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MTel reports 7.8% fall in Q1 net profit, but beats forecasts

6 May 2011

Hungary’s Magyar Telekom (MTel) posted a 7.8% year-on-year fall in net profits for the three months ended 31 March 2011, as the ongoing decline in revenues combined with the effects of a government-imposed telecoms sector tax to weigh heavily on its bottom line. The group booked consolidated net income of HUF15.17 billion (USD77.09 million), compared with HUF16.45 billion in the corresponding period of 2010, but better than the HUF12.83 billion forecast in a recent poll carried out by Hungarian business news portal MTel chairman and CEO Christopher Mattheisen said his firm’s encouraging first-quarter performance reflected the ‘slow macroeconomic recovery’ Hungary is experiencing. ‘Although the results were also helped by real estate sales in Hungary, the savings in employee-related and other operating expenses clearly had a positive influence on our profitability,’ Mattheisen said.

MTel reported 1Q11 revenues of HUF142.51 billion, down 3.3% year-on-year, impacted by lower sales from both its fixed and mobile operations, which fell by 5.2% and 2.4%, respectively. Group operating profit declined 12.7% y-o-y to HUF29.25 billion and earnings before interest, taxes, depreciation and amortisation (EBITDA) slipped 7.7% over the same period to HUF53.2 billion. MTel recorded HUF6.30 billion in telecoms sector taxes – the levy brought in by the government last year in a bid to stabilise the national budget. The telco paid a total of HUF27 billion under the new emergency tax scheme last year, and subsequently cut the dividend paid on its FY2010 results.

Nevertheless, the Deutsche Telekom-backed company affirmed its guidance for 2011, with Mattheisen saying: ‘Looking ahead, we reiterate our guidance and project a revenue decline of 3-5% and 4-6% underlying EBITDA decline for 2011. We intend to cut CAPEX by approximately 5% compared to last year’s spending.’

Hungary, Magyar Telekom

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