Magyar Telekom To Set Up Energy Services Joint Venture with MET

BUDAPEST--Hungary's leading telecommunications company by market share Magyar Telekom Nyrt. (MTELEKOM.BU) said Wednesday that it has signed an agreement with MET Holding AG, a leading integrated retail energy services trader in the central European region, to establish a joint venture that will provide energy services to business customers.

MAIN FACTS:

- The cooperation is based on an agreement signed in July 2013 between Magyar Telekom and Hungarian oil and gas company MOL Nyrt. (MOL.BU), which has a significant ownership stake in MET Group.

- The primary aim of the joint venture is to improve and optimize the energy operations serving the business customers of both Magyar Telekom and MET Group.

- Due to the establishment of the joint venture, natural gas and electricity services currently provided by Magyar Telekom to business customers will be ceased in the medium term as these services will be provided by the joint venture.

- The change in the business energy service operation will have no impact on the residential energy service offered by Magyar Telekom.

- The joint venture will be equally owned by both parties, with balanced management rights.

- Once the joint venture has commenced operation, the business energy service operations will no longer be consolidated into Magyar Telekom's results but 50% of the joint venture's results will appear as a below-earnings before interest, tax, depreciation and amortization item.

- As a consequence, total revenues for Magyar Telekom are now anticipated to be proportionally lower than previously guided, down by around 35 billion forints to 40 billion forints in 2017, implying roughly stable revenues compared to 2014 of HUF626.4 billion.

- Completion of the transaction, which requires approval by the relevant authorities, is anticipated in the second half of 2015.

Write to Margit Feher at [e-mail]