MTel posts 2.9% drop in 1Q profit, sticks with 2009 guidance

Hungary’s dominant communications group Magyar Telekom (MTel) has reported consolidated first-quarter net profit of HUF21.54 billion (USD100.7 million) for the three months ended 31 March 2009, down 2.9% year-on-year but ahead of market expectations, and reaffirmed its full-year guidance despite a weak domestic economy. The telco attributed the fall to a decline in its core business operations as the impact of the economic slowdown combined with higher operating costs related to the weakness of the Hungarian forint. Quarterly EBITDA dropped 6.3% y-o-y to HUF64.6 billion, below market expectations, largely the result of a one-time gain from the sale of real estate assets in Q1 2008 and a faster than expected shift in the revenue mix toward lower margin products, MTel said. The telco posted revenues of HUF159.41 billion in the period under review, down 2% on the same time a year earlier, impacted by falls in its fixed line, mobile and internet business segments. The decline was partially offset, however, as the weak forint helped soften the fall on the top line through revenues denominated in euros from the company’s foreign subsidiaries in Macedonia and Montenegro, it said. Nevertheless, the firm has reaffirmed its full-year guidance. ‘Although the external environment has deteriorated quite significantly since we published our public targets for this year, we still believe that the announced targets can be met if the economic situation does not worsen further,’ said MTel Chairman and CEO Christopher Mattheisen.