Editor-In-Chief Commentary on HT Results

We will take a closer look at HT’s operations in Croatia, but also at the Group level, including the business results of Crnogorski Telekom. Continued investments and growth across all key indicators are visible, demonstrating the resilience of the strongest domestic telecom operator. The unaudited unconsolidated results of Hrvatski Telekom for the period January – December 2025 show a year in which HT managed to preserve profitability despite a slight decline in revenue, primarily through cost discipline and stable operating cash generation, albeit with a visible weakening of the cash position at year-end and an increase in liabilities. The analysis below is based exclusively on the figures contained in the submitted financial reporting forms.

At the income statement level, operating revenues in 2025 amounted to €969,153,448, compared to €992,289,884 a year earlier, representing a decrease of €23,136,436 or approximately 2.3%. At the same time, operating expenses declined faster than revenues: €802,909,424 in 2025 compared to €832,228,407 in the previous year, a decrease of €29,318,983 or around 3.5%. This difference in the dynamics of revenue and cost movements is key to understanding why profit remained at a high level despite lower revenues.

Profit before tax amounted to €164,307,817, compared to €167,468,187 a year earlier, a decrease of €3,160,370 or around 1.9%. Corporate income tax in 2025 amounted to €27,480,703 (previous year €28,359,263). Net profit for the period therefore reached €136,827,114, compared to €139,108,924 a year earlier, a decrease of €2,281,810 or approximately 1.6%. In practice, this means that in 2025, HT almost fully offset the impact of weaker revenues through lower expenses and preserved operational efficiency, as the decline in net profit was significantly smaller than the decline in revenues.

The expense structure further confirms the emphasis on cost control. Material costs amounted to €31,239,588 (previous year €29,738,403), while personnel costs stood at €84,549,950 (previous year €105,621,217), a pronounced decrease of €21,071,267. Depreciation and amortization amounted to €90,155,204 (previous year €91,454,993), remaining almost stable. Other external costs totaled €242,135,204 (previous year €250,392,210), a decrease of €8,257,006. Within this framework, total operating expenses declined sufficiently to preserve the pre-tax result, so 2025 can be interpreted as a year in which part of the pressures from the environment were addressed through rationalization and cost transformation, alongside a relatively stable depreciation base.

The balance sheet as at 31 December 2025 shows an increase in total assets to €2,143,012,931, up from €2,018,493,884 at the end of the previous year, an increase of €124,519,047 or around 6.2%. Non-current assets increased to €1,696,890,077 (previous year €1,537,299,378), while current assets decreased to €425,445,811 (previous year €451,204,619). The most significant shift within current assets is cash at bank and in hand: €105,091,818 at the end of 2025, compared to €169,146,093 a year earlier, a decrease of €64,054,275 or approximately 37.9%. At the same time, receivables increased to €280,784,454 (previous year €249,038,771), indicating a higher level of funds tied up in working capital through receivables, while the cash position weakened.

On the financing side, capital and reserves decreased to €1,600,453,696 (previous year €1,620,523,720), a decrease of €20,070,024 or around 1.2%. At the same time, liabilities increased across both maturities. Non-current liabilities rose to €218,410,165 (previous year €81,303,060), an increase of €137,107,105. Current liabilities increased to €298,374,588 (previous year €242,757,689), up by €55,616,899. This combination of lower equity, a strong increase in liabilities, and reduced cash suggests that during 2025, reliance on liabilities increased, while part of the value was likely returned to shareholders through transactions visible in the statement of changes in equity.

The cash flow statement (indirect method) further clarifies where the cash “disappeared.” Net cash flows from operating activities amounted to €398,151,389 in 2025, slightly lower than €406,394,573 a year earlier. The investing section shows a strong level of investment: cash outflows for the purchase of property, plant, and equipment and intangible assets amounted to €-186,446,713 (previous year €-194,631,345), confirming a continued investment cycle. Financing activities were net negative at €-224,417,943 (previous year €-211,713,373), consistent with outflows to shareholders and/or repayments. Overall net decrease in cash and cash equivalents amounted to €-224,955,275 in 2025 (previous year €-242,768,584), bringing cash at the end of the period to €105,091,818. In other words, HT generates strong operating cash, but the large investment cycle and net financing outflows exceed it, reducing closing liquidity.

In the context of capital policy, the statement of changes in equity shows a net profit of €136,827,114 in 2025, but also significant items reducing distributable equity through transactions with owners. In the current year, dividends paid amounted to €-125,479,042, higher than in the previous year (€---119,209,808). Additionally, treasury share buybacks of €-56,338,051 were recorded. The combination of dividends and share buybacks explains why, despite high net profit, total capital and reserves declined, and the cash position weakened.

Furthermore, the revenue structure by HT segments confirms diversified growth. Mobile service revenues increased from €372.5 million to €391.1 million (+5.0%). Mobile non-service revenues (devices) increased from €182.3 million to €184.3 million (+1.1%). Fixed service revenues rose from €320.4 million to €328.3 million (+2.5%), while fixed non-service revenues remained stable at €57.7 million (-0.1%). System solutions revenues increased from €79.4 million to €87.7 million (+10.5%), confirming growing demand for ICT, cloud, and cybersecurity services.

The mobile segment shows a clear shift toward the postpaid base. The number of postpaid subscribers increased from 1,551 thousand to 1,606 thousand, representing a growth of 3.5%. At the same time, postpaid ARPU increased from €15.1 to €15.5 (+2.8%), reflecting migration to higher-value tariffs and pricing adjustments.

