodafone’s were not directly comparable because of their different structure and content. GVH increased the amount of the fine by 50% because Telenor had received several fines in the past ten years for similar conduct.

Hungary ICT Sector Revenue up 15% in 2017 Revenue of Hungary’s ICT sector rose 15% to HUF 3.137 trillion last year, a summary of data compiled by the Central Statistical Office (KSH) shows, Hungarian

news agency MTI reported. The sector accounted for just under 4% of total corporate revenue in the national economy, KSH said. Revenue of IT companies increased 8% to HUF 1.249 tln and revenue of telecommunications companies was up 11% at HUF 1.174 tln. Revenue of publishers climbed 26% to HUF 275 bln and revenue of film, television and recording companies jumped 49% to HUF 438 bln. Headcount of full-time staff in the ICT sector rose 2-3% in all segments but film, television and recording, where it dropped a marked 10%.

Cloudera to Expand Budapest Office with HUF 3 bln Investment U.S.-owned enterprise software company Cloudera is investing HUF 3 billion in expanding its office in Budapest and creating its second largest developer center globally, Minister of Foreign Affairs and Trade Péter Szijjártó said on March 27, lokal.hu reported. The Hungarian government is supporting the investment with a HUF 605 million grant, the minister said. The investment will expand the company’s office space by 1,100 sqm and create 250 workplaces by the end of 2019. The IoT network will be producing large amounts of data, the analysis of which can help recognize new market needs and create new services, said Tom Reilly, CEO of Cloudera.

MVM NET and Türk Telekom Sign Strategic Agreement MVM NET Zrt., a unit of the state-owned Hungarian Electricity Works (MVM) signed a strategic partnership agreement with Türk Telekom International (TTI), the two companies said in a joint statement on March 27, portfolio.hu reported. TTI, which has a trunk network of about 4,000 km in Hungary, wants to use services offered by MVM NET within the area of the country, while MVM NET wants to use the services of TTI outside of Hungary. TTI is one of the leading telco companies in Central Eastern Europe. The most important part of MVM’s strategy is to develop and expand its network infrastructure services.

www.bbj.hu

Budapest Business Journal | April 6 – April 20, 2018

Special Report | 17

IoT Lags Behind, but Could Snowball in Coming Years While signs of IoT progress have arisen in the country lately and there is silver lining ahead as far as planned developments are concerned, Hungary has still been lagging behind its peers in the field and the room for improvement is huge, market experts tell the Budapest Business Journal. CHRISTIAN KESZTHELYI

The Internet of Things – or IoT as it is commonly referred to – has become as much a business buzz word as the prefix “smart”. The idea basically involves hooking everything — literally, i.e. devices, humans and even animals — onto the internet, letting them communicate and create statistics and countless useful data in order to help our life and our business.

tells the BBJ. He also mentions that while the most advanced are the international organizations with a large manufacturing footprint in Hungary, where there are already live solutions, like connected manufacturing, the least mature sector is Hungarian SMEs. Gábor Frischmann, vice president of Hungarian Association for Innovation (MISZ), agrees that that IoT development is rather slow here. “The deployment of IoT is growing at a moderate speed only; the necessary frequencies and technologies are mostly available,” he notes. This slow pace is partly driven by low user uptake, he believes. “There are still very few private users using smart home applications: the smart city, smart grid, smart metering, smart developments are still in a very embryonic stage.” He adds that most SMEs are only now starting to face the challenges of digitization.

“The most significant IoT investments in Hungary are implemented by the state. The introduction of online cash registers last year was State an Early Adopter the result of one of the Zoltán Havasi, CEO-founder at MOHAnet largest IoT procurements Zrt. and Head of IoT workgroup at IT Association of Hungary (IVSZ), on the other in Europe, as part of which hand makes the very interesting observation nearly 120,000 SIM cards were that it is the Hungarian state that has been the busiest in applying IoT solutions. connected to the system.” “The most significant IoT investments Internationally, businesses have been coming up with eye-catching uses of IoT, such as Intel and Bosch’s Microclimate Monitoring System or a wireless, batteryfree self-powered compressor monitor platform by AEInnova, just to mention two winners of last year’s IoT Solutions Awards. But Hungary appears to be lagging behind in this aspect. “While IoT is one of the most discussed capabilities that can drive not only effectiveness but also changes in business models, most companies in Hungary are only in initial discussions or experimental pilot projects,” Péter Hídvégi, head of IoT & digital supply chain at SAP Hungary,

in Hungary are implemented by the state. The introduction of online cash registers last year was the result of one of the largest IoT procurements in Europe, as part of which nearly

120,000 SIM cards

were connected to the system,” he pinpoints. “The government would like to introduce online cash registers in several sectors of the economy, making more areas available for financial surveillance after the success of the first systems.” Sure enough, the expansion of the idea to hair salons and taxis means 30,00040,000 more SIM cards will be allocated for such operations. Furthermore, the

