DT back in black for first time in two years

15 May 2003

Heavily-indebted German telecoms giant Deutsche Telekom (DT) [NYSE: DT] has unexpectedly reported its first quarterly profit in two years, following an enforced period of spending cuts and asset sales. Net income in the three months to 31 March 2003 was EUR850 million, a vast improvement on the EUR1.8 billion loss in the corresponding period of 2002, whilst group revenue remained stable at EUR7.5 billion. Net debt was reduced to EUR56.3 billion, from EUR61.1 billion at the start of the year, on the back of the EUR1.73 billion sale of its cable television business and a strong performance by the Euro against the Dollar. All four business units – T-Mobile, T-Com, T-Online and T-Systems – performed well, with the group’s US cellco T-Mobile USA singled out for special praise. Whilst still the country’s smallest mobile operator, T-Mobile USA continued to improve its market share by signing up 900,000 new customers in the quarter, taking its total to 9.916 million. The operator now has around 6.6% of the market and is gaining ground on its closest rival Nextel [Nasdaq: NXTL]. The better-than-expected results caused DT to raise its pre-tax earnings targets by EUR1 billion to between EUR17.2 billion and EUR17.7 billion.