DT narrows Q4 net loss, meets FY09 targets

25 Feb 2010

German telecoms group Deutsche Telekom (DT) has achieved its revised financial guidance for full year 2009, recording a 4.8% rise in revenue to EUR64.6 billion (USD87.5 billion) compared to the year earlier. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 6.2% to EUR 20.7 billion, resulting in an adjusted EBITDA margin of 32%, up from 31.6% in 2008. The consolidation of Greek telecoms company OTE in February 2009 contributed EUR5.4 billion to FY09 revenue and EUR2 billion to adjusted EBITDA. Synergies for the entire year totaled EUR105 million, coming in above budget. Free cash flow was on target at EUR7 billion for the full year, down 0.9% year-on-year, however adjusted net profit totaled EUR3.4 billion, 1.1% below the prior-year figure. In unadjusted terms, net profit plummeted 76% compared to the previous year to EUR353 million due to impairment losses of EUR2.3 billion recognised on goodwill in the UK and south-eastern Europe. DT posted a 0.6% year-on-year rise in fourth quarter revenue to EUR16.2 billion, while adjusted EBITDA in 4Q09 rose 8.6% compared to the same period a year earlier to reach EUR5.07 billion. DT also succeeded in narrowing its 4Q net loss, which stood at EUR730 million in 2008, improving by almost 100% in 4Q09 to a net loss of EUR3 million. In view of the ongoing economic uncertainty, DT is expecting EBITDA of around EUR20 billion and a free cash flow of around EUR6.2 billion for the 2010 financial year.

DT’s overall domestic business meanwhile saw revenue decrease 3.7% to EUR25.4 billion in 2009, while adjusted EBITDA declined 1.6% to EUR9.6 billion. Line losses and the reduction in call charges resulted in an expected revenue decline of 5.3% compared with 2008 in Germany’s fixed network division. At the same time, adjusted EBITDA in the fixed business decreased by 2.4%. The number of net line losses fell to 417,000 in the fourth quarter, the lowest in any quarter since the end of 2005; in full-year 2009 2.1 million line losses were recorded, almost 17% less than in 2008, with the total falling to 26.24 million as at 31 December 2009. At the same date, retail broadband customers totalled 11.48 million, up 8.3% year-on-year, while the number of unbundled local loops rose 10% in 2009 to 9.093 million. Revenue in the domestic mobile business increased 0.5% to EUR8.1 billion in 2009. Although Germany’s mobile division grew its 4Q09 adjusted EBITDA by 16% year-on-year to EUR894 million, the figure for the full year rose just 0.3% compared to 2008 to reach EUR3.37 billion. At 31 December 2009 the number of domestic mobile subscribers stood at 29.14 million, up by just 0.1% year-on-year.

Elsewhere, DT’s Systems Solutions division posted FY09 revenue of EUR8.8 billion, down 5.8% year-on-year, while US sales increased 3.4% to EUR15.47 billion, although fourth quarter revenue declined 15.7% to EUR3.7 billion due to negative currency effects and competitive pressures. In the US profit from operations in 2009 fell 2.9% to EUR2.23 billion. Turnover generated by European operations in 2009 fell 11.6% to EUR10.03 billion, led by weak results in the UK and Poland, and EBITDA decreased 12% to EUR2.6 billion. The OTE takeover helped revenue from the Southern and Eastern Europe division more than double to EUR9.7 billion, while EBITDA for the segment jumped 94% to EUR3.8 billion.

Germany, Deutsche Telekom (DT), Telekom Deutschland