Hungarian Post Office’s planned installation of remote surveillance devices, which also communicate directly with the tax authority, in vending machines by the end of June, will increase the number of operational devices by another 30,000 and make the turnover of these machines more transparent, he adds. As far as the latest IoT trends are concerned, the manufacturing sector, and the state’s Liget project are the most notable. “International manufacturing companies are implementing or considering implementation of connected manufacturing scenarios (so-called MES solutions), mostly driven by their HQ,” Hídvégi of SAP Hungary says. “Fixed asset insight is also a trending use case, where based on sensor data, companies try to understand the ‘health status’ of their assets, and the need for repair/ maintenance. However, very few real use cases exist, since this requires in-depth knowledge of the actual asset/technology and usually predictive analytics and big data needs to be involved,” he says. Hídvégi also mentions fleet tracking, where IoT technology is used to follow a logistic or commercial car fleet, following position and key parameters of the vehicle, or more automation of warehouse management activities with active RFID tags of warehouse bins and items.

Smart Liget Project

Havasi of the IVSZ also pinpoints the possibility of smart city solutions snowballing into the advent of new solutions on the housing market, as several investors appear to be pursuing development in this area. “For example, engineers are working on creating a whole city district based on this principle as part of the Liget project,” Havasi adds. Apparently, we are on the brink of a boom in the IoT sector and smart solutions can start their sporadic spread in just a few years’ time. “Technology has expanded both in terms of capability and also in variety

of solutions in the last year, advancing the actual real use cases and productive scenarios… In the next one-to-three years, we expect that larger mid-size and large enterprises will take in use the first productive pilots, followed by SMEs, since they will be forced to for digitalization to be able to stay in the value of chain of their large customers,” says Havasi. He also expects public scenarios like smart offices and smart cities to follow subsequently, since these are the most difficult to show an evidential business case. Frischmann of MISZ also envisages accelerating growth. “I am sure that the different IoT solutions are important enabling infrastructure technologies of effective utilization of the digitalization, automation, data- or fact-based management, etc. I expect some user-side accelerating factors, like smartification, automation both in industry and agriculture, the pressing need for enhanced sustainability of the environment, society and economy – all these will require the fast-growing application of these enabling technologies,” the vice president says.

Péter Hídvégi. He also underlines the importance of 5G technology, and “the creation of an integrated platform for many different applications, starting from the very narrow band IoT needs up to real super high speed and reliable

M2M

communications.

And although the Hungarian government stated the 5G implementation as a national priority, I am sure that we cannot and must not wait for and rely on that technology only.” Havasi also stresses the importance of 5G, saying that while developed countries in Asia and the United States are well ahead, Europe chiefly lags behind in IoT due to the quality of its networks. “On the old continent, 5G networks are available at a limited number of places and no breakthrough can be expected without this technology becoming more wide-spread. Therefore, there is no organic development present in Hungary either; the spread of IoT devices would be negligible without the efforts of the government. Progress could be expected for example if mobile operators would focus more on the development of narrow band IoT, which would allow more ready-to-use products to be sold on the market,” he adds.

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 6 – April 20, 2018

Calming Fears Around the AI Future Magyar Telekom hosted an international artificial intelligence conference on March 21 called “AI for Everyone”, where industry experts and researchers examined the most burning issues related to future technology. The subject that most people are worried about: will AI ever rule humankind? Artificial intelligence is one of the most commonly used buzzwords today, but even so there are still many myths about it. Speakers at the conference sought to dispel some of the misconceptions and to highlight the revolutionary possibilities technology offers. “AI, which seemed to be as absurd as sci-fi stories, is becoming a part of daily lives these days,” said CEO of Magyar Telekom Christopher Mattheisen, who opened the event via a video message. “The existing line of Magyar Telekom businesses, big data, communication networks and cloudbased services allow for the widespread use of AI. That is why I consider it important that we initiate a dialogue on this topic and open up to new opportunities.” Magyar Telekom’s chief technology and information officer, Dr. Kim Kyllesbech

Larsen, addressed prejudices and feelings related to AI in a lectured called “How do we Humans Feel About AI?”. He cited a survey that found that male respondents have a more positive attitude to AI than women. “We tend to apply a much stricter standard to AI than we do to humans. If a machine makes a mistake, that will never be forgiven, but if a human makes a mistake, we just consider it a simple accident,” Larsen pointed out. “Much research has proved that AI is less biased than humans, yet the majority of those surveyed prefer to trust their own decision-making mechanism, considering them to be more objective.”

