Deutsche Telekom to Miss Free Cash Flow Targets As It Increases Investments
Published on: 6th Mar 2014
By: Ian Mansfield
Germany's Deutsche Telekom says that it reached its financial targets for 2013 even slightly exceeding the target for free cash flow.
One driver was the first-time inclusion of MetroPCS as of May 1, 2013. But even in organic terms, i.e., excluding changes in the composition of the Group and currency effects, net revenue would have increased by 0.8 percent in 2013, and 2.8 percent in the fourth quarter.
"The figures for 2013 underscore that Deutsche Telekom is now ideally positioned to become the leading European telecommunications provider," said Tim Höttges, CEO of Deutsche Telekom. "Our results lay the perfect groundwork for 2014. This year, we will be able to tackle the remaining challenges with rigor."
The company has however warned that it will miss its 2105 target for free cash flow of EUR6 billion as the company ramps up investments, particularly in the USA.
The Group's net debt rose by EUR2.2 billion to EUR39.1 billion at the end of the year.
German mobile business achieved its best result in recent years in the fourth quarter with regard to new contract customers. Deutsche Telekom gained 638,000 mobile contract customers between October and December 2013, keeping market investments at the same level.
Revenue in the Germany operating segment decreased 1.3 percent year-on-year to EUR 22.4 billion in 2013.
Adjusted EBITDA was down 2.5 percent to EUR 8.9 billion, resulting in an adjusted EBITDA margin of 39.7 percent, which is within the target range of around 40 percent in 2013.
The total number of customers increased by 1.6 million to 46.7 million. The number of branded postpaid customers rose by 869,000, compared to a decline of 515,000 customers in the final quarter of 2012.
The churn rate in this customer segment decreased from 2.4 percent to 1.7 percent. Excluding the MetroPCS effect, the total customer base rose by around 4.4 million in 2013.
Total revenue increased by 34.0 percent year-on-year to EUR 5.1 billion in the fourth quarter. Measured in U.S. dollars, the increase was even more apparent, with an increase of 40.7 percent.
Rest of Europe
In the fourth quarter of 2013, there was a slight revenue increase compared with the prior-year period of 0.4 percent to EUR 3.5 billion. Growth areas such as mobile data and business customers (B2B/ICT) proved to be driving factors. The share of growth areas in the revenue mix in Europe rose within one year from 21 to 25 percent. Compared with the prior year, for example, the number of TV customers increased by more than 600,000.