Hungary’s dominant telecoms company says its net profit in the three months to 30 September 2006 dipped as a result of a weak performance from its fixed line unit. The incumbent said net income was HUF23.4 billion (USD113.9 million), down marginally from HUF23.6 billion in the corresponding period of 2005, but beat the median forecast estimate of HUF21.5 billion in a Bloomberg survey of analysts. The former monopoly faces increased competition in both the fixed and mobile market and revenues from new services such as its internet operations and foreign ventures have thus far failed to offset the decline. Fixed line sales in the first nine months of 2006 climbed by 3.5% to HUF253.4 billion, mobile phone revenue rose 12.3% to HUF241.5 billion, and sales from its internet business were up 23.9% to HUF36.3 billion.
Last year Magyar Telekom started the process of merging its mobile unit T-Mobile Hungary into the group in a move it says could save it HUF20 billion over four years. The former monopoly has yet to produce audited results for its fiscal year 2005, a fact which has led to the postponement of its AGM, which was scheduled for April. Magyar Telekom’s operational difficulties have been mirrored by a series of legal problems, many relating to four disputed contracts at its Montenegro unit. Some reports suggest that legal fees relating to these cases have reached HUF3.1 billion, surpassing the original value of the agreements. Meanwhile, the uncertainty over the pending law suits has had a negative impact on the company’s share price, leaving it trailing in Hungary’s benchmark BUX Index, writes Bloomberg.