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Magyar Telekom Q1 profit falls 24% as revenue drops, costs rise

First-quarter net income of Magyar Telekom fell 23.6% to HUF 16.4 billion from the same period a year earlier as revenue dropped and costs rose, the company’s consolidated IFRS shows.

Net income was slightly under the HUF 17.6 billion estimate of analysts in a poll by Portfolio.hu.

Earnings per share fell to HUF 15.8 from HUF 20.7.

Revenue decreased 7.5% to HUF 147.4 billion while costs rose 4.8% to HUF 113.8 billion, dragging operating profit down 15.7% to HUF 33.5 billion.

CEO Christopher Mattheisen blamed MTel’s performance on “the economic downturn, strong competition and saturated core markets.”

Revenue fell in all three of MTel’s main business segments. Fixed line revenue was down 11.9% at HUF 62.4 billion, mobile revenue slipped 3.7% to HUF 74.2 billion and revenue from system integration and IT dropped 6.4% to HUF 10.8 billion. Sub-segments that showed growth were television, up 23.8% at HUF 6.7 billion, and non-voice mobile turnover, up 2.7% at HUF 13.4 billion.

Revenue of MTel’s unit in Macedonia fell 11.8% to HUF 18.4 billion and revenue of the unit in Montenegro dropped 9.4% to HUF 7.4 billion.

Among costs, direct cost of sales climbed 5.5% to HUF 36.7 billion. Payroll costs inched up 1.2% to HUF 23.3 billion. MTel said severance payments came to HUF 1.0 billion in Q1, up from HUF 400 million in the same period a year earlier. But costs related to an investigation of questionable contracts at the company’s foreign units fell to HUF 500 million from HUF 1.7 billion.

Capital expenditures were slashed about 21% to HUF 15.7 billion.

MTel had total assets of HUF 1,123.7 billion on March 31, 2009, 3.7% less than twelve months earlier. Net equity rose 2.5% to HUF 620.5 billion. Net debt grew to HUF 265.3 billion from HUF 217.8 billion because of the stronger forint, the report noted. MTel’s gearing ratio reached 30.0%. (MTI – Econews)