MTel posts 27% fall in Q2 profit, trims full year guidance

Hungary’s dominant telecoms operator (MTel) has reported a 26.6% year-on-year drop in second-quarter net profit and cut its revenue and profit guidance for the full year amid a worsening economic downturn. The operator posted net income of HUF23.13 billion (USD124.9 million) for the period under review, compared with HUF31.50 billion in the three months ended 30 June 2008, albeit the results were slightly ahead of the HUF22.34 billion forecast in a Reuters poll earlier this week. The telco’s bottom line was impacted by a one-off gain of HUF8.5 billion from the reversal of provisions in the second quarter of 2008, and hit by a fall in overall usage as consumers tightened their belts amid Hungary’s worst downturn in 20 years. Group revenues dropped by 6.9% to HUF161.09 billion with the government of Hungary predicting the wider economy will contract by a full 6.7% in 2009 – worse than its earlier projections. Second-quarter EBITDA fell by 11.8% year-on-year, slightly better than market expectations, as cost cutting initiatives offset some of the impact of lower turnover, MTel said. ‘Based on the first half results and taking into account the unfavourable economic environment foreseen for the second half of the year, Magyar Telekom now expects a revenue decline of approximately 2% and an underlying EBITDA decline of up to 5% for the full year compared to a 2008 level,’ the company said in its quarterly earnings release.