Applying AI

Susan Wegner, of Magyar Telekom’s parent company Deutsche Telekom, explained how the group applies artificial intelligence

and the new business opportunities it offers. “We can provide automated personalized services to our clients with the help of AI. We are already testing a process that will allow us to forecast customer service error reporting

with

80%

accuracy,” she said. Others highlighted the revolutionary step change promised by AI. Anastassia Lauterbach of Analytics Ventures spoke

27-30 APRIL

about how AI is rewriting existing business models and how the technology becomes a separate line of business. “As electricity transformed the world 100 years ago, AI will also change all industries in the coming years. New generation start-ups will all base their ideas on AI,” she insisted Ali Bahramisharif, CEO of Machine2Learn, also tackled this topic, particularly the importance of data collection. “The data volume currently at our service doubles every 18 months,” he noted. “MicKinsey’s 2011 report is still valid: if we want to have the competitive advantage, we must squeeze it all out of big data.” Arthur Keleti, an IT security strategist at T-Systems Hungary, tackled the fear that our private space can be endangered and we might inadvertently hand out our “secrets” to a mysterious power beyond our control. Keleti did not deny the importance of the problem but highlighted that the very idea of a “private life” as such has changed over time, and our “secrets” are not necessarily identical to our personal data. It is up to the experts to protect our data and prevent unauthorized persons from tampering with it, he said. In addition to the conference lectures, several prominent suppliers and partners were also on hand to present demos related to the field. “The interest and the enthusiasm of the participants were further proof that innovative and future-oriented thinking is important for Telekom,” a spokesperson for the company said.

www.bbj.hu

Budapest Business Journal | April 6 – April 20, 2018

Special Report | 19

Telecom service providers

magyaR telekom nyRt. www.telekom.hu

vodaFone magyaRoRszág mobil távközlési zRt.

610,851

150,933(1)

telenoR magyaRoRszág zRt.

148,705 (2016)

3,000,000 (approx.)

upC magyaRoRszág kFt.

66,570 (2016)

✓

–

✓

–

✓

–

✓ ✓ ✓ ✓ ✓

✓ ✓

–

✓

–

✓

–

oWneRsHip (%) HungaRian non-HungaRian

9,154

Free float (40.64), Christopher other (0.15) mattheisen Deutsche Telekom János Szabó AG (59.21) Zoltán Pereszlényi

1,700

– Vodafone Europe B.V. (100)

amanda nelson David Garcia –

1095 Budapest, Lechner Ödön fasor 6. (1) 288-1270 (1) 288-4270 ugyfelszolgalat.hu@ vodafone.com

✓

– Telenor Mobil Communications AS (100)

alexandra Reich Zoltán Hasulyó Petra Stangl

2045 Törökbálint, Pannon út 1. (20) 930-4000 (20) 930-4100 –

✓

1,000 (approx.)

– UPC CEE Holding B.V. (100)

Robert Redeleanu Ádám Jakabos –

1095 Budapest, Soroksári út 30–34. (1) 456-2600 (1) 216-7752 ugyfelszolgalat@upc.hu

1,827

– RCS&RDS S.A. (100)

ungureanu Florin – –

1134 Budapest, Váci út 35. (1) 707-0005 (1) 708-7009 ugyfelszolgalat@ digikabel.hu

andrás kápolnai Ádám Hargitai András Tóth

1119 Budapest, Petzvál József utca 31–33. (1) 464-2464 (1) 464-2525 antennah@ahrt.hu

Company paCkage(s)

QuadRuple play (inteRnet, tv, landline pHone, mobile)

paCkage type sold tRiple play (inteRnet, tv, landline pHone)

otHeR

isdn

analog WiRe netWoRk

analog Cable netWoRk

optiCal Cable netWoRk

mobile netWoRk

otHeR

voip

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

–

inFRastRuCtuRe types

satellite tv

leased line

Cable tv

iptv

xdsl

Cable inteRnet

mobile inteRnet

mobile voiCe tRansmission

landline tRansmission

no. oF aCtive subsCRibeRs 5,293,328

seRviCes

no. oF Full-time employees on maRCH 1, 2018

Company Website

total net Revenue in 2017 (HuF mln)

Rank

Ranked by total net revenue (HUF mln) in 2017

✓

www.vodafone.hu

www.telenor.hu

www.upc.hu

digi távközlési és szolgáltató kFt.

antenna HungáRia zRt.

www.digi.hu

46,239

–

✓

–

✓

–

✓ ✓ ✓ ✓ ✓

✓

–

✓ ✓

–

✓

–

✓ ✓ ✓ ✓ ✓

inviteCH megoldások zRt.

23,168

taRR kFt.

www.invitech.hu

www.tarr.hu

HungaRo 10 digitel kFt. www.hdt.hu

aCe teleCom kFt. 11 www.acetelecom.hu

netFone 12 teleCom kFt. www.netfone.hu

dRávanet zRt. www.dravanet.hu

opennetWoRks 14 kFt. www.opennet.hu

8,890

7,553

1,338

5,683

3,690

1,157

420

6,267

217

6,000

✓

–

✓ ✓

–

✓

–

✓

–

✓

–

✓

–

✓

–

✓

✓ ✓

✓ ✓ ✓

–

✓ ✓

–

Integrated business, IT and telecom solutions

–

Satellite data transmission, satellite content providing, IT security solutions

–

Virtual mobile ✓ ✓ ✓ ✓ network

✓ ✓ ✓ ✓

26,524(2)

(2)

–

invitel távközlési zRt.

