DT posts 14.6% rise in Q3 net profit, confirms FY guidance

10 Nov 2011

German telecoms giant Deutsche Telekom (DT) has maintained its outlook for the full fiscal year ended 31 December 2011 on the back of ‘solid’ results for the third quarter, which the group said were achieved despite difficult conditions characterised by a weak economy and negative regulatory decisions in a number of countries. Net revenues for the third quarter of 2011 stood at EUR14.67 billion (USD20.12 billion), down 6.0% from the same period a year earlier, while turnover for the first nine months of 2011 totalled EUR43.74 billion, down 5% in comparison to 9M 2010. However, Q3 revenues excluding T-Mobile USA, which is now reported as a discontinued operation, fell by a lower 4.1% compared to the same quarter twelve months earlier to EUR10.99 billion. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for Q3 2011 stood at EUR4.91 billion (a decrease of 2.3% year-on-year), while adjusted EBITDA for continuing operations amounted to EUR3.88 billion (down 2.7%). However, net profit for the third quarter of 2011 increased by 14.6% year-on-year to EUR1.1 billion, while adjusted net profit grew by 48.9% to EUR 1.3 billion. DT continues to expect adjusted EBITDA from continuing operations of around EUR14.9 billion in FY 2011, while adjusted EBITDA of around USD5.5 billion is anticipated from its US business.

Consistent cost management helped DT’s domestic operations achieve its best adjusted EBITDA margin (41.5% in Q3 2011 compared to 39.9% in the year-ago quarter) since reporting of the Germany segment began. Total revenue in the country declined 5% year-on-year to EUR6.0 billion, which the company attributed to a reduction in mobile termination rates and lower handset sales, while adjusted EBITDA fell 1.3% to EUR2.5 billion. Mobile data revenues remain the key driver of the group’s domestic mobile business, growing 26% year-on-year to EUR40 million. The number of wireless customers in Germany grew slightly during the period, from 34.882 million at 30 September 2010 to 34.905 million twelve months later, while retail broadband customers grew 3% year-on-year to 12.201 million.

The group’s European operating segment (which excludes Germany) recorded total revenue of EUR3.9 billion in the third quarter of this year, down 6.1% compared to the same period a year previously, while adjusted EBITDA declined by 5.3% year-on-year between July and September 2011 to EUR1.4 billion, following year-on-year decreases of 13% in Q1 and 8% in Q2. DT said it Greek subsidiary OTE – in which the German company holds a 40% stake – was ‘unable to escape the effects of the financial and economic crisis’. The firm’s operations in Greece saw a 5% drop in sales to EUR930 million and a 7.2% decline in adjusted EBITDA to EUR349 million. Overall the European segment saw total mobile subscribers drop slightly from 60.373 million at the end of September 2011 to 59.467 million twelve months later, while fixed voice accesses fell 6.7% over the same period to 10.751 million. The number of retail broadband subscribers grew 8.2% however, to reach 4.52 million at the end of the reporting period.

Germany, Deutsche Telekom (DT), Telekom Deutschland