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Magyar Telekom an island of calm in a sea of crisis

The global crisis has not yet affected Magyar Telekom, but the company stands ready with a conservative capital structure and a strong ability to generate cash, CEO Christopher Mattheisen said in an interview with business daily Napi Gazdaság.

“Until now, we have seen warning signs rather, the crisis does not affect us directly,” Mattheisen said. Acquisitions and the company's dividend remain priorities, he added.

Mattheisen said Magyar Telekom's ability to generate cash is excellent, and its debt structure is healthy, both in terms of size and maturity. The loans are mostly from parent company Deutsche Telekom and are forint-based, that is, they are only affected by changes in the BUBOR.

“If the crisis reaches us, then it will not come from the financial side, but through the real economy. In such a case the business will not have to restructure, rather the crisis gives us impetus to speed up developments.”

On the acquisition front, Magyar Telekom is looking in three different areas: media and content, cable companies and IT/system integration businesses. Magyar Telekom expects a consolidation on the IT/system integration market which could give the company the opportunity to raise its market share to 10%-12%.

On the development front, mobile internet and broadband infrastructure are in focus. In the future, the two technologies will complement, not cannibalize, each other, because mobile internet will never be capable of the kind of data transfer that cable can handle. Magyar Telekom will spend HUF 10 billion on fiber optic investments this year, and about HUF 40 billion in the long term, Mattheisen said. The amount will be covered from cashflow and CAPEX; it will not raise the company's debt, he added.

Asked whether the possible entry of a fourth player on the mobile market would threaten Magyar Telekom's position, Mattheisen said the company has been able to hold its position since the third player - the UK's Vodafone - entered the market, and it will be no easy task for a new player to provide quality services.

“We're not afraid of anybody,” he said.

Magyar Telekom will announce its expectations for 2009 when it publishes its Q4 report on February 24. (MTI – Econews)