Wednesday, November 3, 2010

Deutsche Telekom Confirms Guidance

Deutsche Telekom confirmed its guidance for the full year following a solid third quarter. Excluding the effects of the joint venture in the United Kingdom, Deutsche Telekom expects to generate adjusted EBITDA of approximately EUR 20 billion and free cash flow of at least EUR 6.2 billion. By the end of the first nine months, adjusted EBITDA amounted to EUR 14.9 billion, while free cash flow stood at EUR 4.8 billion.

"We are delivering what we promised. We have made our mark and posted good results in an environment that was not always favorable. In terms of both finance and operations, the Group's development has completely fulfilled our expectations," said René Obermann, CEO of Deutsche Telekom.

Some highlights for the quarter:

In the domestic mobile communications business, Deutsche Telekom said smartphones accounted for 53 percent of all handsets sold. The fixed-network broadband market share has remained stable at over 46 percent since 2007. A total of 1.4 million Entertain packages had been sold at September 30, 2010. The number of lines lost in the third quarter of 2010 was slightly lower than in the prior-year quarter.

Total revenue from domestic mobile communications business increased by 2.3 percent in the third quarter of 2010 to EUR 2.2 billion. This includes a one-time effect from the expiration of the national roaming agreement with O2 at the end of 2009.

The number of mobile communications customers decreased by 4.2 million compared with year-end 2009 to 34.9 million in the first three quarters of 2010. This was mainly attributable to the deregistration of inactive prepay customer cards, which had no effect on revenue. The number of contract customers was slightly higher year-on-year at 17.2 million.

In the U.S., T-Mobile USA's customer base grew by 137,000 in the past quarter to 33.8 million customers. After witnessing a decline in the total customer base both in the prior quarter and in the same period of the previous year, Deutsche Telekom's U.S. mobile communications subsidiary thus reported growth again between July and September 2010. While the number of contract customers fell by 60,000 during these three months, 196,000 new prepay customers were acquired in the same period. As a result of seasonal fluctuations and increased competition, contract customer churn rose slightly compared with the previous quarter to the level recorded in the prior-year period.

In other European markets, in spite of intense competition and a negative impact from regulatory decisions in a number of countries, the DT companies continued to record high levels of profitability. The adjusted EBITDA margin in the Europe segment in the third quarter of 2010 remained virtually stable at 35.5 percent compared with 36.0 percent in the prior-year period. Seen over the first nine months of the year, it increased by 1.8 percentage points, from 32.9 percent to 34.7 percent.