T-Mobile performance boosts Deutsche Telekom’s 1H profits

11 Aug 2005

Profit at German telco Deutsche Telekom (DT) rose sharply in the first half of this year, partly driven by increased take-up of its mobile services in the USA and Germany. Group pre-tax profits rose by 93.6% to EUR3.4 billion, on revenues which grew 3% to EUR28.1 billion. Wireless division T-Mobile posted 1H turnover of EUR13.9 billion, up 7.9%, helped greatly by the addition of 623,000 new domestic subscribers and 972,000 new customers in the USA in the second quarter alone. Despite the strong growth in mobile communications, the near-doubling of pre-tax profits was largely a result of a EUR1.4 billion impairment charge in 2004. EBITDA increased by 5.7% to EUR10.1 billion in 1H.

DT’s half-yearly revenues from fixed line and broadband operations fell 4.5% to EUR 13.1 billion as traffic volumes continued to decrease. Continued growth in the number of installed ADSL connections (reaching 6.7 million at the end of June) partly offset the fall in wireline turnover. ISP division T-Online added 477,000 new DSL customers in Germany in the six-month period, but saw profits drop by 29% as increased competition drove down prices. DT has pinpointed the planned reintegration of T-Online as a core element of its future strategy. Some T-Online shareholders have challenged the merger agreement, under which Deutsche Telekom is buying out T-Online minorities for EUR3 billion. Nevertheless, in the next few days, T-Online will apply to court for judicial release so that the merger can become legally binding.

Germany, Deutsche Telekom (DT)