2nd UPDATE: Deutsche Telekom 3Q Net Up 7.2%, Cautious On 2010
05 Noviembre 2009 - 7:09AM
Noticias Dow Jones
Deutsche Telekom AG's (DT) shares rose Thursday as tight cost
control resulted in a 7.2% increase of third-quarter net profit,
but it said visibility into 2010 remains low and its U.S.
performance remained a weak spot.
Chief Financial Officer Timotheus Hoettges said the company "is
comfortable" in terms of reaching its 2009 free cash flow target,
but Chief Executive Rene Obermann said "there are a few
developments at which we are looking very carefully and with
caution when it comes to 2010."
Net profit for the quarter ended Sept. 30 was EUR959 million, up
from EUR895 million a year earlier on lower operating expenses.
Revenue for the period rose 5.2% to EUR16.26 billion.
Closely watched earnings before interest, taxes, depreciation
and amortization, or Ebitda, adjusted for one-time items and
restructuring, the company's preferred measure of operating
performance, rose 5.2% to EUR5.53 billion.
Sales and operating profit benefited from the consolidation of
Hellenic Telecommunications Organization (OTE), which contributed
EUR1.5 billion to Deutsche Telekom's third-quarter sales and EUR600
million to adjusted Ebitda.
Still, Obermann said the company's performance in the U.S., once
the growth engine, was "clearly not satisfying."
T-Mobile USA's subscriber base shrank by 77,000 in the quarter
to 33.42 million, the first time it has lost customers since in
entered the market at the start of the decade. Revenue was down to
$5.38 billion down from $5.51 billion a year earlier.
If Deutsche Telekom's U.S. strategy doesn't work it needs to
revamp it, and quickly, as it is a highly competitive market, said
Gartner research director Katja Ruud.
The company aims to bolster its underperforming U.K. operations,
meanwhile, through a 50:50 joint venture with France Telecom SA's
(FTE) Orange in a deal first announced in September.
Overall, analysts were particularly upbeat about Deutsche
Telekom's third-quarter free cash flow, which at EUR3.29 billion
comfortably beat expectations for EUR2.41 billion. Hoettges
attributed the beat to "strong working capital management."
Strong free cash flow is key for the company's dividend
policy.
The results are "fantastic," said Sal Oppenheim analyst Frank
Rothauge, noting the positive impact of cost savings in Europe and
South East Europe, and at 1225 GMT its shares traded up EUR0.26, or
2.75% at EUR9.54, outpacing a lower overall market.
Obermann declined to provide guidance for 2010, saying the
company would do so at its full-year results in February, along
with details on further cost savings.
Deutsche Telekom reported in its new geographic group structure
for the first time, comprising Germany, the U.S., Europe and South
East Europe, plus its Systems Solutions unit.
In its home market of Germany and in Europe, sales and adjusted
Ebitda fell, but were up in South East Europe primarily on the OTE
consolidation.
Deutsche Telekom followed European peers Royal KPN NV (KPN.AE)
of the Netherlands and France Telecom in confirming its full-year
2009 outlook, despite the weak dollar against the euro. The company
confirmed its forecast for OTE to boost its adjusted Ebitda by
around EUR2 billion in the 11 months of fiscal 2009.
Peer Telecom Italia SpA (TI) reports later Thursday.
Excluding OTE, Deutsche Telekom forecast Ebitda to fall by
around 2% to 4% this year from EUR19.5 billion a year earlier, and
said it expects OTE to contribute around EUR0.6 billion to free
cash flow, bringing the group's total free cash flow to around EUR7
billion.
OTE Thursday said third-quarter net profit fell 19% on weak
mobile sales and a continued deterioration in fixed-line revenue,
in results that were weak overall but in line with consensus.
Company web site: www.telekom.de
-By Archibald Preuschat, Dow Jones Newswires, +49 211 138 7218,
archibald.preuschat@dowjones.com
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