Magyar Telekom has scheduled an Extraordinary General Meeting for today, where the main issues will be the discussion of ongoing investigation, and election of BoD, Supervisory BoD and audit committee members.
Our view: The EGM's agenda has been widely expected, although speculation over the CEO's possible departure has been circulating since last week. Although the company has denied knowldege of any plans to replace the CEO, we place a 50-50 odds on the issue. Whilst Elek Straub, the current CEO, is highly-regarded and credited for MTEL's successful expansion strategy in recent years, the Montenegrin legal scandal may have somewhat tainted his track record. In addition, given the maturing business, a new CEO may give just the fresh breath of life that MTEL needs for a re-rating. Either way, the focus, in our view, should not be whether the CEO will be replaced, but how MTEL's growth and dividend strategy will evolve in the short-term. Lastly, we believe investors will now be looking to the AGM on November 15 for confirmation of dividend payment before the end of the year.