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MTel Q1 profit drops 55% on narrower margins, one-offs

Telco

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Magyar Telekomʼs first-quarter after-tax profit fell 54.6% year-on-year to HUF 4.8 billion on narrower margins and one-offs in the base period, an earnings report published late Wednesday shows, Hungarian news agency MTI reported.

The consolidated profit and loss statement, which excludes Crnogorski Telekom, MTelʼs Montenegrin unit sold to Hrvatski Telekom in January, shows revenues rose 1.6% to HUF 140.5 bln. Direct costs of sales outpaced that increase, climbing 6.5% to HUF 52.9 bln, while gross profit dropped 1.2% to HUF 87.6 bln.

EBITDA was down 16.5% at HUF 38.3 bln, largely because of the sale of an office building and an internet news portal in the base period, MTel noted.

MTel CEO Christopher Mattheisen said the telcoʼs efforts to acquire and retain subscribers boosted postpaid customer growth, decreased churn and increased sales of smartphones and data packages. 

"In the short term, the costs associated with these efforts have had a slight negative impact on our direct margin. However, many customers have subscribed to a two-year loyalty contract, which has boosted rates of customer retention," he added.

Mattheisen highlighted increased revenue from the system integration and IT segment in Q1, boosted by public sector contracts, and said growth on the market is expected to continue during the year.

In its guidance for 2017, excluding Crnogorski Telekomʼs operations as well as its sales price, MTel put revenues at HUF 560 bln, down from HUF 574 bln in 2016. It sees EBITDA slipping from HUF 188 bln to HUF 182 bln, but still anticipates payment of a HUF 25 per-share dividend, level with that paid on last yearʼs earnings.

MTel had total assets of HUF 1,109.4 bln at the end of Q1, down 5.6% from the end of 2016. Non-current liabilities edged down 0.7% to HUF 314.3 bln.

MTel said its net debt ratio improved from 39.3% to 37.0% as a result of the sale of Crnogorski Telekom.

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