By Margit Feher
BUDAPEST--The fourth-quarter net profit of Hungary's largest
telecommunication company by market share Magyar Telekom Nyrt.
(MTELEKOM.BU) disappointed Wednesday with coming in lower than
analysts' expectations but the company said it plans to pay a
dividend from its 2015 earnings, a much-awaited positive
development for investors.
MAIN FACTS:
- Based on its dividend policy, financial position and the
current operating, regulatory and taxation environment and outlook,
coupled with the anticipated significant improvement in its free
cash-flow generation, Magyar Telekom plans to pay a dividend of at
least 15 forints per share (0.06) on 2015 earnings, it said.
- The company confirmed Wednesday its earlier plan for not
paying a dividend on 2014 earnings.
- As for the firm's 2015 earnings guidance, Chief Executive
Officer Christopher Mattheisen forecast that revenues will increase
by up to 3% versus last year, driven by an effort to offset the
fall in fixed-line revenue and supported by the purchase of
alternative telecom provider GTS.
- Ebitda, a key indicator of business performance for
telecommunications companies, is expected to decline this year by
no more than 3% compared to 2014, he said in a filing on
fourth-quarter earnings with the Budapest Stock Exchange.
- In the October-December period of last year, the company made
a net profit of HUF1.54 billion forints, missing analysts' forecast
in a Portfolio poll for HUF2.6 billion, but up sharply from a net
profit of HUF253 million a year earlier. The fourth-quarter net
profit was mostly the result of a rise in Ebitda as an increase in
corporate taxes offset that. Net profit translated into per-share
earnings of HUF1.48, compared with HUF0.24 a year earlier.
- Ebitda was HUF41.86 billion from a year earlier, exceeding
analysts' forecast for HUF40.8 billion. It was up 8% from HUF38.75
billion on the year, owing primarily to lower severance
expenses.
- Fourth-quarter revenue fell by a moderate 0.3% to HUF165.26
billion from a year earlier and was slightly below the HUF165.7
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 higher mobile
equipment sales.
- The net debt ratio, which is key for the company's dividend
policy, was 45.7% at the end of last year, up from 43.8% a year
earlier and exceeded the 40% upper limit of the company's
self-imposed indebtedness limit. Citing its financial position and
the operating and business environment, Magyar Telekom said in
October that it won't pay a dividend on its 2014 profit. Its policy
of maintaining a net debt to capital ratio of between 30% and 40%
meant it didn't expect to be able to pay a dividend.
- Magyar Telekom CFO Janos Szabo will hold a briefing for the
press about the earnings at 0730 GMT Thursday.
- Deutsche Telekom AG (DTE.XE) holds a 59.3% stake in Magyar
Telekom.
- Magyar Telekom shares closed Wednesday 0.3% lower at HUF380 on
the Budapest Stock Exchange while the benchmark BUX index ended
0.3% higher.
Write to Margit Feher at margit.feher@wsj.com
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