Telekom Austria will write off about 400 million euros ($545 million) from its Mobiltel subsidiary in Bulgaria as risks from the Ukraine crisis spread in the region, the Vienna-based company said.
Higher capital costs and a weaker economic outlook triggered today’s move, Telekom Austria (TKA) said in a statement today. The company reiterated its forecast that full-year revenue will decline about 3 percent and it will keep the dividend for this year at 5 cents a share.
About half the writedown stems from the “medium-term expectations as regards macroeconomic risks for Bulgaria, inter alia due to the crisis in the Ukraine,” Telekom Austria said. Expectations that Bulgaria won’t be able to revive its economy in the mid-term by enacting economic reforms “drive the remainder of the impairment,” according to the statement.
The company completed the purchase of Mobiltel from a group of Austrian investors in 2005 for a transaction valued at 1.6 billion euros. Telekom Austria carried goodwill of about 650 million euros for the Bulgarian unit, according to its annual report.
To contact the reporter on this story: Jonathan Tirone in Vienna at firstname.lastname@example.org