MTel Q4 earnings improve on lower payroll costs


Fourth-quarter after-tax profit of Magyar Telekom more than doubled to HUF 2.7 bln from the same period a year earlier following a decline in payroll costs, Hungarian news agency MTI said today citing an earnings report published yesterday. Earnings per share came to HUF 1.5.

Revenue and direct cost of sales were both practically flat at HUF 165.3 bln and HUF 67.8 bln, respectively. But payroll costs fell a sharp 15% to HUF 23.2 bln, lifting operating profit 29% to HUF 15.2 bln, MTI reportedly said.

According to the news agency, within revenue, MTel's mobile services generated HUF 84.4 bln, up 7%, while fixed line revenue fell 5% to HUF 52.1 bln. Revenue from system integration and IT services also fell, dropping almost 8% to HUF 16.8 bln. Revenue from non-core energy services dropped 14% to HUF 12.0 bln.

For the full year, MTel booked after-tax profit of HUF 32.0 bln, up 11% on improved margins and lower payroll costs, MTI said. Revenue fell almost 2% to HUF 626.4 bln, but direct cost of sales dropped at an even faster clip, declining more than 4% to HUF 226.4 bln. Payroll costs were down 2% at HUF 94.8 bln. Operating profit was up about 8% at HUF 80.6 bln.

According to a separate statement cited by MTI, MTel said its board would propose to an annual general meeting of shareholders paying no dividend on 2014 earnings. The proposal is in line with the company's dividend proposal of maintaining its net debt ratio in the 30-40% range "and reflects the group's financial position", MTel said.

MTel projected revenue would rise 0-3% in 2015, lifted by subscribers migrating to bundled packages, while EBITDA would decline 0-3% because of severance payments, MTI said citing a note on guidance released yesterday. It put CAPEX, excluding spectrum acquisitions and annual frequency fee capitalization, at around HUF 105 bln.

MTel put its compound annual growth rate at around 2% compared to 2012 and EBITDA at over HUF 185 bln, MTI reported citing an outlook for 2017. The CAPEX target is around HUF 80 bln and the free cash flow target "at least" HUF 50 bln.


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