DT Q2 sales climb 5.4%, US spending boosted

8 Aug 2013

German telecoms group Deutsche Telekom (DT) has reported net revenue of EUR15.157 billion (USD20.2 billion) for the second quarter of 2013, an increase of 5.4% from EUR14.379 billion in the year-ago period. DT attributed the growth to the first-time consolidation of MetroPCS following the merger with T-Mobile US as of 1 May 2013, as well as higher revenue from handset sales in the US thanks to strong new business. Adjusted EBITDA declined 6.0% year-on-year to EUR4.417 billion due to increased expenditure in the US, while adjusted net profit fell 1.5% from EUR822 million in Q2 2012 to EUR810 million twelve months later and reported net profit increased 10.0% year-on-year to EUR530 million. T-Mobile US is planning to invest more in customer acquisition and marketing for the rest of the year, with a view to increasing the number of branded post-paid customers by another 500,000 to 700,000 in H2 2013, after earlier forecasting for a roughly stable customer base. As such, DT now expects adjusted EBITDA of around EUR17.5 billion for the full year, compared to the previous pro forma figure including MetroPCS of EUR18.4 billion, while free cash flow is now forecast at EUR4.5 billion for 2013 rather than the previous figure of EUR5.0 billion. ‘Our strategy is bearing fruit: we are in the middle of a massive turnaround in the US and we want to carry on along this successful course. We are prepared to spend more on high-value growth this year than previously planned,’ commented Rene Obermann, chairman of the board of management of DT.

In its domestic market, the Bonn-based telco generated total revenue of EUR5.565 billion in Q2 2013, flat compared to EUR5.610 billion in the year-ago quarter, while adjusted EBITDA fell 2.9% to EUR2.279 billion, due to an increase in investments in the market, although reported EBITDA rose 2.6% to EUR2.161 billion. In the US, revenues climbed 26.4% in the three months ended 30 June 2013 to EUR4.825 billion, mainly thanks to the first-time consolidation of MetroPCS and higher revenue from handsets; in 2Q13 smartphones accounted for 4.3 million (86%) of all handsets sold, compared to 2.1 million twelve months earlier. T-Mobile US’s adjusted EBITDA fell 12.1% year-on-year to EUR930 million, due to substantial increases in customer acquisition costs and intensified marketing. Meanwhile, net revenue in the Europe segment declined 4.5% to EUR3.420 billion in the second quarter of 2013, with reduced mobile termination rates accounting for around 80% of the decrease. In addition, competition-induced price reductions and the ongoing strained economic situation continued to put revenue under pressure. Adjusted EBITDA dropped 7.4% to EUR1.107 billion, driven mainly by declining revenue in almost all countries of the segment, as well as additional expenses for marketing new rate plans in the Netherlands and Austria. This was partially offset by efficiency enhancement measures at several of the group’s subsidiaries, which are having a positive impact on adjusted EBITDA, especially in Greece.

As at 30 June 2013 DT’s domestic wireless subscriber base stood at 37.492 million (up 5.7% from 35.470 million a year earlier), while retail fixed broadband connections increased by just 0.1% year-on-year to 12.430 million and pay-TV accesses (IPTV and satellite) climbed 13.6% to 2.078 million. Internationally, the group’s US subsidiary ended the second quarter with 44.016 million mobile subscribers, a jump of 32.7% year-on-year and 29.6% quarter-on-quarter. The growth included 8.9 million pre-paid customers attributable to the first-time consolidation of MetroPCS, while another 1.13 million were added across all customer segments in 2Q13, compared to a decline of 205,000 customers in the prior-year period. Across its European operations, wireless voice customers numbered 61.62 million at 30 June 2013, up 1.3% from 60.814 million twelve months earlier, while retail broadband lines and TV customers rose 4.9% to 4.817 million and 11.7% to 3.086 million, respectively.

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