Magyar Telekom Q3 net down 15 pct, affirms outlook

* Q3 net income 22.76 billion forints

* Affirms full-year guidance, warns of head winds

* Internal investigation continues

* Auditor unable to perform quarterly review

BUDAPEST, Nov 5 (Reuters) - Magyar Telekom MTEL.BU reported on Thursday a 14.8 percent decline in third-quarter net income that was in line with market expectations and the company also affirmed its full-year profit guidance.

Net income for the period fell to 22.76 billion forints ($123.9 million) from 26.71 billion a year earlier on the back of lower retail voice and mobile wholesale revenues, the company said in its quarterly earnings note.

Analysts in a Reuters poll earlier this week had expected net income of 22.87 billion forints.

"In the third quarter, Magyar Telekom continued to face strong head winds across all segments resulting from the recessionary economic environment and the government's austerity measures," Magyar Telekom Chairman and Chief Executive Christopher Mattheisen said in the flash report.

Hungary's economy is mired in its worst downturn in almost two decades and Magyar Telekom said it experienced increased retrenchment towards telecom spending from both households and companies in the third quarter.

Revenue in the three-month period was 160.11 billion forints, below market expectations and also down from 167.08 billion a year earlier, as the contribution of foreign units could only partially offset weaker sales in the company's main market.

Magyar Telekom affirmed its guidance, issued in August, for an approximately 2 percent decline in revenue and a drop of up to 5 percent in earnings before interest, taxes, depreciation and amortisation (EBITDA) over last year's results.

"However, we expect current trends, such as the significant reduction in private consumption and heavily scaled back spending by corporates, to continue to put strong pressure on our top line," the company said.

It said a stronger forint could also temper revenue from foreign subsidiaries in the fourth quarter compared with last year, when the currency plumbed new lows, forcing Hungary to seek international aid to avert collapse.

Net income for the first nine months was down 16.1 percent year-on-year at 67.4 billion forints, while EBITDA was down by 5.4 percent to 202.3 billion as total revenue shrank by an annual 4.4 percent to 480.6 billion forints.

Magyar Telekom said its auditor could not perform its quarterly review in the third quarter for lack of sufficient information relating to an ongoing internal investigation into irregular contracts at its foreign units.

The contracts probe cost Magyar Telekom 5.1 billion forints in the first three quarters.

The company's own audit committee could not evaluate the third-quarter financial statements either, and Magyar Telekom said if underlying issues are not resolved, that could influence the publication and timing of future financial statements. (Reporting by Gergely Szakacs; Editing by Steve Orlofsky)