Magyar Telekom Improves 2014 Ebitda View as 2Q Beats Expectations

By Margit Feher

BUDAPEST--Hungary's largest telecommunications company by market share, Magyar Telekom Nyrt. (MTELEKOM.BU), now expects a smaller decline this year in earnings before interest, taxes, depreciation and amortization than it had forecast, the company said as it released its second-quarter earnings that beat expectations.

MAIN FACTS:

--The company made a net profit of 11.58 billion forints ($49.4 million) in the 2014 second quarter, significantly above the HUF10.7 billion analysts forecast in a Portfolio.hu poll, and down from a net profit of HUF12.21 billion a year earlier. The second-quarter net profit was mostly the result of the broadly stable Ebitda, while both financial and income tax-expenses increased.

--Net profit translated into per-share earnings of HUF11.11, compared with HUF11.71 in the same period last year.

--Ebitda, a key indicator of business performance for telecommunications companies, was HUF49.61 billion from a year earlier, exceeding analysts' forecast for HUF48.7 billion, and little changed from HUF49.75 billion a year earlier. Second-quarter Ebitda was strong, mainly because of rising gross margins of energy and system integration and information technology services and a reduction in employee-related expenses.

--The moderating decline in Ebitda prompted the company to revise the Ebitda fall it anticipates this year to no more than 3%, from its earlier guidance of a decline of between 3% and 6% on 2013.

--Second-quarter revenue fell 3.3% to HUF151.79 billion from a year earlier and was above the HUF151.4 billion expected by analysts. The decline resulted from lower fixed and mobile voice revenue and lower revenue from energy services.

--The company left its full-year revenue and capital-expenditure guidance unchanged. It continues to forecast a revenue drop of up to 3% from HUF637.5 billion in 2013 on lower growth in retail energy and equipment sales.

--CFO Janos Szabo will hold an earnings news briefing at 0630 GMT Thursday.

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

--Magyar Telekom's shares closed down HUF14, or 3.7%, at HUF361 on Wednesday.

Write to Margit Feher at [e-mail]

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