* Underlying Q2 profit down due to weak economy, taxes
* Flags cost cuts, price rises to meet 2012 profit guidance
* Shares down 1.2 percent (Releads, adds market reaction, analyst comment)
By Gergely Szakacs
BUDAPEST, Aug 9 (Reuters) - Magyar Telekom said it was to raise prices and cut costs after quarterly earnings missed expectations as austerity-hit Hungarians cut back on discretionary spending and with a new tax on the sector taking effect.
The Deutsche Telekom unit said on Thursday the moves allowed it to affirm previous guidance for underlying full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) to fall 4-6 percent.
"Telecommunication spending in Hungary came under increasing pressure, accelerating the decline in our traditional voice revenues in the second quarter," chairman and chief executive Christopher Mattheisen said.
"As our growth businesses could not fully compensate for the fallout of high-margin voice revenues, our underlying EBITDA in the second quarter declined by 9 percent year-on-year."
EBITDA adjusted for special cost items fell to 56.2 billion forints, compared with a forecast for 57.1 billion in a poll by business news website portfolio.hu.
Net profit more than doubled to 10.7 billion forints ($48 million) in the second quarter, compared with a forecast for 12.05 billion. The result was flattered by Magyar Telekom having to book a 10.6 billion forints charge in the 2011 period for settling a U.S. investigation into the bribery of government officials in Macedonia and Montenegro.
Magyar Telekom shares were down 1.5 percent to 404 forints at 0845 GMT, underperforming a flat blue chip index.
"The results are clearly negative and the stock may fall below 400 forints in the very short term," KBC Securities analyst Gergely Palffy said.
"We believe consensus estimates need to come down, as the new telephone tax could have a 6 billion forint negative impact in the second half of 2012 even with the planned tariff hikes from September/October," Palffy said.
Magyar Telekom's profitability is being weighed on by government measures to reduce the budget deficit, such as a special tax on the telecommunications sector first levied in 2010 and a new levy on phone calls and text messages.
It said the telecommunications sector tax would cost more than 24 billion forints this year, while the impact of the new phone call tax levied from the second half was estimated at 8 billion forints by the year-end.
Second-quarter revenue rose 1.3 percent to 145 billion forints due to an increase in systems integration and energy service revenues, while income from higher margin mobile and fixed-line businesses fell.
"Despite the worsening EBITDA trends, outlook for our revenues looks more positive," Mattheisen said. ($1 = 224.3 forints) (Editing by Dan Lalor)