Magyar Telekom Sinks to Record on MSCI Concern: Budapest Mover

Magyar Telekom Nyrt., the Hungarian unit of Deutsche Telekom AG, fell to a record low on concern the stock’s weighting in an index tracked by investors will be cut.

The company’s shares sank as much as 4.5 percent and closed down 0.3 percent at 308 forint by the close in Budapest, the lowest since the shares strated trading in 1997. The stock has slumped 9.4 percent in July, adding to a 6.1 percent drop in June and a 14 percent tumble in May.

MSCI Inc. is due to publish the quarterly review of its MSCI Hungary Index in mid-August and a cut in the company’s weighting may drive investment funds to sell the shares, according to Tibor Bokor, head of telecom, media and technology research at Wood & Company Financial Services AS. Hungarian pharmaceutical company Gedeon Richter Nyrt., plunged the most in four years in November when it was dropped from the gauge.

Magyar’s share price decline means “the company may be on the edge” of being cut in the index, Bokor said by phone from London. “There may be some investors worrying and positioning for that.”

Magyar Telekom lowered its guidance for earnings before interest, taxes, depreciation and amortization this year to a 9-12 percent drop from a 4-7 percent decline on June 27, citing higher taxes and tough operating conditions at its unit in Macedonia.

The European Commission withdrew a challenge against Hungary’s telecommunication industry taxes at the European Court of Justice, Hungarian state news agency MTI said July 23. Hungary’s cabinet has raised a levy on phone calls and text messages as part of a bid to cut the government deficit.

Four analysts recommend investors buy Magyar Telekom shares, while eight have a hold rating and four say sell, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.