MTEL has announced the resignation of Elek Straub as CEO, to be replaced by Chris Matthiesen, who was the former deputy CEO and Head of T-COM prior to leaving the company earlier this year. The company also raised the proposed 2006 DPS by 4.3% to HUF 73 to compensate investors for the delay in payment.
Our view: This development is consistent with our view that deeper management changes were inevitable to rebuild company credibility. The 7% stock price appreciation yesterday is a reflection of the investment community's endorsement of management changes, and relief that dividends are finally forthcoming. We believe that the CEO replacement, resolution of the legal issues at Montenegro and auditor sign-off of the 2005 accounts remove share overhang on MTEL and should unlock potential for further valuation expansion.