–

✓

✓ ✓

–

www.invitel.hu

–

✓ ✓

Program distribution, telecom– ✓ ✓ ✓ munication, multimedia, WiFi services, ICT solutions

–

4G, 4G+

–

✓

–

✓

–

✓ ✓ ✓

44,219

www.ahrt.hu

–

✓

–

✓ ✓

–

✓

–

✓

–

✓

–

addRess pHone Fax email

1013 Budapest, Krisztina körút 55. (1) 458-0000 – –

–

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

–

544

Hungarian state (100) –

Microwave connection

✓

✓(3)

✓(4)

604

Ilford Holding Kft. (99.99), other (0.01) –

david blunck, marianne langsteiner Gerald Grace István Iski

2040 Budaörs, Edison utca 4. (1) 801-1500 (1) 801-1501 info@invitel.co.hu

581

Ilford Holding Kft. (99.99), other (0.01) –

david blunck, áron Javorniczky Gerald Grace Balázs Horváth

2040 Budaörs, Edison utca 4. (1) 801-1500 (1) 801-4424 vip@invitech.hu

272

Individuals (100) –

János tarr Kata Barta Péter Kuczkó

7100 Szekszárd, Kadarka utca 18. (74) 416-000 (74) 413-636 info@tarr.hu

Data centrers, – microwave transmission

–

Satellite data transmission center

–

✓

–

✓

–

top loCal exeCutive CFo maRketing diReCtoR

–

✓

–

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

2310 SzigetszentmiklósLakihegy, Komp utca 2. (1) 488-8500 (1) 488-8501 info@hdt.hu

Individuals (68) ThreeF Kft. (32) –

attila Farmosi, gábor varga Gábor Varga Viktória Krall

1037 Budapest, Zay utca 3. (1) 437-0590 (1) 437-0599 office@acetelecom.hu

zsolt Wilhelm Zsolt Wilhelm Lajos Varga

4400 Nyíregyháza, Tiszavasvári út 35/A (1) 878-1814 (1) 325-5675 info@netfone.hu

✓ ✓ ✓ ✓ ✓

–

✓

–

✓

NETFONEINVEST Kft. (Ÿ), Zsolt Wilhelm (Ÿ) Scanwinavia AB (Ÿ)

–

✓ ✓

–

✓

–

✓

–

✓

Pallas Office Kft. (81), other (19) –

zsombor attila papp Rezső Dunay Csaba Csizmadia

7624 Pécs, Budai Nagy Antal utca 1. (80) 811-118 (1) 890-0891 info@dravanet.hu

–

Virtual subdirectory

András Beliczay (100) –

andrás beliczay Katalin Urbanics Judit Stark

1117 Budapest, Fehérvári út 50-52. (1) 999-6000 (1) 999-6001 info@opennet.hu

–

✓

–

✓

–

✓ ✓

–

NOTES: (1) Data of business year April 1, 2016-March 31, 2017. (2) Preliminary data. (3) Mobile internet. (4) Small company packages.

–

✓

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 6 – April 20, 2018

Internet service providers

telenoR magyaRoRszág zRt.

vodaFone magyaRoRszág mobil távközlési zRt.

147,507

upC magyaRoRszág kFt.

www.telekom.hu

www.telenor.hu

148,705

3,500,000

✓

–

✓

–

✓

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone Fax email

✓

1991 9,226 (June 30, 2016)

Free float (40.64), other (0.15) Deutsche Telekom AG (59.21)

Christopher mattheisen János Szabó –

1013 Budapest, Krisztina körút 55. (1) 458-0000 – –

✓

1993 1,130

– Telenor Mobil Communications AS (100)

alexandra Reich Zoltán Hasulyó Petra Stangl

2045 Törökbálint, Pannon út 1. (1) 464-6000 (1) 464-6100 –

– Vodafone Europe B.V. (100)

amanda nelson David Garcia –

1095 Budapest, Lechner Ödön fasor 6. (1) 288-4288 (1) 288-3200 –

mobile

miCRoWave

adsl

Cable ✓

yeaR establisHed no. oF Full-time employees on august 1, 2017

leased line

602,651

5,390,000 (June 30, 2016)

magyaR telekom nyRt.

modem

total no. oF subsCRibeRs on august 1, 2017

Company Website

means oF aCCess

total net Revenue in 2016 (HuF mln)

Rank

Ranked by total net revenue (HUF mln) in 2016

✓

–

✓

1999 1,761

66,570

–

✓

–

✓

1994 1,014

– UPC CEE Holding B.V. (100)

Robert Redeleanu Ádám Jakabos –

1095 Budapest, Soroksári út 30–34. (1) 456-2600 (1) 216-7752 info@upc.hu

digi távközlési és szolgáltató kFt.

