Magyar Telekom Q1 net plummets on new govt measures in Hungary

Wed May 8, 2013 12:52am EDT

* Quarterly net profit hit by new tax, energy price cuts

* New costs dent stronger-than-expected rise in revenues

* Lifts full-year revenue guidance, maintains profit outlook

BUDAPEST, May 8 (Reuters) - Magyar Telekom said on Wednesday its first-quarter net profit fell sharply compared to a year ago as a new tax and government-backed energy price cuts in Hungary offset a stronger-than-expected increase in revenues.

The Deutsche Telekom unit said net profit for the first three months fell to 1.7 billion forints ($7.53 million) from 13 billion a year earlier as it booked the full annual amount, 7.3 billion forints, of a new utility tax.

Analysts polled by financial news website portfolio.hu had expected quarterly profit of 4.4 billion forints on revenues worth 152.25 billion in a recent survey.

Magyar Telekom's bottom line sank even though quarterly revenues rose by 6.8 percent to 156.6 billion forints, above expectations, as government-backed price cuts in household energy turned one of its fastest-growing segments loss-making.

"Thanks to the outstanding revenue generation in the first quarter and based on my current expectations ... I now expect the full year revenues to be approximately flat compared to our previous guidance of flat to -3 percent," Chairman and Chief Executive Christopher Mattheisen said in the earnings report.

Magyar Telekom's profitability was also hit as the bulk of the revenue increase came from lower-margin business segments.

The company kept its profit guidance for reported earnings before interest, taxes, depreciation and amortisation (EBITDA) to fall by 4-7 percent from last year.

In the first quarter EBITDA fell 24.3 percent due to the tax charge and the energy price cuts. The company said it was in talks on potential changes that may allow it to maintain its services in this business segment.

Magyar Telekom shares closed at 361 forints on the Budapest Stock Exchange on Tuesday. ($1 = 225.85 Hungarian forints) (Reporting by Gergely Szakacs; Editing by Jeremy Laurence)