Surprise blow, asset sale for Magyar Telekom_20.12.2015

The Hungarian government has taken the industry by surprise by instructing all its ministries and their background institutions to terminate contracts with Magyar Telekom.

Portfolio reports that the move was announced by the government spokesman Zoltán Kovács and took Deutsche Telekom, Magyar Telekom’s parent company, by surprise. At this stage it remains unclear if it also affects a strategic partnership agreement between Magyar Telekom and the government, though Kovács said it would not be.

Portfolio adds that the move was triggered by Magyar Telekom’s decision to the cancel a sponsorship agreement the company had with Ákos Kovács, a singer supportive of the government, following controversial remarks he made in a TV interview about women and their role in society.

In a separate and unrelated development, Magyar Telekom has signed an agreement to sell its 100% stake in the media company Origo. The latter is being bought by Wave Media for around €13.2 million, with the deal expected to close in Q1 2016.

Magyar Telekom says the transaction is in line with the increased strategic focus on its core business and on further strengthening its free cash flow generation.

It adds that it is not subject to competition authority approval and certain business activities will be excluded from the deal.