42,769

✓

–

✓

–

1996 1,621

– RCS&RDS S.A. (100)

ungureanu Florin, Ryszka sambor – –

1134 Budapest, Váci út 35. (1) 707-1000 (1) 707-0009 ugyfelszolgalat@hu.digi.tv

invitel távközlési zRt.

36,057

✓

1995 620

Ilford Holding Kft. (99.99), other (0.01) –

david blunck, marianne langsteiner Gerald Grace István Iski

2040 Budaörs, Edison utca 4. (1) 801-1500 (1) 801-1501 info@invitel.co.hu

gts HungaRy kFt.

9,828

–

✓

–

✓

–

1993 5

Magyar Telekom Nyrt. (100) –

gergely árvai – –

2040 Budaörs, Ipartelep utca 13–15. (1) 814-4000 (1) 814-4047 info@gts.hu

netFone teleCom kFt.

1,157

Morando Zrt. (80), Zsolt Wilhelm (10) Scanwinavia AB (10)

zsolt Wilhelm Zsolt Wilhelm Lajos Varga

4400 Nyíregyháza, Tiszavasvári út 35/A (1) 878-1814 (1) 325-5675 info@netfone.hu

aCe teleCom kFt.

1,103

dRávanet zRt.

339

6,916

–

✓

–

✓

–

eQnet inFokommunikáCiós zRt.

✓

–

✓

noRdtelekom nyRt.

www.vodafone.hu

www.upc.hu

www.digi.hu

www.invitel.hu

www.gts.hu

www.netfone.hu

www.acetelecom.hu

www.dravanet.hu

www.eqnet.hu

www.nordtelekom.hu

Ÿ= would not disclose, NR = not ranked, NA = not applicable

135

–

✓

–

2012 44

–

✓

–

✓

–

1997 47

Individuals (68), ThreeF Kft. (32) –

attila Farmosi, gábor varga Gábor Varga Viktória Krall

1037 Budapest, Zay utca 3. (1) 437-0590 (1) 437-0599 office@acetelecom.hu

–

1996 10

Pallas Office Kft. (81), other (19) –

zsombor papp Rezső Dunay Csaba Csizmadia

7624 Pécs, Budai Nagy Antal utca 1. (40) 811-118 (1) 890-0891 info@dravanet.hu

–

1999 1

Ÿ Ÿ

tamás graur – –

2000 Szentendre, Egres út 37. (1) 465-7800 (1) 465-7899 info@eqnet.hu

✓

2009 4

BELTÁV Vagyonkezelő Kft. (76.58), other (23.42) –

mihály gácsi – –

1074 Budapest, Dohány utca 12–14. (1) 492-0000 (1) 267-6114 info@nordtelekom.hu

–

✓

–

✓

This list was compiled from responses to questionnaires received by April 8, 2018 and publicly available data. Data is based on companies’ own data revelations. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

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Budapest Business Journal | April 6 – April 20, 2018

Graphic by Shutterstock.com/Marina Linchevska.

Finding Reminders of Elvis in Budapest

Wandering down Király utca last Friday I noticed a poster for “Elvis The Musical”. As I strolled towards it, the buildings around me began to fade out and wobble. The voices of a gang of British girls on a hen weekend became fainter. I was transported back in time…

Peace in the Valley

Even if you don’t worship the King – and I do, unironically –, the story behind the park is a tribute to Elvis’ noble spirit. It was January 6, 1957 and Elvis was making his third and final appearance on “The Ed Sullivan Show”. On previous broadcasts, censors at CBS TV had done their best to tame him by filming him from the waist up. They were terrified that the hip

raise

HUF 16 mln,

the amount it deemed necessary for a lifesize bronze statue. In 2017, Elvis fans donated almost HUF 600,000 forints but there’s still a very, very long way to go. But this year, according to the Magyar Elvis Klub, a number of Elvis-related shows will be coming to Hungary as well as Elvis The Musical. Various Hungarian music groups have come together to create a “Together for Elvis” movement and plan to hold a day-long charity concert to raise money for the statue. No less an august Elvis-connected personage than the King’s former wife Priscilla has expressed support for the new statue campaign.

Freedom and Compassion

DAVID HOLZER

I’d love to tell you that I was catapulted back to when Elvis walked the earth in his magnificent sneery pomp and finery. Instead, I materialized in a scrubby patch of park on the Buda side of the Danube. This, my friends, is Elvis Presley Park. On one of my first visits to Budapest after I’d somehow come to live in this country, my Hungarian partner’s brother-in-law told me he had a surprise for me. When we arrived at Elvis Presley Park, next to the Margit bridge, I was amazed. Not at the park itself, I have to say, which is far from impressive, but at the simple fact that it existed at all. Sadly, the park’s existence doesn’t celebrate the fact that Elvis had Hungarian blood. After you’ve lived in this country for a couple of months you get used to discovering that people you thought couldn’t possibly have Hungarian forebears were in fact a sixteenth Hungarian or something. That surprisingly long list includes the likes of Goldie Hawn, William Shatner, Freddie Prinze, Ali MacGraw, Paul Newman, Uncle Tom Cobley and all, but Elvis isn’t on it. In fact, the King was a mixture of ScotsIrish, French and German with possibly a sprinkling of Cherokee, which may have given him those high cheekbones.

