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Still no end for Magyar Telekom investigation

Hungarian telco Magyar Telekom Nyrt has still not closed an investigation into contracts signed at its unit in Montenegro, therefore it can neither present an audited report from 2005 to shareholders nor pay a dividend, an announcement following an EGM on Monday reveals.

The contracts being investigated were worth a combined Ft 1.095 billion, but the investigation has so far cost the company Ft 3.1 billion, CEO Elek Straub said. He added that he could not say when the investigation would be closed, but promised an announcement would be made as soon as the investigation produces enough information to satisfy the auditor.
The announcement noted that, during the course of the investigation, Magyar Telekom's auditors had discovered two more contracts which do not appear in the books in addition to the two contracts which were the reason for the investigation. CFO Thilo Kusch told shareholders at the meeting that the company still planned to meet its targets for 2006 of boosting revenue 3% while maintaining EBITDA. It aims to increase the number of ADSL subscribers to 600,000 by year-end, Kusch said, adding that by the end of June, subscriber numbers were already at 440,000.
Answering a question, Straub said Magyar Telekom's loans taken out by Deutsche Telekom, its majority owner, carry better conditions than terms of loans available in Hungary. Szabolcs Czenthe, in charge of investor relations, said the loans carried rates of 30bp, 50bp and 55bp over the interbank offer rates for their respective currencies. Kusch noted, however, that Magyar Telekom's net financing had increased because of exchange rate losses on the loans.
The EGM was suspended before shareholders could vote on management appointments because more time was required to prepare for the changes considering amendments to the company charter.