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Magyar Telekom quarterly profit rises on new units

Magyar Telekom Nyrt, Hungary's former telephone monopoly, said Q4 profit rose 21.7%, helped by revenue from two computer units.

Net income was Ft 16.4 billion ($83.4 million) in the three months ended December 31 from a restated Ft 13.4 billion a year before, Magyar Telekom said on its Web site today. Profit was forecast at Ft 15.9 billion, according to the median estimate of 10 analysts surveyed by Bloomberg. Magyar Telekom, the Budapest-based unit of Germany's Deutsche Telekom AG, is facing lower revenue from its fixed-line business and eroding profitability on mobile phones due to competition from operators like Vodafone Group Plc. Profit at Magyar Telekom, which is now relying on other businesses to counter stalled fixed-line growth, was helped by rising sales at new units. „In the Hungarian fixed line business, we made several acquisitions and successfully integrated these investments,” CEO Christopher Mattheisen said in the statement. „We developed a strong position in the growing IT, SI and telco-outsourcing market.”

The company's profit was boosted by earnings from Hungarian software developer KFKI Zrt, which it bought in June for Ft 9.7 billion, and local information technology services company Dataplex Kft, purchased for Ft 5.1 billion in late 2005. Q4 sales rose 13% to Ft 180.9 billion, compared with Ft 177 billion forecast by analysts. Fixed-line sales in the quarter rose 5.8% to Ft 91 billion, while mobile phone revenue increased 21.5% to Ft 89.8 billion, Magyar Telekom said. Sales from its Internet business rose 27.1% to Ft 12.4 billion. Magyar Telekom is eastern Europe's second-largest phone operator, behind Poland's Telekomunikacja Polska SA. Telekomunikacja said January 30 its profit unexpectedly declined 21% after the company cut prices amid tougher competition. Q4 net income fell to 381 million zloty ($126 million) from 484 million zloty a year earlier. Magyar Telekom said it had higher costs in the Q4, mainly from an ongoing legal inquiry into contracts at its Montenegrin unit, valued at a total 1.98 billion forint. Legal problems have contributed to the company's shares trailing Hungary's benchmark BUX Index last year. They rose 11%, while the BUX advanced 20%. (Bloomberg)