Hungarian incumbent Magyar Teleom has reported a massive 131% rise in net profits for the twelve months to 31 December, but warned that spending on investments and network expansion plans could result in flat-lining profits for 2006. Magyar Telekom, majority owned by Germany’s Deutsche Telekom, said full-year net profits rose to HUF80.13 billion (USD381.9 million), up from HUF34.61 billion in 2004, as the effects of its restructuring began to bear fruit. The telco incurred high costs in 2004 relating to redundancies and the re-branding of its mobile unit, but was free of such liabilities this time round. Nonetheless, analyst estimates calculate the company underperformed in the fourth quarter and while no official breakdown was given, Reuters estimates Telekom’s income at HUF15.15 billion, below consensus forecasts of HUF16.58 billion.
On the upside, Magyar Telekom reported a 6.3% increase in fourth-quarter revenues to HUF161.3 billion, above market expectations of HUF158.87 billion, while EBITDA was HUF58.5 billion, below expectations of HUF61.5 billion. The lower than expected EBITDA level has been attributed to the cost of integrating its fixed line and mobile operations, Telekom’s entry into Romania’s retail market and investments at home.