Hungarian rock and roll singer known as “the Hungarian Elvis”. Komár went to join the King in rock and roll heaven in 2012. Despite the harsh criticism it’s facing, there remain good reasons to defend Facebook. If it didn’t exist I probably wouldn’t have discovered the Magyar Elvis Klub and its campaign to erect what it calls a “worthy Elvis statue” in the park. In January 2017, the fan club started a fundraising campaign to

and leg gyrations that had led to Elvis being nicknamed “the Pelvis” would incite females of good character into all kinds of debauchery. But this hadn’t stopped him from almost singlehandedly changing popular music overnight and kick starting a musical and cultural revolution. The then 22 year old Elvis sang seven songs in three segments, including the gospel standard Peace in the Valley. Ed Sullivan announced that Elvis wanted to dedicate his performance to the Hungarian people who had risen up against their Soviet government in

October

1956.

The revolution had been quashed before Elvis’ appearance but, as Sullivan explained, Elvis felt “this is sort of in the mood that he’d like to create”. On Elvis’ behalf, Sullivan asked the TV audience to donate to Hungarian relief efforts and around CHF 25 million were raised. For obvious reasons, perhaps, it took a while for Hungary to be able to honor the King’s profoundly American gesture. But, in 2011, a small patch of grass beside the Danube became Elvis Presley Park. Even so, the Mayor of Budapest, István Tarlós, said: “The reasons for honoring Elvis are not sentimental but political.”

Elvis Presley Boulevard

Surprisingly enough, Elvis Presley Park was not the first Hungarian tribute to the King of its kind. At the time the international news media covered the opening of the park, much was made of the existence of an Elvis Presley Boulevard on the outskirts of the city. This was a dirt road, notable for being near the home of László Komár, a

I’d love to see the statue erected, and not simply because it would be splendidly surreal. Even if you’re not a diehard Elvis fan, there’s no question that he stood for freedom and compassion. Today, we need as many of these people as we can get. But, until a bronze Elvis does rise above old Buda, Elvis Presley Park is a great place to start exploring this side of the city. You have the fantastic Lukács Baths a few minutes’ walk away – not as picturesque as Széchenyi but, in my opinion, more authentically Budapestian. If you take a walk down Frankel Léo utca and cross over Margit krt. you come to the Bambi Bar, a perfectly-preserved socialist era coffee house that has been gently hipsterized. And that’s only the beginning….

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Budapest Business Journal | April 6 – April 20, 2018

Photo: Attila Kleb Photography.

Putting on a ‘Higher Purpose’ Show JVS Group Hungary is responsible for bringing some of the biggest shows and exhibitions to Hungary, including the current “BODY Exhibition” and the upcoming Elvis show. CEO Dániel Bátyi and communications director Zsuzsanna Oláh talked to the Budapest Business Journal about what is involved BBJ: The publicity for the Elvis show proclaims “In concert. Live on Screen” Can you tell us more about the staging? What can audiences expect? Dániel Bátyi: Fans are about to enjoy a real live concert experience with Elvis singing his greatest hits on huge screens with a full orchestra. Priscilla Presley once told us that it was the dream of Elvis to perform with an orchestra, something that had never happened in the life of the King but now, more than 40 years after his death, it is a reality. The shows filled arenas in Europe and we expect a crowd from all over the country and even from abroad. BBJ: The show was originally a 40th Anniversary celebration concert. Why is it coming to Budapest now, and what other stops will it have on tour? Zsuzsanna Oláh: The show is on tour, it was a great success in the United States, packed arenas in the United Kingdom – two consecutive sold-out shows in the London O2 for example – and now it is conquering inland Europe and coming to Hungary in June. BBJ: What are your expectations for the show? How are ticket sales going? DB: We are expecting a full house. Ticket sales are going well, Elvis has a great fan base in Hungary. A park is named after him in Budapest remembering the actions he took to support the 1956 revolution. Elvis helped to raise money to help Hungarians in those difficult times. BBJ: You are also involved with the internationally renowned “BODY Exhibition” show. How did that come about? ZSO: It is the first time the original “BODY Exhibition” visits Hungary. We believed the Hungarian public, which is very open towards high-level, informative exhibitions will esteem such an event. It paid off. BBJ: What has been the response to the show? How many people have seen it in Budapest thus far?

personalities and bloggers joined us to promote the importance of daily sport in our lives. The “BODY Exhibition” is here to help and we take it seriously. BBJ: For those uncertain of what is involved in bringing such shows to Hungary, can you describe the process? DB: All concerts and exhibitions of JVS Group are of great dimensions. The Ennio Morricone concert featured more than 250 musicians on stage, a full house of 12,000 spectators, and 20 trucks of equipment. Security was guaranteed by a professional team of 48 people. Installing the more than 300 artifacts at the “BODY Exhibition” meant coordinating the work of 112 people. The team worked 24 hours a day for ten consecutive days to set up this exhibition. BBJ: How much of it is left in your hands, and how much is decided by international partners? ZSO: We do feel the benefits of using all the international experiences of the headquarters in Prague but it has always been a goal to localize the exhibitions. “Titanic” featured a “Hungarian room” presenting the local links to the catastrophe and the heroism of the doctor of the ship “Carpathia”. The “BODY Exhibition” also pays tribute to the greatest minds of Hungarian medicine.

