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Magyar Telekom Q1 profit falls 8% on declining revenue, telco tax

First-quarter net income of Magyar Telekom fell 7.8% to HUF 15.2 billion from the same period a year earlier as revenue dropped and an extraordinary telco tax partly offset cost cuts, the company’s consolidated IFRS report for the period published early Friday shows.

First-quarter net income of Magyar Telekom fell 7.8% to HUF 15.2 billion from the same period a year earlier as revenue dropped and an extraordinary telco tax partly offset cost cuts, the company’s consolidated IFRS report for the period published early Friday shows.

Net income was over the HUF 12.8 billion estimate by analysts polled by Portfolio.hu.

Earnings per share came to HUF 14.6.

First-quarter revenue edged down 3.3% to HUF 142.5 billion from the same period a year earlier. Fixed line revenue fell 5.2% to HUF 59.1 billion and mobile revenue was down 2.4% at HUF 72.4billion. System integration and IT revenue inched up 1.1% to HUF 10.9billion.

Operating costs fell 1.2% to HUF 115.4billion. Magyar Telekom noted it paid HUF 6.3 billion in Q1 on a crisis tax levied on telcos late in 2010. It also booked HUF 1.5 billion in severance payments and accruals as well as HUF 400 million in costs related to an investigation of questionable contracts at its foreign units that has lagged on for years.

EBITDA dropped 7.7% to HUF 53.2 billion. However, excluding the effect of these one-off items, EBITDA climbed 3.8% to HUF 61.5 billion and EBITDA margin widened to 43.1% from 40.2%. The improvement reflected cost-cutting measures and a HUF 1.4 billion gain on real estate sales in Hungary, the company said.

Magyar Telekom’s operating profit fell 12.7% to HUF 29.3 billion. Pre-tax profit was down 16.8% at HUF 20.8 billion.

Chairman-CEO Christopher Mattheisen reiterated Magyar Telekom’s guidance in the report, projecting full-year declines in revenue and EBITDA, excluding one-off effects, of 3-5% and 4-6%, respectively.

The company intends to cut CAPEX by 5%, he added. CAPEX was down 21.7% at HUF 12.3 billion in Q1 compared to the same period a year earlier.

Magyar Telekom had total assets of HUF 1,100.4 billion on March 31, 2011, down 0.8% from the end of 2010. Net assets rose 1.4% to HUF 602.8 billion during the period. Non-current liabilities increased 0.3% to HUF 268.4 billion.

Magyar Telekom said its net debt rose to 270.5 billion at the end of March from 265.4 billion twelve months earlier. Its net debt ratio was 31.0% at the end of Q1.