DT net profit falls on higher investment in Germany, US

6 Nov 2014

German telecoms giant Deutsche Telekom (DT) has reported net revenue of EUR15.648 billion (USD19.6 billion) for the three months ended 30 September 2014, an increase of 0.8% from EUR15.525 billion in the year-ago quarter. The Bonn-based telco noted that for the first time in its history, more than 60% of turnover was generated abroad, with CEO Tim Hottges stating: ‘The challenges vary regionally, but we are clearly making progress everywhere. Whether in the Unites States, Europe, or our home market of Germany, it has been a very successful quarter for us.’ Adjusted EBITDA declined 1.8% year-on-year to EUR4.575 billion in Q3 2014, due to higher market investments in Germany and the US. DT said that adjusted net profit fell 2.8% from EUR823 million in the third quarter of 2013 to EUR800 million twelve months later, while unadjusted net profit decreased 13.9% year-on-year to EUR506 million, as the proceeds from the sale of its Bulgarian subsidiaries had been posted in the prior-year quarter. The group’s cash CAPEX (excluding expenses for mobile spectrum) amounted to EUR2.493 billion in 3Q14, up 10.3% compared to EUR2.260 billion twelve months previously. DT has confirmed its guidance for the full year: adjusted EBITDA is expected to amount to around EUR17.6 billion, while free cash flow is forecast at EUR4.2 billion.

In its home market, DT reported revenue of EUR5.587 billion for the third quarter of 2014, a decrease of 1.5% year-on-year, while adjusted EBITDA fell 2.1% to EUR2.324 billion due to a 2.1% increase in market investments (including the launch of the iPhone 6) to EUR2.3 billion. Adjusted EBITDA for the European segment rose 1.3% to EUR1.184 billion thanks to systematic cost management, while total revenue declined 3.6% to EUR3.317 billion, with the firm noting that the decrease ‘is almost entirely attributable to regulatory decisions relating to mobile communications’. Meanwhile, T-Mobile US reported an 8.7% year-on-year rise in 3Q14 revenue to EUR5.554 billion, although adjusted EBITDA for the three-month period decreased 6.3% to EUR1.014 billion, due to strong customer growth, which in turn meant higher customer acquisition expenses.

As at 30 September 2014 DT’s German wireless subscriber base stood at 39.653 million (an increase of 4.5% from 37.936 million a year earlier), while retail fixed broadband connections fell 0.3% year-on-year to 12.340 million (of which 1.608 million were fibre lines [VDSL, vectoring and FTTH]) and pay-TV accesses climbed 12.1% to 2.377 million. Internationally, the group’s US subsidiary ended the third quarter of 2014 with 52.890 million mobile subscribers, an increase of 17.4% against the same date a year earlier, as the number of branded post-paid customers jumped 20.9% to 25.909 million, with a record high of 1.4 million such customers added in 3Q14. As a result, T-Mobile US has revised its forecast for customer acquisition upwards for the third time this year, with 4.3 million to 4.7 million net branded post-paid additions now expected in full year 2014, compared to the previous forecast of between 3.0 million and 3.5 million. Across its European (excluding Germany) operations, DT’s mobile customers numbered 56.087 million at 30 September 2014, down 1.3% from 56.825 million twelve months earlier, while retail broadband lines rose 4.2% to 4.880 million and pay-TV customers increased 8.0% year-on-year to 3.670 million at the end of 3Q14.

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