Magyar Telekom Upgrades 2016 Profitability Guidance Post-Third Quarter

   By Margit Feher

BUDAPEST--Hungary's largest telecommunications company, Magyar Telekom Nyrt. (MTAY), raised its profitability guidance for the full year on Wednesday as cost savings and mobile equipment and data sales boosted its third-quarter results.

Still, the company left its closely-watched 2016 dividend payment plan unchanged for 25 forints (9 cents) a share, up from HUF15 a share last year.

"Our confidence for the full year is reflected in our decision to raise 2016 revenue and earnings before interest, taxes, depreciation and amortization targets to around 595 billion forints ($2.15 billion) and around HUF193 billion forints, respectively," Magyar Telekom Chief Executive Christopher Mattheisen said in a filing with the Budapest Stock Exchange.

The company originally targeted this year's revenue at up to HUF590 billion and Ebitda between HUF187 billion and HUF191 billion.

Magyar Telekom, in which Deutsche Telekom AG holds a 59.3% stake, no longer expects telecom peer Digi to enter the mobile market in 2016. It also anticipates that household spending power in Hungary will continue to rise. Revenues will also continue to benefit from residential electricity services sales, which it doesn't plan to wind up before March 2017, it added.

Net profit totaled HUF12.44 billion in the July-September period, up 33% from a year earlier and higher than analysts' forecast of HUF11.5 billion in a poll conducted by the company.

Revenue fell 4.7% to HUF150.61 billion from the same period of last year, primarily as a result of exiting the residential gas distribution market and on lower revenues from systems integration and information technology services.

Ebitda, a key indicator of profitability in the telecommunications sector, rose 10% on the year to HUF53.81 billion, beating analysts' forecast for HUF51.4 billion. The Ebitda margin, which analysts also watch closely, was 35.7%, up sharply from 31.0% a year earlier and exceeding analysts' forecast for 34.6%.

Write to Margit Feher at margit.feher@wsj.com

(END) Dow Jones Newswires

November 09, 2016 13:43 ET (18:43 GMT)

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