DT profit will be unaffected by mobile termination rate cut, CEO says

22 Nov 2010

German telecoms giant Deutsche Telekom (DT) will maintain its profit target for the year, despite the fact that a cut in domestic mobile termination rates (MTRs) is expected later this month, Bloomberg reports, citing the operator’s CEO Rene Obermann. Germany’s telecoms regulator, the Federal Network Agency (FNA), is set to reduce MTRs on 30 November, but Obermann insists the move will not affect DT’s profit target: ‘Whatever happens, the impact on us will be affordable. We can digest an MTR cut,’ he said. The FNA is trying to bring MTRs in line with other rates in the region, after the European Commission said rates should fall to between EUR0.015 (USD0.02) and EUR0.03 across Europe by 2012. ‘The MTR cuts are hard to predict,’ Obermann commented, adding: ‘I do not think the German regulators will just blindly follow these very aggressive suggestions from the European regulation side,’ as the FNA ‘hopefully understands that the industry also needs to make some money to keep investing.’ Earlier this month DT confirmed its guidance for full year 2010: excluding the effects of the joint venture between T-Mobile and Orange in the UK, the company expects to generate adjusted EBITDA of approximately EUR20 billion and free cash flow of at least EUR6.2 billion.

Germany, Deutsche Telekom (DT), Federal Network Agency (FNA)