DT confirms full year guidance on ‘solid’ third quarter

4 Nov 2010

German telecoms giant Deutsche Telekom (DT) has announced its results for the three months ended 30 September 2010, reporting net profit of EUR1.03 billion (USD1.44 billion), an increase of 22% compared to the EUR959 million posted in the third quarter of 2009. The figures have been adjusted for the deconsolidation of T-Mobile UK, which formed a joint venture with France Telecom’s UK unit Orange, effective 1 April 2010. Adjusted net profit rose by 1.5% year-on-year to EUR1.02 billion, while third-quarter 2010 revenue stood at EUR15.6 billion, an increase of 1% against the EUR15.4 billion reported twelve months previously. However, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) decreased 6.1% y-o-y to EUR5.02 billion, due to higher customer acquisition costs in the US and the Netherlands, as well as the economic environment in southeastern Europe and regulatory effects. DT has confirmed its guidance for full year 2010: excluding the effects of the joint venture in the UK, the company expects to generate adjusted EBITDA of approximately EUR20 billion and free cash flow of at least EUR6.2 billion.

On a reported basis – i.e. including T-Mobile UK’s operations in the prior-year figures – unadjusted net profit in the three months ended 30 September 2010 increased by 7.9% y-o-y to EUR1.04 billion, although adjusted net profit fell 9.8% to around EUR969 million. Revenue decreased 4.1% in 3Q10 to EUR15.6 billion, while adjusted EBITDA for the period totalled EUR5.02 billion, down 9.2% y-o-y.

In its domestic market, DT generated revenue of EUR6.31 billion (a fall of 2.4% against EUR6.47 billion in 3Q09), of which fixed line turnover accounted for EUR4.5 billion (down 4.3% y-o-y) and mobile sales around EUR2.1 billion, an increase of 2.3% versus 3Q09 thanks to rising mobile data revenues, which jumped 27% y-o-y. Adjusted EBITDA was stable at EUR2.5 billion. In terms of subscribers, DT reported a total of 25.02 million fixed lines in Germany at 30 September 2010 (a fall of 6.1% y-o-y), while broadband customers increased 2.3% to 13.88 million, of which 11.84 million were retail users. T-Mobile Deutschland subscribers witnessed an 11.3% drop from 39.33 million in 3Q09 to 34.88 million a year later, due to the deregistration of inactive pre-paid SIMs, which DT said had no effect on revenue. The total number of T-Mobile USA customers increased 1% y-o-y to 33.75 million, while 3Q10 net revenue rose 10.3% to EUR4.14 billion from EUR3.75 billion. T-Mobile USA generated EBITDA of EUR1.02 billion in the three-month period, down 5.6% against 3Q09 due to higher customer acquisition and network costs. Meanwhile, total revenue generated by the group’s European segment dropped 19.5% y-o-y to EUR4.12 billion, although after the elimination of T-Mobile UK’s contribution, revenue fell just 3.6%. Adjusted EBITDA dropped 20.6% to EUR1.46 billion. At 30 September 2010 the Europe segment reported 60.37 million wireless customers, down 1.9% from a year earlier. Retail broadband subscribers jumped 13.7% to 4.18 million, although fixed line subscribers decreased 7.7% to 11.52 million.

Germany, Deutsche Telekom (DT), T-Mobile UK