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Magyar Telekom margin narrows, profit slips 17%

Magyar Telekom, Hungary’s biggest telco, had net income of HUF 77.6 billion, down 16.5% from a year earlier as revenue fell faster than costs, the company’s consolidated IFRS report for the period shows.

The company reported comprehensive net income of HUF 81.6 billion in 2009, down 17.9%.

Magyar Telekom’s Q4 net income came to HUF 9.2 billion, Econews calculated based on Q1-Q3 net income of HUF 67.4 billion. Q4 earnings were about level with the estimate by analysts polled by

Earnings per share for the full year were HUF 74.5, down 16.5%.

Full-year revenue dropped 4.3% to HUF 644.0 billion last year, as the crisis put pressure on spending in both the consumer and corporate segments, CEO Christopher Mattheisen said. At the same time, operating costs fell just 2.7% to HUF 497.0 billion, causing operating profit to drop 9.3% to HUF 147.1 billion. Net financial expenses, at HUF 32.8 billion, were 8.3% higher.

Fourth-quarter consolidated revenue dropped 4% yr/yr as higher revenues from television, system integration and IT services did not compensate the fall in voice-service retail revenues as well as mobile wholesale revenues, the report said.

EBITDA fell 7.2% to HUF 249.1 billion in 2009, and fell 6.9% to HUF 262.8 billion excluding extraordinary items. Q4 EBITDA fell 14.2% on the year and fell 7.9% excluding one-off items.

Magyar Telekom targets a 5-7% drop in revenue and EBITDA in 2010 as the economic environment continues to weigh on consumer and corporate spending, and a stronger forint hurts the contribution of foreign units, Mattheisen said. The company expects to spend 5% less on CAPEX in 2010 because of the higher proportion of revenue from system integration and IT activities, he added.

CAPEX came to HUF 101.9 billion in 2009, HUF 6.1 billion less than in 2008.

Fixed line revenue dropped 8.6% from 2008 to HUF 274.1 billion. Within the segment, retail voice turnover fell 15.2% to HUF 128.1 billion and internet turnover dropped 7.9% to HUF 55.1 billion, but revenue from television subscriptions rose 26.1% to HUF 23.8 billion.

Mobile revenue was down 1.7% at HUF 326.0 billion last year. System integration and IT revenue climbed 6.1% to HUF 43.9 billion.

In a breakdown by consumer and corporate clients, Magyar Telekom said revenue of the consumer segment fell 5.7% to HUF 322.3 billion in 2009 and revenue of the corporate segment slipped 4.6% to HUF 171.0 billion.

The company spent HUF 6.4 billion during the year on an investigation into questionable payments at its foreign units. The investigation was wound up at the end of 2009, but Magyar Telekom said it “is continuing to assess the nature and scope of potential legal remedies available to the company against individuals or entities that may have caused harm to the company.”

Including the investigation costs and severance payments, Magyar Telekom calculated special items took HUF 13.8 billion off its bottom line.

Magyar Telekom had total assets off HUF 1,166.4 billion on December 31, 2009, level with that twelve months earlier. Net assets rose 1.5% to HUF 605.4 billion. Non-current liabilities climbed 11.8% to HUF 322.6 billion.

Magyar Telekom said net debt rose to HUF 269.4 billion at the end of 2009 from HUF 254.3 billion twelve months earlier, and its net debt ratio reached 30.8% at the end of 2009. (MTI – Econews)