Hungary’s two biggest telecoms players have scrapped plans for price rises this month in response to government pressure to control ongoing inflation risks.

Magyar Telekom and 4iG were expected to implement respective 3.7% and 3.5% inflation-linked price hikes from April 1 for all customers. But last week, they not only cancelled the fee changes but also committed to not raise prices until at least the end of June 2026.

For Deutsche Telekom’s Hungarian operation, the decision to reverse course is intended to help “mitigate inflation and support the economic recovery” while also taking into account “governmental measures aimed at limiting the inflation”, it said.

In early April Prime Minister Viktor Orbán appealed to telecoms service providers and banks to keep prices in check with a thinly veiled threat of government-imposed limits if their proposals were deemed insufficient, Reuters reported.

Márton Nagy, Minister for National Economy, followed up with a more direct message for players in the two sectors, via a Facebook video message, according to Budapest Business Journal. He warned that further fee hikes would be “unacceptable” and gave providers one week to make “commitments” to the government. He added that the government could resort to “market regulation” if responses were not acceptable.

In addition to the price freeze, Magyar Telekom said it will introduce a revamped mobile services portfolio that offers flexibility to combine various options, which was said to be developed in response to customer feedback.

The Hungarian government has been hands-on lately with efforts to rein in inflation. With a national election expected in 2026, some suggest the moves are aimed at shoring up public support for Orbán and assuaging voter dissatisfaction with high prices.

In March, a 10% margin cap was imposed on certain food groups in a bid to curb prices for basic provisions that have soared by 7%.

In telecoms, Nagy claimed that service fees had risen by 16% in January and February, which likely fueled the government’s intervention.

Magyar Telekom hit customers with a 15% price hike in 2024, which contributed to a stellar financial performance for the year to 31 December 2024 (FY24), albeit also assisted by unwinding of the country’s telecoms windfall tax from January 2024.

It beat all Deutsche Telekom’s other European operations with high double-digit revenue and earnings growth. Its revenue increased 13.9% to HUF 967bn (€2bn) across the twelve months, driven the inflation-linked price increase as well as mobile and fixed broadband subscriber growth. Operating profit was up 51% to HUF 223bn, while earnings before interest, tax, depreciation, and amortization (EBITDA) increased 26.5% to HUF 363bn.

The operator ended 2024 with 6.4 million mobile customers and 1.6 million fixed-line broadband customers (including DSL, cable, and fibre).

Tibor Rékasi, Chief Executive of Magyar Telekom, has a track record for navigating political and economic turbulence and the decision to halt price increases until mid-next year is the latest example. Early last year, Rékasi’s contract was extended for three years to 30 June 2027. He has served as CEO since July 2018.

In parallel with the removal of the utility tax, Maygar Telekom signed an agreement with the Hungarian government pledging to extend 5G coverage to 99% of the population by 2026 and expand its “Gigabit” network footprint to 4.5 million homes and businesses by the end of 2027.

With the price freeze announced today, Magyar Telekom said it has invested nearly HUF 350bn in fixed and mobile networks between 2019 and 2024. Its Gigabit network currently reaches 3.8 million homes and businesses and its 5G network covers 74% of the population.