MTel reports strong 1H profit as cost-cutting bares fruit

7 Aug 2008

Hungarian fixed line and mobile operator Magyar Telekom (MTel) reported a 57% rise in first-half profits to HUF53.7 billion (USD351 million), driven by lower operating costs related to an earlier decision to shed staff. The strong performance was also aided by a decision from the regulator, the NCAH, to allow MTel to free up HUF8.5 billion-worth of provisions after the watchdog agreed the telco had fully compensated customers after breaching rules on fixed-to-mobile call tariffs. 1H08 revenues climbed to HUF335.8 billion in the six months to 30 June 2008, up 2% year-on-year, and operating costs fell 4% to HUF247.1 billion, boosting operating profit by 24% to HUF88.7 billion. MTI-ECONEWS says MTel group profits were also helped by lower financial losses of HUF12.5 billion, down 16% y-o-y, including a HUF1.4 billion FOREX gain and property sales. MTel also spent HUF3.4 billion on costs related to an ongoing investigation into disputed contracts at some foreign-owned units.

On a segmental basis, MTel’s fixed line division (including international operations) reported revenues up one percentage point on the same time a year ago, at HUF155.8 billion. Although turnover from both retail and wholesale services dipped – by 1% and 25% respectively, to HUF1.1 billion and HUF10.9 billion – the fall was offset by 7% rises in internet and data revenue to HUF30.3 billion and HUF14.5 billion, respectively. Mobile revenue was also up 2% year-on-year to HUF159.9 billion in the first six months of this year, and systems integration & IT sales climbed 7% to HUF20 billion. In its home market, MTel said fixed line revenue (excluding group transactions) fell three percentage points to HUF118.4 billion, although operating profit climbed 26% from 1H07 to HUF29 billion a year later. Fixed line revenue at the group’s Macedonian unit MakTel was broadly flat at HUF20 billion and EBITDA dropped 19% to HUF8.1 billion, it said. Meanwhile, fixed line sales at MTel’s Montenegro unit T-Com CG dipped 7% to HUF9.3 billion although EBITDA grew 25% to HUF3.2 billion.

Mobile sales were steady in Hungary at HUF136.9 billion (up one percentage point on a year ago) and operating profit rose 10% to HUF43.5 billion. Cellular revenues in Macedonia climbed 10% to HUF21.6 billion and EBITDA was up 12% at HUF12 billion. In Montenegro, mobile turnover increased 4% y-o-y to HUF8 billion and EBITDA increased 19% to HUF2 billion.