Telekom Austria CEO Hannes Ametsreiter said the operator is "of course very unhappy" about the surprise €400 million ($544 million) writedown it has just been forced to make on its Bulgarian Mobiltel unit, but said he has so far received no negative comments from shareholder América Móvil that would suggest it was on the verge of abandoning its Austrian investment.
Hannes Ametsreiter, Telekom Austria CEO
In an interview with Austrian newspaper Kurier, Ametsreiter said a representative of the Carlos Slim-owned Mexican group, which recently agreed to pool its shareholding in the Austrian group with that of state-owned ÖIAG, made "no negative comments in the direction of an exit" during a video conference for the supervisory board meeting.
Ametsreiter added that when the syndicate agreement was signed at the end of April, Telekom Austria itself was unaware of the impairment requirement.
He noted that recent negative external factors had significantly worsened the situation in Bulgaria in recent months. These included the macro economic conditions, which had an adverse impact on average capital costs, and the generally difficult situation in Bulgaria, which is suffering from a shrinking population.
Ametsreiter also said he saw no reason why he should resign over the matter, as the board had acted quickly and in a transparent and correct manner.
In its ad hoc statement on the write down, Telekom Austria said: "This impairment is primarily due to an increase in the cost of capital of the Bulgarian segment and changed expectations with regard to medium-term macroeconomic developments in Bulgaria, as well as related market effects which affect the valuation of Telekom Austria Group's business plan for the Bulgarian segment."
The operator noted that the impairment will be reflected in the financial statements of Telekom Austria Group for the first half of 2014 and will negatively impact net income and equity. However, the company reiterated its outlook for 2014 despite the impairment: group revenue decline of about 3 per cent, capex of around €700 million and a proposed dividend of €0.05.
However, Reuters noted that the impairment would likely push the operator into the red for the full year: analysts have been expecting a full-year net profit of about €130 million, according to Thomson Reuters data.
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