Magyar Telekom Rises Most Since June on Dividend Decision

Magyar Telekom Nyrt., the Hungarian phone unit of Deutsche Telekom AG, gained the most in eight months as management proposed keeping the dividend unchanged following the first increase in sales since 2007.

Shares gained as much as 6.7 percent and last traded 4.4 percent higher, the biggest jump since June 29, to 407 forint at the close in Budapest. Volume of trading was more than seven times the three-month average. Management proposed holding the dividend at 50 forint per share at 2010 and 2011 levels, the company said in a statement to the Budapest bourse today.

Magyar Telekom sales rose for the first time in five years in 2012 as the company started selling energy services, helping balance a drop in fixed and mobile voice revenue. The dividend overshadowed for investors the unexpected fourth-quarter loss and management forecasts for declining earnings this year.

“Investors are primarily focused on the size of the dividend,” Gergely Palffy, a Budapest-based analyst at KBC Securities, said in an e-mail before the dividend decision.

Sales rose 3.4 percent in the October-December period from a year ago to 165 billion forint ($733 million), boosting full-year revenue by 1.6 percent, the first increase since 2007.

The loss attributable to owners of the parent company was 1.6 billion forint in October-December, compared with a 40.3 billion-forint loss a year earlier, as the share of high profit-margin voice revenue declined and as a new telephone tax wiped out profit. The mean estimate of six analysts surveyed by Bloomberg was a profit of 505 million forint.

Call Tax

Earnings before interest, taxes, depreciation and amortization, an indicator closely watched by analysts and investors, declined 21 percent to 37 billion forint as a new phone-call tax cost the company an extra 4.4 billion forint, compared with the year-ago period.

Ebitda fell 9.1 percent to 52.5 billion forint when excluding investigation-related costs and provisions, severance expenses and extraordinary taxes. It may decline by 4 percent to 7 percent this year while sales revenue may decline as much as 3 percent, Chief Executive Officer Christopher Mattheisen forecast in the report.