Deutsche Telekom lowers full year expectations as 1H results disappoint

10 Aug 2006

Deutsche Telekom has announced that net revenue rose by 3.2% to EUR30 billion in the first half of the year but adjusted EBITDA fell by 2.4% to EUR9.8 billion. Net profit was unchanged compared to the same period of 2005, at EUR2.1 billion. International business developed positively on the back of its mobile operations in the US and UK; international revenues rose by 13.5% to EUR13.6 billion. In its home market, however, increasing competitive pressure led to a 4% decline in revenue to EUR16.3 billion. In the first half of 2006, T-Mobile Deutschland’s revenue declined by 3.3% despite an increasing customer base. As a result it plans to cut prices in the autumn to increase wireless usage. ‘New bundled offers will cost well under 10 cents per minute, regardless of which network is being called,’ said Deutsche Telekom CEO Kai-Uwe Ricke.

Domestic revenue in the Broadband/Fixed Network business area declined by 6.5% year-on-year in the first six months of 2006. The decrease in access, call and interconnection revenue had a negative impact, as in previous quarters. T-Com lost approximately 500,000 lines in the second quarter of 2006 alone, as a result of customers’ switching to other network operators (including cablecos), and as a result of mobile substitution.

On the back of the latest results, DT’s Board of Management has revised its guidance for the full 2006 financial year. Revenue guidance has been adjusted to between EUR61.5 billion and EUR62.1 billion, compared with the EUR62.1 billion to EUR62.7 billion range previously announced. A moderate increase in revenue is expected for 2007. Adjusted EBITDA is expected to be between EUR19.2 billion and EUR19.7 billion in 2006, rather than EUR20.2 billion to EUR20.7 billion.

Germany, Deutsche Telekom (DT)