DB: We hoped that the exhibition would be a success but the reaction of the public has surpassed all expectations. The “BODY Exhibition” is fully booked and, which makes us really happy, we have around 40 student groups visiting every day. BBJ: The “BODY Exhibition” has always courted a degree of controversy. Have you experienced any negative feedback, or have people been accepting of it? ZSO: We don’t feel it is controversial and we believe that most of our visitors see it the same way. Prevention is the main aim of the exhibition, it helps us to understand the inner workings of our body and by facing a lung destroyed by smoking or a liver battered by years of heavy drinking, it does make us think about our lifestyles and how it affects our health. If only one out of ten visitors decide

Biographies Dániel Bátyi started his career as the international event manager of the Red Bull Air Race Word Series, then became the production director of the series. In three years he organized 23 RBAR events in 21 countries. Later, Bátyi engaged in exhibitions such as BODIES, Da Vinci Genius and Tutankhamen in Budapest, before joining Semmel Concerts Entertainment GmbH, a leading concert and exhibition

to adapt new measures in life because of the experience, it is already a great success. But we believe many more will do so. BBJ: How do you decide which shows and exhibitions to get involved with? Are there any guiding criteria for you? DB: At JVS Group it is always an objective to serve a higher purpose, to give something to the public that makes them richer. “Titanic” was about human stories, the “BODY Exhibition” is about health and well-being. We fill a gap: currently there is no other promoter that would bring such high-level and publicly acclaimed exhibitions to Hungary. ZSO: In the framework of the “BODY Exhibition” we founded the Hungarians for Daily Exercise movement. Great athletes, artists, medical professionals, TV

promoter and producer in Europe. Bátyi supervised the exhibitions in 11 European countries for eight years as a project leader. Looking for new challenges he accepted the offer of JVS Group to become its CEO in Hungary. Zsuzsanna Oláh started her career at the protocol section of the Ministry of Foreign Affairs before filling various positions in the hotel business at the Intercontinental, the Marriott

BBJ: Finally, could you give us some of the history of JVS Group Agency? How did it come to be in such a strong position today? DB: JVS Group specializes in the promotion, creation, design, production and tourmanagement of large international, concerts and cultural events with broad appeal. Our travelling exhibitions are high quality, educational, entertaining and interactive. We developed and produced the “Cosmos Discovery” exhibition and promoted worldfamous exhibitions including “Titanic”, “Gateway to Space”, “Tutankhamen” and “BODY”. We have been present in the European market since 2000. We were the proud promoter of Czech, Polish and Slovak concerts of Scorpions, José Carreras, Pussy Cat Dolls, Anastacia, Vanessa Mae, Ennio Morricone, Hans Zimmer, Mireille Mathieu, Deep Purple, Jean Michel Jarre, James Newton Howard, Lara Fabian, Ringo Starr, “Harry Potter in Concert”, the “Elvis On Screen” concert and many more. Our venture in Hungary started with the “Titanic” exhibition in 2017 followed by the Ennio Morricone concert. We are regional market leaders when it comes to organizing major exhibitions. When I started working for JVS Group in Hungary I knew that Zsuzsanna had to be the communications leader. ZSO: Dániel and I have known each other for ten years and worked together on the “Tutankhamen Exhibition” before.

Group and the Gerbaud in Budapest. She left the segment as the director of a four-star hotel. Later she co-founded the RedOne Event agency and became an adviser to the Bank of China and FIFA Congress on communication. In 2015, she founded Felhang PR and production agency that worked for companies such as Henkel, NISZ, IKEA, TV2 and various Chinese firms. From 2017 she is the communications director of JVS Group Hungary.

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Budapest Business Journal | April 6 – April 20, 2018

Tokaj Wines Taking Center Stage Coming out of the blue, it was a Kabar – one of the permitted grapes of Tokaj and a crossing of Hárslevelű and Bouvier – that topped the hit parade. The wine in question was made by the barely known Péter Pincészet, which unfortunately wasn’t present at the tasting. Kabar can possess seductive fruitiness that in this case propelled it past the rest of the pack. In second place, Gizella Pince’s Szilvölgy Furmint-Hárslevelű 2016 once again showed how well the two grapes can work in tandem in dry wines – it seems very logical that the pair that perform so well in botrytized sweet wines can also hit it off in dry. The rest of the Top Ten comprised single varietal wines: five Furmint and three Hárslevelű, with third place taken by a Hárslevelű (Palkó Pince’s Báthori Hárslevelű 2015).

