Hungary’s largest telecoms group Magyar Telekom (MTel) reported a 19% year-on-year fall in fourth-quarter net income, on a drop in revenue and rising staff costs, and said it expects a further decline in profitability in the current fiscal year. With Hungary enduring its worst recession in nearly 20 years MTel’s net profit for 4Q09 contracted to HUF10.2 billion (USD51.7 million) in the period under review, down from HUF12.6 billion a year ago, and below market expectations of HUF12.9 billion in a poll conducted by portfolio.hu. For FY2009, MTel’s net income was HUF77.6 billion, down 16.5% year-on-year.
MTel is looking to reduce its workforce by a further 400 jobs to offset the impact of falling sales, and booked HUF8.3 billion worth of severance payments in the fourth quarter, up from HUF5.2 billion a year ago. Fourth-quarter employee-related expenses increased in line with annualised salary increases, the company said, adversely impacting earnings before interest, tax, depreciation and amortisation (EBITDA), which fell 14.2% year-on-year. Commenting on the disappointing performance, MTel chairman and CEO Christopher Mattheisen said: ‘Looking ahead to 2010, we expect continued pressure on consumer spending due to high unemployment and restricted growth in household disposable income … We are targeting a revenue and an underlying EBITDA decline of 5-7% for 2010, with the latter reflecting our changing revenue structure.’ He added that the company would also cut 2010 CAPEX by 5% from last year’s levels.