3rd UPDATE: Deutsche Telekom Posts Stable 1Q, US Remains Weak
12 Mayo 2010 - 8:44AM
Noticias Dow Jones
Deutsche Telekom AG (DT) Wednesday swung to a first-quarter net
profit despite slightly lower sales and a continued weak
performance from its closely-watched U.S. operations.
Analysts said that Germany's incumbent telecom provider posted a
relatively stable start to the year, benefiting from a strong
performance in the German mobile market. At 1252 GMT Deutsche
Telekom shares were trading up 2.7% at EUR9.06 ahead of a 1.9% rise
in the DAX.
But concerns remain over the performance of T-Mobile USA and the
effect of the sovereign debt crisis on Hellenic Telecommunications
Organization SA (OTE), in which Deutsche Telekom has a 30%
stake.
Deutsche Telekom Chief Executive Rene Obermann didn't rule out
that the sovereign debt crisis could affect OTE mid-term, but OTE's
Chairman and Chief Executive Panagis Vourloumis was more drastic,
saying Wednesday that "an increase in disconnections and a slowdown
in telecoms spending is likely." OTE reported a 76% drop in first
quarter net profit due to weak sales and higher taxes.
T-Mobile USA also posted a weak performance. It lost 77,000
subscribers on a net basis in the first quarter, level with the
subscriber loss in the third quarter last year. Revenue declined by
2.2% in dollar terms to $5.28 billion. In euros, the sales decline
was even worse, slumping 7.8%. Still, the adjusted Ebitda margin
improved by 0.8 percentage points to 26.4% in the period.
Chief Executive Officer Rene Obermann said in a conference call
that the U.S. performance is "not satisfying", but said T-Mobile
USA is still "a cash cow." Obermann also said he hopes for a
tailwind from an economic recovery as the U.S. business has a
strong exposure to consumers rather than business customers.
Obermann declined to comment on speculation Deutsche Telekom is
in talks with U.S. hedge fund Harbinger Capital about a possible
alliance with its T-Mobile USA unit which would give it access to
Harbinger Capital's planned 4G network.
But Obermann did say that collaborations in building up new
networks make sense due to the large investment required.
Deutsche Telekom "did not do too badly in its first quarter
overall, but the U.S. is showing continued problems," said Gartner
research director Katja Ruud.
Group net profit for the quarter ended March 31 was EUR767
million after a net loss of EUR1.12 billion a year ago, when the
company's bottom line was weighed down by a EUR1.8 billion
impairment charge on the goodwill of its U.K operations. T-Mobile,
its U.K. mobile operation, is now part of Everything Everywhere, a
joint venture with France Telecom's (FTE) Orange.
Deutsche Telekom did not revise its 2010 outlook but adjusted it
for the deconsolidation of its U.K. operations. It now expects full
year adjusted Ebitda to be EUR400 million to EUR500 million below
the previous guidance of around EUR20 billion, and free cash flow
to remain EUR6.2 billion.
First-quarter group sales declined 0.6% to EUR15.81 billion. But
closely-watched adjusted earnings before interest, tax,
depreciation and amortization, or Ebitda, the company's preferred
measure of operating performance, rose 1.6 % to EUR4.89
billion.
In particular German mobile operations performed well with
service revenue up 3.3%.
Peer Royal KPN NV's (KPN.AE) posted a 0.7% decline in service
revenue, Telefonica SA's (TEF) and Vodafone PLC (VOD) are yet to
report.
Company website: www.telekom.com
-By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18;
archibald.preuschat@dowjones.com
(Alkman Granitsas in Athens contributed to this article.)
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