While Tokaj is Hungary’s bestknown and respected region in the wider wine world, it is also the firm favorite of many Hungarians, as was highly apparent at the busy and bustling Tokaji Március tasting held at the Corinthia Hotel Budapest on March 24.

Place of Growth

ROBERT SMYTH

While its reputation was built on botrytized sweet wine – some of it coming from the first vineyards to be officially classified in the world – much of attention these days has turned to the dry wines made in the region, also referred to as Tokaj-Hegyalja (Tokaj-foothills). It’s not that the sweet wines aren’t good – Tokaji Aszú continues to be made in the same way that it has been for centuries, yet with the use of modern technology making the sublime stuff even more delectable than ever, and as a good as anything anywhere. It’s just that our palates have changed. While the dry revolution has been led by the esteemed Furmint grape, with Hárslevelű coming up on the inside and sometimes overtaking its prestigious partner in sweet Tokaji Aszú crime when the stakes are dry, it was notable that neither claimed top place in this year’s Tokaji Marcius’ Top Ten, a list compiled from the results of a blind tasting involving a number of experts.

It was nice to see two cellars that are more recognized for their sweets – Tokaj Classic, with its stony, salty and linear Mád Furmint Király Grand Cru 2015, and Hangavári Pincészet with the juicy, round and smooth Furmint Lapis 2015 make the top list, in eight and ninth places, respectively. Both wines represented their places of growth down to a tee – the mineral intensity of Mád and the lusciousness of Lapis. Incidentally, both wineries also made into the sweet Top Ten. Coming from the slightly cooler climes of Sárospatak, Pajzos Tokaj’s Tokaji

“This focus on personality – in limited production lots – has helped the Napa Valley wine industry to blossom in recent decades. I see precisely the same thing happening in Tokaj.” Hárslevelű Selection 2015 was the best dry wine I can remember from the Frenchowned winery and took fifth position. Erzsébet Pince, owned by the Prácser family and situated in the heart of the town of Tokaj in a cellar that was once used by

Russian royalty to store wine, claimed two of the Top Ten spots. Present at the tasting and lending a hand to his wife, Hajni Prácser, was Ronn Wiegand, Master of Wine and Master Sommelier. He is also a member of the Confrérie de Tokaj Wine Tasting Committee, which selected the lots for the upcoming sixth Great Tokaj Wine Auction. The auction will see a record selection of 31 wines from 24 producers with an estimated value of HUF 70 million. These unique, oneoff wines go under the hammer at the synagogue in the town of Tokaj on April 21 at 3:30 p.m. “Looking back, I see that the growth and development of the Tokaj auction mirrors that from another wine region where I lived for 30 years – the Napa Valley – whose extraordinarily successful wine auction originated only in 1981,” said Wiegand, who had moved to Napa the year before to auctions started there. He added that he saw the Napa Valley wine auction help to increase the personality and quality of the region’s wines, as producers combed their barrel cellars for unique, superior lots that would be sold only at the auction. “This focus on personality – in limited production lots – has helped the Napa Valley wine industry to blossom in recent decades. I see precisely the same thing happening in Tokaj,” said Wiegand. The auction will include dry wine from the highly promising 2017 vintage, as well as the full gamut of sweets.

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Socialite | 23 László Mészáros, head of the Disznókő winery which has several wines up for auction, describes the 2017 vintage as a “very drinkable one”. While dry Furmint generally needs some time for the acidity to calm down, the 2017s are already very approachable. 2017 looks a stellar vintage for Tokaj from dry to sweet. Here are two standout dry Tokaj wines tasted last month (not in the auction and generally available):

Gizella Pince Szilvölgy FurmintHárslevelű 2016 The share of Hárslevelű was upped to 50% in 2016 to make the two main Tokaj grapes equal partners. Aged in new and used barrels, and the oak is perfectly integrated, adding a layer of richness without impeding on the wine’s delightful lightness of touch. Hailing from a small, partly terraced vineyard at the foot of Tokaj Hill with lots of volcanic dacite in the upper part, this wine is all about the balance between floral freshness, fresh fruit, zesty acidity and complexity. HUF 6,650. Demetervin Király 2015 Harvested from the upper terraces of the highest vineyard in the Tokaj region. October 20, hand pressed, spontaneously fermented and aged for eight months in second- and third-fill Zemplén oak ranging between 500200 liters in size. Just 1,200 bottles of this organic wine were made, from one hectare. This was one of the standout wines at DiVino Gozsdu’s organic wine tasting last month. It captures the Király vineyard’s exciting herby note. Green herbs and sage on the vibrant nose and very long palate. Harmonious and balanced with good body and weight, with refreshing acidity to prevent it from becoming flabby. HUF 9,000.

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