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Magyar Telekom Hits Record Low on Dividend Bets: Budapest Mover

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Dec. 6 (Bloomberg) -- Magyar Telekom Nyrt. fell for a fourth day, reaching a record low, on speculation Hungary’s biggest phone company will lower its dividend because of rising taxes and as parent Deutsche Telekom AG seeks to boost profit.

The shares dropped as much as 3.1 percent and closed 2.1 percent lower at 374 forint by the end of trading in Budapest, bringing its decline in the past four days to 4.8 percent. Traders bought and sold about 5.2 million shares, 344 percent of the daily average for the last three months.

Hungary’s government said last month it will levy an extra tax on cables and pipes owned by telecommunications companies and utilities, which Magyar Telekom said will cost the company 9 billion forint ($42 million) to 11 billion forint a year. Deutsche Telekom is reviewing job cuts to increase profitability as Germany’s largest phone company meets investors today, according to two people with knowledge of the matter.

“The speculation that they will have to cut the dividend because of the new taxes is behind the slide in the shares,” Balint Hada, Budapest-based head of research at broker Quaestor Zrt., said by phone.

Magyar Telekom will announce its dividend strategy in February, Chief Executive Officer Christopher Mattheisen said in an interview in Budapest today.

The company paid a dividend of 50 forint per share for 2010 and 2011, compared with 74 forint for 2009. The payout fell because of a special “crisis” tax which is now being replaced with new types of levies on cables and phone calls from this year.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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