DT raises full year forecast after beating analyst’s 3Q expectations

13 Nov 2003

Europe’s largest telecoms company Deutsche Telekom (DT) has raised its profits forecast for the year following a 12% rise in third quarter earnings as mobile phone sales surged and domestic costs were slashed. DT beat analyst’s expectations to post net income of EUR508 million in the three months to the end of September, compared with a EUR20.6 billion loss a year ago. EBITDA rose to EUR4.71 billion, up from EUR4.2 billion and some EUR110 million above forecasts, on a 4.9% rise in revenues to EUR14.1 billion. Following the results DT raised its guidance for full-year EBITDA by EUR1 billion to EUR18.2 billion. The positive outlook is vindication of chief executive Kai-Uwe Ricke’s enforced plan of cost cutting, debt reduction and asset disposals that has seen one of Europe’s most indebted companies make tentative progress in a return to health. Ricke will celebrate the end of his first year in charge tomorrow having reached his debt reduction target three months ahead of schedule. Borrowing totalled EUR49.2 billion at the end of September, a reduction of EUR15.1 billion on the year before. Alongside the cost cutting it has been DT’s mobile business T-Mobile that has driven the strong growth. Whilst the group’s fixed line unit T-Com remains the largest generator of revenue for the company, it was the growth at T-Mobile that points the way forward for DT. EBITDA at the mobile operator rose by more than 35% to EUR1.75 billion on the back of a 16% rise in sales to EUR5.92 billion.