MTel outperforms market expectation in 1Q14

Hungary’s largest telecoms group by subscribers and revenue, Magyar Telekom (MTel), saw its net income for the three months to 31 March 2014 increase sharply, when compared to the same period a year earlier, on the back of a surge in EBITDA and lower operating expenses, beating analysts’ expectations. The carrier booked net profit of HUF4.83 billion (USD21.8 million) in the first three months of this year, eclipsing the HUF1.70 billion profit it reported in 1Q13, and markedly higher than the HUF3 billion profit forecast by analysts in a Portfolio.hu poll. Three-month EBITDA rose by 3.8% year-on-year to HUF40.53 billion, beating the HUF39.65 billion forecast by analysts, attributed to improving gross margins across all business segments – in particular MTel’s system integration (SI) and information technology (IT) services and its energy division. However, the service provider’s revenue for January-March declined 3% y-o-y to HUF151.89 billion – below market expectations of HUF152.10 billion, due to a fall in fixed and mobile voice call revenue, coupled with the impact of falling sales from SI/IT and energy services. In FY2014, MTel is forecasting that total revenue will fall by up to 3% from the HUF637.5 billion booked in FY2013, again impacted by lower growth in its new retail energy division and equipment sales. Full-year 2014 EBITDA is expected to decline by between 3% and 6% from FY2013.