Deutsche Telekom reported Q3 revenue of 26.4 billion euros, up 2.0 percent in organic terms and up 31% when considering the acquisition of Sprint.
On the back of the strong performance in the first nine months and a positive outlook for the rest of the year, the Group raised its guidance for the current financial year. Deutsche Telekom now expects to report adjusted EBITDA AL of at least 35 billion euros and free cash flow AL of at least 6.0 billion euros.
“Deutsche Telekom is showing its strengths,” said CEO Tim Höttges. “We are raising our guidance thanks to strong business on both sides of the Atlantic. And we are able to do this despite feeling the effects of the pandemic in some areas.”
Highlights
- In Germany, Telekom grew much faster between July and September than in the previous quarters, with 97,000 net broadband additions. Around 15.5 million lines in Telekom’s network are now fiber-optic-based (FTTH and FTTC/vectoring), 1.6 million more than a year ago. Almost 3.8 million customers use the television service MagentaTV, with 63,000 new users in the quarter and growth of 6.9 percent year-on-year. In the third quarter, Telekom won 192,000 new branded mobile contract customers. The company recorded a slight year-on-year decline of 0.5 percent in mobile service revenues, mainly due to lower roaming and visitor revenues on account of the reduction in travel as a consequence of the coronavirus pandemic. Without this factor, mobile service revenues would have risen by around 2 percent.
- In the United States, DT is well on course following the merger with Sprint. In the third quarter of 2020, T-Mobile US passed the 100-million customer mark. 2.0 million net additions between July and September brought the total number of customers of the number two on the U.S. mobile market to 100.4 million. The key financials increased substantially on the back of the Sprint takeover. Revenue grew by 74.2 percent to 19.4 billion U.S. dollars. Adjusted EBITDA AL increased 119.3 percent to 7.0 billion U.S. dollars. Adjusted for the Sprint transaction, in organic terms, revenue grew by 4.0 percent and adjusted EBITDA AL by 14.6 percent. The integration of Sprint is ahead of plan. Just a few short months after the transaction was closed, 15 percent of the voice and data traffic of Sprint contract customers is already being processed on the network of the new T Mobile. The company expects to realize synergies of 1.2 billion dollars in the current year, primarily from the integration of networks and sales.
- In Europe, DT's European national companies remain on course for growth. In organic terms, adjusted EBITDA AL increased by 2.1 percent year-on-year in the third quarter to 1.1 billion euros. This means that the segment posted organic earnings growth for the eleventh quarter in a row, despite the headwind from coronavirus-induced declines in roaming revenues. Revenue remained stable at the prior-year level, rising 0.2 percent to 2.9 billion euros. The number of mobile contract customers grew by 171,000 in the quarter. Broadband net additions totaled 60,000, with the companies in Greece and Hungary being primarily responsible for this growth. Fixed-mobile convergence product bundles won 258,000 new users. The percentage of broadband households using such products passed the 50-percent mark.
- T-Systems is feeling the effects of the coronavirus pandemic. Order entry in the third quarter declined by 24.9 percent to 0.7 billion euros. Adjusted for the restructuring within the Group, revenue decreased by 11.6 percent to 1.0 billion euros. Adjusted EBITDA AL fell by 16.3 percent year-on-year to 67 million euros.
