MTel 4Q10 profit slumps 26.5% on govt. telecoms tax

24 Feb 2011

Hungarian incumbent Magyar Telekom (MTel) reported a 26.5% fall in fourth-quarter net profit last year to HUF7.48 billion (USD37.42 million) down from HUF10.18 billion a year earlier, undermined by a new government-imposed telecoms tax. Nevertheless, the operator’s performance eclipsed market expectations for a net loss of HUF9.55 billion in a poll carried out by financial news website portfolio.hu. Deutsche Telekom-owned MTel paid out HUF27 billion under the state’s new HUF61 billion telecoms sector tax – part of a series of government initiatives designed to cut the country’s budget deficit. However, other costs related to a contracts probe at the company and the effect of redundancy payments and corporate tax obligations fell by HUF5 billion in 4Q10, helping stabilise the fall in its bottom line, it said. For example, MTel said it booked a HUF16.97 billion corporate tax refund in the fourth quarter, compared with a payment of HUF1.27 billion in FY2009.

MTel said full-year revenues reached HUF609.58 billion in FY2010, down 5.3% year-on-year, while underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by a similar 5.5%, although both metrics beat the company’s own forecasts. Commenting on the results, chairman and chief executive officer, Christopher Mattheisen, said: ‘Our revenue and underlying EBITDA, also excluding telecom tax, registered more moderate declines than the previously guided 6-8% and 7-9% drop for 2010.’ For the current fiscal year MTel is forecasting revenues to fall by between 3% and 5%, and EBITDA to fall by 4%-6% (excluding special influences and the telecoms sector tax). CAPEX in 2011 is expected to be cut by another 5%, it added.

Hungary, Magyar Telekom