Magyar Telekom books HUF 38.7 bln loss in Q4

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Magyar Telekom had an after-tax loss of HUF 38.7 billion in the fourth quarter of last year as depreciation and amortization ate up earnings, the company’s consolidated IFRS report for the period published Thursday shows.

The loss was well over the HUF 10.2 billion estimate in a poll of analysts by Portfolio.hu.

The company booked net profit of HUF 9.7 billion in the base period.

Revenue edged up 1.6% to HUF 159.4 billion.

EBITDA jumped 79.4% to HUF 46.7 billion because of a low base. The company booked a HUF 20.1 billion payment on a sectoral “crisis tax” in Q4 2010, the year the tax was introduced, but it made no payment on the tax in Q4 2011.

Depreciation and amortization increased a sharp 128.4% to HUF 60.9 billion to give the company a HUF 14.2 billion loss at operating level. Magyar Telekom nearly broke even at the level in the base period.

A HUF 11.8 billion financial loss, almost double the loss in the base period, further damaged the bottom line.

For the full year, Magyar Telekom booked a HUF 7.5 billion loss on its net income line, compared to profit of HUF 64.4 billion in 2010.

The company blamed the loss on one-off items, namely provisions related to a settlement on questionable contracts at its foreign units with the United States Securities and Exchange Commission and Department of Justice, impairment at its unit in Macedonia and higher corporate profit tax because of changes to Hungarian tax law.

The company booked HUF 1.3 billion in legal costs and set aside HUF 21.9 billion in provisions related to the questionable contracts case in 2011.

Impairment at the Macedonian unit came to HUF 31.4 billion, the result of a 15-25% reduction in the ten-year growth plan for the business.

Magyar Telekom’s corporate profit tax climbed 318.3% to HUF 27.6 billion because of the reversal in Q4 2011 of a one-off decrease in deferred taxes booked in Q4 2010. The reversal was necessary because of a change to the Hungarian tax law that leaves the 19% corporate tax rate in place from 2013 for companies with tax bases over HUF 500 million, instead of reducing it to a universal 10%, Magyar Telekom explained.

Revenue was up 2.0% at HUF 597.6 billion. Fixed line revenue fell 3.6% to HUF 240.6 billion and mobile revenue dropped 2.1% to HUF 308.5 billion, but systems integration and IT revenue rose 8.4% to HUF 48.5 billion.

Total operating costs fell 8.0% to HUF 540.8 billion, showing an improved margin, but operating profit still plunged 43.6% to HUF 63.2 billion.

Magyar Telekom spent HUF 83.3 billion on investments in 2011, down 8.7%.

CAPEX at the company’s business in Hungary was HUF 65.6 billion.

The company had total assets of HUF 1,098.0 billion on December 31, 2011, down 1.0% from twelve months earlier. Net assets fell 6.5% to HUF 556.1 billion.

Chairman-CEO Christopher Mattheisen projected a 0-2% fall in revenue for 2012 because of a “deteriorating economic environment…together with fears over the level of declines in disposable income”. He put EBITDA, cleared of one-off effects, down 4-6%.

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