Magyar Telekom’s profit on rise

Telco

Widening margins caused Magyar Telekom’s (MT) profits to swell in the first quarter, the company’s consolidated IFRS report published Thursday shows. MT’s net income rose to HUF 4.8 billion in Q1 from HUF 1.7 billion in the same period a year earlier.

According to estimations of analysts net income was over the HUF 3.0 billion. Earnings per share came to HUF 4.6 for the period. Revenue fell 3.0% to HUF 151.9 billion, but direct costs dropped at triple that rate, declining 9.5% to HUF 53.9 billion. Operating profit was up 13.0% at HUF 16.1 billion. Financial losses narrowed by HUF 1.7 billion to HUF 6.0 billion.

In a breakdown of revenue, MT said turnover from its mobile business edged up 0.2% to HUF 73.4 billion. Fixed line revenue dropped 4.1% to HUF 51.8 billion. Turnover from the system integration and IT segment dropped 5.9% to HUF 13.2 billion and revenue from MT’s non-core energy services business was down 11.9% at HUF 13.5 billion because of lower gas consumption due to the mild winter, the company said.

Magyar Telekom left its guidance for the full year unchanged from February. It projects revenue will fall 0-3% and EBITDA will decline 3-6%. CAPEX, excluding spectrum acquisitions and frequency fees, is expected to reach HUF 87 billion. MT had total assets of HUF 1,096.6 billion at the end of March, up 0.5% from the end of 2013. Net assets rose 0.9% at HUF 494.1 billion. The company’s gearing ratio reached 43.6% at the end of Q1.

Speaking to journalists after the earnings report was published, CFO János Szabó said further energy price cuts and an expected frequency tender would impact the business this year. He noted that the government-mandated gas and electricity price cuts were set to take effect for households in April and September, and added that the government had signalled it wants to make energy cheaper for businesses, too.

These impacts can be assessed after the second quarter, he said, adding that guidance had not yet come up for re-evaluation.

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