Bloomberg News

Magyar Telekom Rises Most Since May on Dividend Speculation

November 03, 2010

Magyar Telekom Nyrt. rose the most in six months on speculation Hungary’s former phone monopoly will stick to its dividend policy when reporting earnings tomorrow, even as it faces a special tax.

Shares of the company now controlled by Deutsche Telekom AG advanced as much as 5.1 percent to 601 forint, the biggest intraday jump since May 10. They traded up 24 forint, or 4.2 percent, at 596 forint as of 2:31 p.m. in Budapest.

Magyar Telekom expects to pay 27.5 billion forint ($142 million) this year in a special tax that the government imposed on the telecommunications, banking, energy and retail industries, the company said on Oct. 20. The tax, which would be more than the profit analysts expect Magyar Telekom to report for the third quarter tomorrow, “may impact” the company’s dividend policy, Chief Executive Officer Christopher Mattheisen said on Oct. 15.

“Some investors may be betting that the management will decide to maintain dividend payouts close to amounts paid in the past years after all, contrary to comments from management that the newly introduced tax would reduce the dividend,” Igor Muller, a Prague-based analyst at Wood & Co., said in a phone interview today.

Magyar Telekom paid at least 70 forint per share in dividends in each of the previous seven years, Bloomberg data show. Raiffeisen Research said in an Oct. 22 report it expected the company to pay a dividend of 60 forint per share this year and 55 forint for the next two years.

The company’s share price is still down almost 6 percent since Oct. 13, when Prime Minister Viktor Orban announced the three-year industry taxes aimed at plugging the government’s budget deficit.

Magyar Telekom may report third-quarter adjusted net income of 23.4 billion forint tomorrow, according to the median estimate of nine analysts in a Bloomberg poll.

To contact the reporter responsible for this story: Andras Gergely at agergely@bloomberg.net Zoltan Simon at zsimon@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net


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