MTel posts 24% fall in 1Q profits of weak sales and higher costs

Hungary’s Magyar Telekom (MTel) has posted its financial results for the three months to 31 March 2010, reporting a 23.6% dip in first-quarter net income on the back of falling revenues and higher costs relating to the group’s cost-cutting programme. Group net profits for the three months ended 31 March came to HUF16.4 billion (USD75.7 million), compared to HUF21.5 billion in the same period of 2009, and below analyst expectations of profits of HUF17.5 billion, in a poll conducted by online news site portfolio.hu. MTel, a unit of German powerhouse Deutsche Telekom, said its turnover dipped 7.5% year-on-year to HUF147.4 billion as a sharp fall in sales of fixed line voice and data services was only partially offset by an increase in mobile internet and TV sales. The operator’s financial performance was also undermined by the strength of the euro versus the forint which eroded the revenue contribution of the group’s international businesses, while a one-time HUF1 billion charge related to accruals and job cuts also hit its bottom line. Despite the relatively weak performance, MTel chairman and CEO Christopher Mattheisen said: ‘We remain confident in our ability to improve our financial performance once the economic indicators which drive demand for our services start to show signs of recovery, which is expected towards the end of the year.’