Hungary's largest telecommunications service provider, Magyar Telekom, which has recently been excluded from a tender for a 49.13% package in Telekom Slovenije, may turn its attention to Ukraine, Thilo Kusch, Chief Financial Officer of the group, told Portfolio.hu in an interview on Monday. He believes MTel is making small but decisive steps in the right direction, but noted that the erosion of fixed-line revenues is unlikely to be stopped any time soon. Kusch also said he currently sees nothing that would jeopardize the company to pay HUF 70 dividend per share on its 2007 profits.
Key points of the interview are:
- Value accretive acquisitions remain a core element of the group's strategy
- Buying out minority shareholders in Macedonia and Montenegro may be possible in the longer run
- Without acquisitions, cash will be directed back to shareholders
- HUF 100 dividend payment is unrealistic
- Further mass headcount reductions are unlikely, but additional cost cutting should be expected
- MTel cannot sell and then lease back properties
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Portfolio.hu: How do you feel now that Magyar Telekom was excluded from the bidding for Telekom Slovenije? Are you disappointed? Thilo Kusch: An acquisition always have two aspects. It would have been very nice to acquire the company because it would have fit perfectly into our portfolio, but only at a price that benefit the shareholders. We examined the company thoroughly and I believe we offered a very competitive price, but it didn't work. I did not expect us not to succeed, so in this respect I am indeed disappointed, but we did what we could, so that's life.
P.: What was the price you offered in last round? T. K.: The tender is not closed yet and we are bound by a confidentiality agreement, so I cannot give you an answer to this question. In the current market environment I do not believe that a price higher than what he have offered would have created value for our shareholders.
P.: Do you think that Telekom Slovenije will be sold at its current market price? T.K.: You have probably seen discussions about the level of the share price... which was deemed obviously quite high.
P.: Many believe Telekom Slovenije was the last chance for Magyar Telekom for a major acquisition in the region... T.K.: We do not have a shopping list, but we are actively looking at any opportunity to expand our business in the region, and if something interesting comes up, we run in that tender. We will keep looking for opportunities in the South Eastern European region. CEE remains a central stage in our strategy, whether its assets of another telco service provider or a privatisation of a company. We want to acquire more but with our purchases we definitely want to create value for our shareholders.
Telecom companies are expected to go on sale in Bosnia-Herzegovina, Kosovo and Ukraine and these are the countries where we could be interested in buying something. So I definitely wouldn't say Telekom Slovenije was our last chance.
P.: Is it possible that you will buy out minority shareholders in your subsidiaries in Macedonia or Montenegro? T.K.: This is something we would be interested in, but it depends on whether or not the governments in the respective countries are interested in selling their stake or not. Eventually they will sell them, but I don't believe there's anything on the table just yet, so our holding is unlikely to be increased in one or two years.
P.: An increasing number of analysts criticise your forced acquisition policy and want to see the dividend taken higher. Don't you think this is something Magyar Telekom should at least give some thought to? T.K.: The problem is that many analysts and investors believe that if we carry out acquisitions we destroy value. I understand that because during the "bubble years" in the telecom sector all over the world of the past decade or so a lot of investors got burned because there was a clear view that companies overpay and destroy shareholder value. We don't want to do that. We do not make acquisitions for the sake of acquisition, but to generate value for shareholders. If we don't have an opportunity to make an acquisition, then we will seek to return money to shareholders in form of dividend payments.
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