European broadcaster Modern Times Group has decided to write down the value of its Ukrainian pay TV service, Viasat Ukraine, because of continuing economic uncertainty in the country.
The company said in its second-quarter results it will include net non-recurring charges of SEK154 million (US$23.2 million) related to the stake.
The charges comprise a SEK160 million non-cash net impairment related to Viasat Ukraine and SEK70 million of organizational and restructuring costs, offset by a SEK76 million net gain from the recently completed sale of an 80% stake in Swedish open-access fibre-to-the-home network operator Zitius to TeliaSonera.
According to the company, the decision was taken due to the uncertain economic outlook in Ukraine and the devaluation of the Hryvnia. Viasat Ukraine accounted for less than 1% of MTG’s net sales in 2013.
MTG said its organizational restructuring, costing SEK70 million, would deliver annual cost savings of approximately SEK40 million, which would be reinvested in business intelligence and data analysis.
“The impairment of the Ukrainian assets reflects the current situation, but make no mistake that we remain committed to the operations and see substantial long term potential for the business, not least given the scale of the country and the upcoming TV digitalisation process,” said Jørgen Madsen Lindemann, MTG president and CEO (pictured).
“The sale of Zitius in Sweden has generated a healthy return on investment for us, and the broader changes we have made are all about optimising our set-up so that we can continue to invest in the Group’s growth and development.”