Deutsche Telekom Posts Higher Q1 Profits, but T-Mobile USA Loses Subscribers

Deutsche Telekom's adjusted EBITDA increased by 1.6 percent YoY to EUR 4.9 billion in Q1 2010 as revenue was down 0.6 percent to EUR 15.8 billion.


"These results show that we got off to a good start in 2010," said René Obermann, CEO of Deutsche Telekom. "We have further stabilized our operations - in some cases achieving substantial improvements - and implemented important steps in our new strategy at the same time."


Some highlights:


Deutsche Telekom maintains its guidance for the Group. Excluding the effects of the joint venture between T-Mobile UK and Orange UK in the UJ, Deutsche Telekom expects to generate adjusted EBITDA of approximately EUR 20 billion and free cash flow of around EUR 6.2 billion in the 2010 financial year.


In Germany, the company's broadband market share has remained stable since 2007, at 46 percent. The positive trend continued with an additional 130,000 Entertain packages sold, bringing the figure up to 1.2 million as of March 31, 2010.


Total revenue from mobile operations in Germany rose by 2.5 percent in the first quarter of 2010 to EUR 2.0 billion, mainly as a result of 3.3 percent higher service revenues. Mobile data revenues continued their solid growth trend, increasing by 39 percent year-on-year.


As of March 31, 2010, Deutsche Telekom served 17.3 million mobile contract customers in Germany, up 1.9 percent compared with the prior-year quarter.


In the first quarter of the year, revenue in the fixed network fell by 4.1 percent year-on-year to EUR 4.5 billion. Adjusted EBITDA amounted to EUR 1.5 billion, the decrease in revenue being largely offset by effective cost management. At 372,000, the number of line losses in the first quarter was down 38.2 percent compared with the same quarter in 2009.


In the United States, the number of 3G-enabled converged devices in T-Mobile's network rose by one third to 5.2 million in the first three months of 2010 alone. This represents an increase of 3.7 million compared with the previous year. As a result, non-voice revenue per customer also increased by USD 1.50 year-on-year.


Customer numbers at T-Mobile USA declined by 77,000 in the first quarter of 2010 as a result of the intense competitive environment and an industry-wide downturn. As of March 31, 2010, the U.S. mobile subsidiary served 33.7 million customers, 0.5 million more than one year earlier.


T-Mobile USA's business figures were negatively impacted by the exchange rate of the U.S. dollar against the euro. On a U.S. dollar basis, Deutsche Telekom's U.S. subsidiary posted a revenue shortfall of just 2.2 percent, while adjusted EBITDA rose by 0.8 percent. On a euro basis, however, revenue in the first quarter of 2010 was down 7.8 percent compared with the prior-year period to EUR 3.8 billion.


In Europe, the company's mobile customer base remained stable at 44.0 million in spite of the deregistration of inactive prepay customers. 171,000 net contract additions were recorded in the first three months of 2010. The companies in Poland and the Netherlands were particularly successful at customer acquisition and once again shifted their customer base clearly towards lucrative contract customers.


The first quarter of 2010 was the last time T-Mobile UK reported its business figures. The new joint venture company with Orange UK commenced operations on April 1, 2010, and will publish its figures separately in the future.


In the first quarter of the year, total revenue from T-Systems' operations returned to an upward trend, increasing by 1.2 percent year-on-year to EUR 2.1 billion, driven in particular by the 5.7 percent growth in T-Systems' international business.
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