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Magyar Telekom to launch share allocation program

Magyar Telekom announced on Wednesday that the company's board of directors has decided to launch a share allocation program under which Magyar Telekom shares will be awarded to the company's best performing employees.

This program will replace and be equivalent in value to the bonus budget set aside for 2010 (equivalent to a 1.5% wage increase for 2010).

In total, about 858,000 treasury shares will be distributed among the best performing Magyar Telekom employees in December 2010. The total number may change according to the actual market value of the shares at the grant date.

The shares may not be sold until year-end 2012, but entitle the holder for a dividend up to that date too.

Magyar Telekom said that from a financial perspective, granting company shares rather than distributing the bonus budget equivalent to a 1.5% wage increase has favorable cash-flow implications. The improvement in free cash flow for 2010 is expected to be approximately HUF 800m compared to distribution of the bonus budget, the company noted. (MTI-Econews)