Wednesday, February 28, 2007

Deutsche Telekom Posts Contiued Decline in Home Market, Growth Abroad

Deutsche Telekom reported its 2006 results. Two key trends stood out: in Germany, intense competition was met with a major drop in prices; meanwhile, significant growth continued in the company's international business.

Overall, net revenue increased by 2.9 percent year-on-year to EUR 61.3 billion. Based on adjusted net profit of EUR 3.9 billion and free cash flow (excluding the investment in Mobile Communications spectrum in the United States) of EUR 5.7 billion, the Board of Management and the Supervisory Board will propose a dividend of EUR 0.72 per share to the shareholders' meeting on May 3, 2007.

Some highlights:

  • Domestic revenue declined by around EUR 1.7 billion or 5.0 percent year-on-year to EUR 32.5 billion in 2006.

  • Revenue generated outside Germany increased by EUR 3.5 billion or 13.6 percent to EUR 28.9 billion. International business therefore generated 47.1 percent of the Group's net revenue, compared with 42.7 percent in 2005.

  • T-Mobile Deutschland recorded a decline in revenue of 4.7 percent to EUR 8.2 billion in the 2006 financial year. This decrease was attributable in part to the continued drop in prices of more than 10 percent in the German mobile communications market and the effects of the reduction in termination charges imposed by the regulator in November 2006.

  • Domestic revenue in the Broadband/Fixed Network business area decreased by around 6.1 percent in 2006 to EUR 21.8 billion. This is mainly the result of lower revenues from Network Communications where the migration of lines from T-Com's network to alternative fixed-network providers and to mobile communications as well as the continued decline in prices led to a drop in revenues of EUR 1.1 billion or 9 percent, mainly from lower call revenues.

  • Bundling continues to grow. At the end of 2006, the number of complete packages marketed had increased to 3.6 million. More than two thirds of the packages sold were double-play (telephone and Internet).

  • In Q4, T-Com recorded 880,000 new broadband lines, its highest ever quarterly DSL growth in Germany since market launch. The proportion of broadband lines that were marketed by T‑Com itself increased significantly in the last quarter of the year: from 19.0 percent in the third quarter to 64.0 percent in the fourth quarter.

  • As of the end of 2006, Deutsche Telekom was serving 11,716,000 total broadband lines, of which 10,280,000 were domestic, and 3,212,000 were resale.

  • As of the end of 2006, narrowband lines numbered 38,961,000 down from 41,243,000 a year earlier.

  • As of the end of 2006, total mobile subscribers across the group were 106,419,000, up from 97,846,000 a year earlier.

See also