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Magyar Telekom Q3 profit nosedives as revenue falls, margin narrows

Magyar Telekom’s third-quarter after-tax profit plunged 42.1% to HUF 16.7bn from the same period a year earlier as revenue edged down and operating costs rose, the company’s consolidated IFRS report published early Thursday shows.

Net income, that is, profit attributable to owners of the parent, was down 45.6% at HUF 13.3bn.

Net income was under the HUF 16.8bn estimate by analysts polled by

Earnings per share dropped to HUF 12.8 in Q3 from 23.5 in the base period.

Revenue fell 1.7% to HUF 152.1bn. Fixed line revenue was down 4.8% at HUF 59.2bn and mobile revenue dropped 2.1% to HUF 79.9bn. System integration and IT revenue was up 18.9% at HUF 13.0bn.

Operating costs rose 10.1% to HUF 125.4bn, causing operating profit to fall 35.4% to HUF 27.6bn.

A HUF 4.2bn financial loss, albeit down from the HUF 7.2bn financial loss in the base period, further dented the bottom line.

Magyar Telekom paid HUF 6.3bn on a sectoral "crisis tax" during the period, and HUF 19bn in Q1-Q3.

The company also set aside an additional HUF 8.2bn in provisions related to the settlement of an investigation of questionable contracts at its foreign units signed years earlier.

The picture for the company was much the same in Q1-Q3, when revenue fell 3.2% to HUF 438.2bn and operating costs climbed 6.6% to HUF 364.9bn, causing after-tax profit to drop 38.1% to HUF 41.9bn. Net income was HUF 32.9bn, down 42.2% on Q1-Q3 2010.

Chairman-CEO Christopher Mattheisen said the management was maintaining its guidance for a 3-5% decline in full-year revenue, a 4% drop in underlying EBITDA and a 5% fall in capital expenditures.

Magyar Telekom’s CAPEX was down 19.2% at HUF 43.9bn in Q1-Q3.

Magyar Telekom had total assets of HUF 1,087.6bn on September 30, 2011, down 1.9% from the end of 2010.

Net assets fell 2.3% to HUF 581.3bn during the period.

The company’s debt-to-equity ratio reached 31.9% at the end of the period.