Europe’s largest telco Deutsche Telekom [NYSE: DT] defied analysts by reporting its second straight quarterly profit on the back of reduced costs, lower debt and strong growth from its mobile phone operations. Market consensus predicted that DT would report a loss of around EUR160 million, but the operator instead posted a EUR256 net profit in the three months to the end of June, compared to a EUR2.08 billion loss the previous year. Group sales for the quarter rose by 4.7% to EUR13.6 billion. Much of the turnaround was attributed to the performance of wireless operator T-Mobile International, whose US operations gained 606,000 new customers in the period to help push the group’s mobile EBITDA up 29% to EUR1.74 billion. Additionally, fixed network division T-Com reported better than expected results, with EBITDA down just EUR10 million to EUR2.55 billion, despite a 6.9% fall in sales.
DT’s CEO Kai-Uwe Ricke, who took the helm last November, has looked to reduce the group’s debt mountain whilst countering economic malaise and falling sales with widespread cost cutting measures, including 30,000 job cuts at T-Com alone. Asset disposals, most notably the EUR500 million sale of a stake in Russian cellco Mobile TeleSystems, meant that the telco’s net debt fell to EUR53 billion at the end of June. The surprise profit announcement prompted DT to say that it would aim to once again pay a dividend for the business year, after Ricke’s predecessor, Ron Sommer, dropped 2002’s dividend altogether when the company posted Europe’s biggest loss at nearly EUR25 billion.