New tax to cost Magyar Telekom up to $50 million a year

Magyar Telekom expects a new tax approved by Hungary’s parliament on Tuesday to cost it between HUF9 billion ($41 million) and HUF11 billion a year from 2013 onwards.

Hungarian authorities have levied a charge of HUF125 per meter on the owners of ducts that support electricity, telecoms, natural gas, heating, water and wastewater services.

Telecoms operators must pay 20% of the per-meter rate for the first 170,000 meters, 40% for the next 80,000, 80,000% for the 50,000 after that and the full rate for anything in excess of 300,000 meters.

Magyar Telekom expects a new tax approved by Hungary’s parliament on Tuesday to cost it between HUF9 billion ($41 million) and HUF11 billion a year from 2013 onwards.

Hungarian authorities have levied a charge of HUF125 per meter on the owners of ducts that support electricity, telecoms, natural gas, heating, water and wastewater services.

Telecoms operators must pay 20% of the per-meter rate for the first 170,000 meters, 40% for the next 80,000, 80,000% for the 50,000 after that and the full rate for anything in excess of 300,000 meters.

The tax still needs to be ratified by Hungary’s president before it becomes effective on January 1 2013.

Owned by Germany’s Deutsche Telekom (Bonn, Germany), Magyar Telekom (Budapest, Hungary) has been a target of increasingly hostile regulation in recent months.

In July, authorities introduced a new usage-based levy on certain fixed-line and mobile-phone services.

Deutsche Telekom partly blamed that measure for the 8.4% decline in its Hungarian earnings before interest, tax, depreciation and amortisation (EBITDA) last quarter.

In its recent earnings report, it warned investors that it “cannot exclude that further extraordinary government measures may have an impact on earnings in addition to the special levy the introduction of which had not been expected”.

Deutsche Telekom is also anticipating changes to Hungary’s telecommunications act that “which could potentially have negative consequences for Magyar Telekom in relation to retail contracts, conditions and legal remedy in connection with future spectrum tendering processes and the role of Magyar Telekom as a universal service provider”.

Since September, Magyar Telekom has been increasing the prices of some fixed-line and mobile-phone tariffs in response to new regulation.

The operator is also looking to reduce what it calls “Total Workforce Management (TWF)” costs by around €20 billion ($26 billion) between 2012 and 2013.

Chief executive Christopher Mattheisen expects full-year EBITDA to be 4–6% lower than in 2012.