Magyar Telekom 3Q Net Profit Meets Expectation on Stronger Forint

By Margit Feher

BUDAPEST--Third-quarter net profit of Hungary's largest telecommunications company by market share Magyar Telekom Nyrt. (MTELEKOM.BU) met analysts' expectations mostly as a result of lower foreign-exchange losses, the company said in a filing with the Budapest Stock Exchange on Thursday.

MAIN FACTS:

- The company made a net profit of 10.66 billion forints ($43.2 million) in the third quarter of 2014, meeting analysts' forecast in a Portfolio.hu poll for HUF10.6 billion, and up 15% from a net profit of HUF9.31 billion a year earlier. The third-quarter net profit was mostly the result of lower foreign-exchange losses.

- Net financial expenses declined from HUF9.2 billion to HUF6.6 billion as a result of the Hungarian forint remaining broadly stable against the euro during the July-September period whereas it weakened by 1.1% against the euro over the same period of last year.

- Net profit translated into per-share earnings of HUF10.23, compared with HUF8.93 a year earlier.

- Ebitda, a key indicator of business performance for telecommunications companies, was HUF49.22 billion from a year earlier, exceeding analysts' forecast for HUF48.7 billion. It was down 5.2% from HUF51.93 billion on the year, owing primarily to higher bad debt and severance expenses.

- Third-quarter revenue fell by a moderate 0.5% to HUF157.5 billion from a year earlier and was above the HUF156.2 billion expected by analysts. The decline in voice and system integration and information technology revenues was mitigated by a combination of increased mobile internet and television services revenues and higher mobile equipment sales.

- The company left its full-year revenue, Ebitda and capital-expenditure guidance unchanged. It continues to forecast a revenue drop of up to 3% this year from last year's HUF637.5 billion on lower growth in retail energy and equipment sales. It continues to anticipate an Ebitda fall of no more than 3% this year from last year's HUF179.5 billion.

- CFO Janos Szabo will hold an earnings news briefing at 0730 GMT Thursday.

- Deutsche Telekom AG (DTE.XE) holds a 59.3% stake in Magyar Telekom.

- Magyar Telekom's shares closed up HUF6, or 1.8%, at HUF348 on Wednesday.

Write to Margit Feher at [e-mail]

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