Deutsche Telekom Sees Lower Revenue, Higher Profits

Deutsche Telekom reported Q3 2011 revenue of EUR 11.0 billion, down by 4.1 percent in the quarter compared to last year. However, cost cutting led to an increase in EBITDA margin of 0.5 percentage points while net profit rose 14.6 percent to EUR 1.1 billion.


The company confirmed its financial targets for the full year 2011 saying it remains on target despite the uncertain macroeconomic climate. The Group continues to expect adjusted EBITDA from continuing operations of around EUR 14.9 billion. Adjusted EBITDA of around USD 5.5 billion is anticipated from business in the United States. Free cash flow of the Group is expected to total at least EUR 6.5 billion.


"We have once again demonstrated that we can stand our ground in a difficult environment," said René Obermann, Chairman of the Board of Management of Deutsche Telekom. "We cannot afford to be complacent in our efforts as the challenges will continue to intensify."


Some highlights:


The carrier has brought the cost base down by EUR 3.9 billion in total since 2010.


A decline in revenues from mobile communications business is primarily attributable to weaker handset revenues and the reduction in MTRs.


With growth of 26 percent to EUR 410 million, mobile data revenues remained the key driver of mobile communications business in Germany.


Smartphones now account for 64 percent of all devices sold, a strong increase compared to 53 percent in the prior year.


In the fixed network, Deutsche Telekom maintained its market share of broadband customers of over 45 percent.


The carrier lost 1,330,000 fixed lines in Germany during Q3, ending with 23.6 million fixed lines still in service in Germany.


Regarding its OTE subsidiary, revenue in Greece declined by 5.0 percent in the third quarter to EUR 0.9 billion, while adjusted EBITDA fell 7.2 percent in the same period to EUR 0.35 billion. A reduction in working hours and a corresponding drop in pay have since been agreed on with the trade unions.


Order entry at Systems Solutions developed encouragingly in the third quarter, climbing 18.5 percent year-on-year to EUR 1.9 billion. The higher order volume was a result of big deals such as with Daimler, as well as numerous smaller contracts for cloud services. From January to September 2011, order entry increased by 8 percent year-on-year to EUR 6.6 billion.


Key indicators for T-Mobile USA


T-Mobile USA served 33.7 million customers at the end of third quarter of 2011, compared to 33.6 million customers at the end of second quarter 2011 and 33.8 million customers at the end of third quarter 2010.


Service revenues of $4.67 billion in the third quarter of 2011, up 1.0% from the second quarter of 2011 but down 0.9% from the third quarter of 2010.


Net customer additions of 126,000 related to Value plan and unlimited Monthly 4G prepaid growth, compared to a net customer loss in the second quarter of 2011 of 50,000 and 137,000 net customer additions in the third quarter of 2010.


Contract ARPU of $53 in the third quarter of 2011, consistent with $53 in the second quarter of 2011 and up from $52 in the third quarter of 2010 attributed in part to data ARPU growth.


Data ARPU of $14.00 in the third quarter of 2011, up 13% from $12.40 in the third quarter of 2010.


Blended churn, reflecting both contract and prepaid customers, increased to 3.5% in the third quarter of 2011, up from 3.3% in the second quarter of 2011 and 3.4% in the third quarter of 2010. The sequential and year-on-year increase in blended churn was primarily driven by higher churn from MVNO customers.


Data service revenues were $1.4 billion in the third quarter of 2011, up 12% from the third quarter of 2010. Data service revenues in the third quarter of 2011 represented 30% of blended ARPU, or $14.00 per customer, compared to 30% of blended ARPU, or $13.60 per customer in the second quarter of 2011, and 27% of blended ARPU, or $12.40 per customer in the third quarter of 2010.



10.1 million customers were using smartphones. 3G/4G smartphone customers now account for 30% of total customers, up from 29% in the second quarter of 2011 and 21% in the third quarter of 2010.


CAPEX was SU$741 million in the third quarter of 2011, compared to $688 million in the second quarter of 2011 and $643 million in the third quarter of 2010.

http://www.telekom.com