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MTel Q2 profit edges up to HUF 10.9 bln

Telco

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Magyar Telekomʼs second-quarter after-tax profit edged up 2% year-on-year to HUF 10.9 billion, lifted by lower taxes, an earnings report released Wednesday shows, state news wire MTI reported.

The profit figure excludes Crnogorski Telekom, MTelʼs Montenegrin unit sold to Hrvatski Telekom in January.

Revenues rose 9% to HUF 153.5 bln, but direct costs of sales jumped 28% to HUF 62.7 bln. EBITDA fell 2% to HUF 47.9 bln.

MTel booked income tax of HUF 3.9 bln for Q2, down 27% from the base period.

Explaining the drop in EBITDA, CEO Christopher Mattheisen said "successfully implemented cost-saving measures did not fully offset gross profit pressures." He also noted a big increase in system integration and IT sales, as well as high demand for fixed and mobile equipment, adding that guidance for full-year revenues is being raised to "around HUF 580 bln" from HUF 560 bln earlier.

Mattheisen added that sales are climbing in large part because of "additional revenue streams that are lower margin, serving to establish and consolidate customer relationships rather than result in an immediate return," thus all other elements of the original guidance remain unchanged.

Data revenues to offset declining voice

After the company published its earnings report Wednesday, CFO János Szabó said Thursday that Magyar Telekomʼs falling revenues from voice-based services could be offset by growing data transmission revenues.

Szabó noted that the expansion in data transmission traffic exceeded expectations and demand was also outstanding in sales of mobile devices. He said Magyar Telekom will continue its network developments financed from EU and internal funds.

The CFO said the mandatory registration of pre-paid subscribers was successful and Magyar Telekom has managed to retain 95% of the revenue from this segment.

Following the recent abolition of roaming charges, there has been a perceivable increase in data transmission traffic, which surged in June to seven times its level a year earlier, the CFO added.

Szabó said Magyar Telekom has reached 300,000 customers, more than 10% of its entire clientele, with the new mobile service package portfolio it introduced in the second quarter. He also noted rising revenues from system integration and IT services related to EU-funded investments.

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