The prepaid base remained stable, increasing from 926 thousand to 933 thousand users (+0.8%). However, prepaid ARPU declined from €5.0 to €4.5 (-8.7%), as a result of migration toward the postpaid segment and growth in lower-revenue M2M subscribers.

In the fixed segment, transformation toward fiber continued. The number of retail broadband lines increased from 669 thousand to 674 thousand (+0.7%), while the retail fiber base increased by 35% year-on-year. TV subscribers remained stable (554 thousand compared to 555 thousand, +0.4%). The number of fixed voice lines decreased from 717 thousand to 709 thousand (-1.1%), in line with the market trend of substitution by mobile services. The wholesale base declined from 171 thousand to 165 thousand (-3.4%), alongside a gradual migration from copper to fiber infrastructure.

At the cash flow level, net cash flow from operating activities amounted to €407.5 million (+1.6%). CAPEX AL (excluding spectrum) reached €268.4 million, an increase of 10.5% compared to €242.9 million in 2024, confirming a strong investment cycle in fiber, the mobile network, and data centers.

Crnogorski Telekom also contributed to Group growth: revenues increased from €90.4 million to €93.4 million (+3.4%), EBITDA AL from €32.1 million to €33.7 million (+4.9%), with a margin of 36.1%, while net profit increased from €5.8 million to €7.7 million (+32.3%).

Capital allocation in 2025 was exceptionally strong: €160 million was returned to shareholders through dividends and share buybacks, and 1.9% of total shares were cancelled.

Looking at HT Group results, in 2025 it generated total revenues of €1,141.7 million, representing growth of 3.6% compared to €1,101.6 million in 2024. Growth was primarily generated in the mobile and fixed services segments and system solutions. In the fourth quarter, revenues amounted to €296.1 million, with year-on-year growth of 2.7%, confirming a stable growth trend throughout the year.

Mobile service revenues reached €433.4 million, up 4.9%. The key driver was growth in the postpaid base, which increased from 1,551 thousand to 1,606 thousand subscribers, or 3.5%. The total number of mobile subscribers increased to 2,539 thousand, up 2.5%. Average mobile ARPU increased slightly from €11.2 to €11.3, with postpaid ARPU rising to €15.5, while prepaid ARPU declined to €4.5. The growth structure clearly indicates continued migration toward higher-value tariffs and more stable revenues.

Fixed service revenues amounted to €356.3 million, up 2.8%. The number of retail broadband lines increased to 674 thousand, while broadband ARPU increased to €15.8. The TV segment shows particularly strong monetization, with TV ARPU increasing from €13.1 to €14.3, or 9.0%. At the same time, the number of retail voice lines declined by 1.1%, with voice ARPU decreasing from €8.1 to €7.4, continuing the long-term structural trend of declining fixed telephony revenues.

The system solutions segment generated €90.6 million in revenue, up 8.9%, making it the fastest-growing segment of the Group. In the Croatian part of the Group, growth was even more pronounced at 10.5%, confirming strong demand for ICT, cloud, and security solutions.

At the profitability level, adjusted EBITDA after leases amounted to €429.8 million, up 3.3%. The EBITDA margin decreased slightly from 37.8% to 37.6%, indicating cost-side pressures. Personnel expenses increased by 15.1% to €223.7 million, while material costs decreased by 0.7% to €350.7 million. One-off items increased from €15.8 million to €23.6 million, primarily due to restructuring costs and severance payments.

EBIT increased by 2.0% to €183.3 million, with a slight margin decrease to 16.1%. Net profit after non-controlling interests amounted to €143.0 million, an increase of 0.8% compared to €141.9 million in the previous year. The net margin decreased from 12.9% to 12.5%, showing that revenue and EBITDA growth were not fully translated to the net level, partly due to higher one-off costs and a weaker financial result.

Investments after leases reached €268.4 million, up 10.5%, increasing the CAPEX-to-revenue ratio to 23.5%. The investment cycle was primarily focused on expanding the FTTH network, which reached coverage of one million households, and further investments in mobile and data infrastructure.

The balance sheet shows total assets increased to €2,125.4 million, with property, plant, and equipment rising to €916.8 million. Cash and cash equivalents decreased by 24.6% to €173.1 million, primarily due to the strong investment cycle and shareholder distributions. Total liabilities increased by 10.2% to €463.2 million, while equity decreased by 0.9% to €1,662.1 million, primarily due to dividend payments and share buybacks.

Operating cash flow amounted to €407.5 million, up 1.6%, while net cash outflow from investing activities increased to €211.1 million. Net cash outflow from financing activities amounted to €253.0 million, including €126.5 million in dividends and €49.8 million in lease repayments.

In 2025, a total of €159.7 million was returned to shareholders through dividends and share buybacks, confirming strong capital discipline and stable cash generation.

In conclusion, in 2025, HT Group achieved stable organic revenue and EBITDA growth, alongside a strong investment cycle and sustainable profitability. The structural shift toward postpaid mobile services, fiber infrastructure, and ICT solutions further strengthens revenue quality. At the same time, rising labor costs and one-off items limited net profit growth, while increased CAPEX and shareholder distributions reduced liquidity levels, but without jeopardizing financial stability.

The projection for 2026 foresees continued low single-digit revenue and adjusted EBITDA growth, with a moderate decline in investments, indicating a stabilization phase following an intensive investment cycle. In any case, another successful year is behind HT, and the same is expected in 2026.