MTEL has announced that the HUF 1.1bn cost it capitalised in 2005 will now be expensed following the legal investigations at TCG and auditor reports. MTEL is also booking a HUF 0.2bn potential tax obligation on the amount. In total, 2005 net profit is likely to be HUF 78.6bn, just 1.8% lower than the HUF 80.1 preliminary figure released in February.
The company also said that it has terminated employees associated with the scandal, and those who were involved in hampering the investigation.
Our view: We do not expect material trading impact over the marginal difference between the expected audited and preliminary figures. We believe that the imminent resolution of legal issues, management changes and payment of dividend removes share overhang and positions MTEL for outperformance.