Telekom Austria to book impairment on Bulgarian subsidiary
Telekom Austria Group has revealed that it will book a €400 million impairment for its Bulgarian subsidiary Mobiltel.
The impairment is largely thanks to an increase in the cost of capital in the Bulgarian segment, as well as changed expectations for medium-term macroeconomic developments which have affected the valuation of Telekom Austria Group’s business plan in the country.
In May this year, Mobiltel’s WACC (weighted average cost of capital) increased by more than 20% compared to a previous impairment test in Q4 2013, thought largely to be a result of Telekom Austria Group’s unstable share price in the first half of 2014.
The company said that the crisis in Ukraine was also a factor in the change.
The impairment will be reflected in the consolidated financial statement of Telekom Austria Group for the first half of 2014 and will negatively impact net income and equity, the company said.
However, the Austrian OIAG state holding company said that the writedown will not affect the relationship between the Austrian government and Telekom Austria’s major shareholder, América Móvil.
“The partnership between OIAG and América Móvil will of course continue,” a spokesperson for OIAG told reporters today.
“A stable shareholder structure is exactly what Telekom Austria needs at the moment.”
Telekom Austria is reportedly in the process of being fully acquired by América Móvil, but in May this year, Telekom Austria’s board said it would give no recommendation on the offer.