Bloomberg News

Magyar Telekom Spends Less on Severance Payments

December 20, 2007

Magyar Telekom Nyrt., the former Hungarian phone monopoly controlled by Deutsche Telekom AG (DTE), will spend less than expected in the fourth quarter on severance payments for workers leaving because of job cuts.

The Budapest-based company will pay 19 billion forint ($107 million) in severance, rather than the original plan of 24 billion forint, it said in a statement to the Budapest Stock Exchange. The cash-flow impact of the cost-reduction program will be 3 billion forint this year, it added.

Magyar Telekom in October agreed with unions to cut 15 percent of its jobs next year, as part of Chief Executive Officer Christopher Mattheisen's efforts to counter lower revenue. The company's sales are slumping as customers abandon fixed-line phones and wireless competition increases.

The company today said that it still expects to cut personnel-related expenses by 5 percent next year, even after deciding to delay job cuts at international subsidiaries.

To contact the reporter on this story: Balazs Penz in Budapest at bpenz@bloomberg.net.

To contact the editor responsible for this story: Chris Kirkham at ckirkham@bloomberg.net.


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