Thursday, February 24, 2011

Deutsche Telekom's 2010 Revenue Increases 0.4%

Deutsche Telekom's net revenue for 2010 increased by 0.4 percent to EUR 62.4 billion excluding the UK. The company turned an adjusted net profit of EUR 3.4 billion, on a par with the 2009 figure. Unadjusted for special factors, net profit stood at EUR 1.7 billion, a substantial increase from EUR 0.4 billion in the previous year. Adjusted EBITDA was EUR 19.5 billion in the financial year just ended, matching the forecast made at the start of 2010 (excluding the deconsolidated T-Mobile UK that accounted for around EUR 0.5 billion). At EUR 6.5 billion, free cash flow was considerably higher than the EUR 6.2 billion originally expected.

Deutsche Telekom asserted that business in its home market of Germany was strong, with mobile Internet, smartphones, broadband lines and IPTV as the growth drivers.

Some highlights:

Cash capex totaled EUR 8.6 billion, around 7 percent less than in 2009.

Deutsche Telekom also invested an additional EUR 1.3 billion in new spectrum acquired in the frequency auction in Germany.

In Germany, Total revenue from the German mobile communications business was almost 2 percent up year-on-year at EUR 2.1 billion in the fourth quarter. Service revenues increased to an even larger extent, by 3.4 percent. Excluding the effects from the reduction in termination charges, service revenues increased by around 5 percent. The share of smartphones sold rose sharply, accounting for 50 percent of all terminal devices sold in the fourth quarter. This is more than 20 percentage points higher than in the prior-year quarter. The fastest-growing group by some margin was devices with the Android operating system.

At EUR 25.1 billion, total revenue from the German business was just slightly down on the prior year by 1.1 percent. However, in the fourth quarter of 2010, total revenue increased by 0.6 percent to EUR 6.4 billion. For the full year 2010, adjusted EBITDA remained stable at the prior-year level and amounted to EUR 9.6 billion.

Revenue in the fixed-network segment decreased by just 0.7 percent year-on-year in the fourth quarter of 2010 compared with around 3 to 6 percent in the preceding quarters.

In Greece, the economic downturn continued in the financial year under review, which also affected OTE's business, with double-digit percentage declines in revenue and earnings in the fourth quarter.

The number of broadband customers in the Europe segment increased by 12 percent in 2010 to a total of 4.6 million. The number of users of IPTV rose by more than 50 percent to 654,000. In mobile communications, the proportion of new contracts with smartphones doubled to more than 30 percent in the fourth quarter.

T-Mobile USA served 33.73 million customers (as defined in Note 3 to the Selected Data, below) at the end of the fourth quarter of 2010, down from 33.76 million at the end of the third quarter of 2010 and 33.79 million at the end of the fourth quarter of 2009. In the fourth quarter of 2010, net customer losses were 23,000, compared to net additions of 137,000 in the third quarter of 2010 and 371,000 in the fourth quarter of 2009. Contract customers were the primary driver for the sequential and year-on-year change in net customers. Contract churn was 2.5% in the fourth quarter of 2010, up from 2.4% in the third quarter of 2010 and consistent with the fourth quarter of 2009.

T-Systems saw continued revenue growth and a clear improvement in earnings in the fourth quarter. Total revenue increased by 3.8 percent year-on-year, 9 percent of which was driven by international business. Revenue generated outside the Group climbed by almost 6 percent, primarily due to increased demand for cloud services and growth in the systems integration business. Total revenue increased by 2.9 percent year-on-year to EUR 9.1 billion in 2010.