Deutsche Telekom Profits Decline As US Investment Costs Rise
Published on: 7th May 2014
By: Ian Mansfield
Germany's Deutsche Telekom has posted an 8 percent rise in its first quarter revenues boosted by performance at its T Mobile USA subsidiary although the underlying net profit fell by a quarter.
Revenue increased 8 percent year-on-year to EUR 14.9 billion (US$20.7 billion) in the first quarter. In organic terms, i.e., adjusted for changes in the composition of the Group, like the merger with MetroPCS in the United States, as well as currency effects, revenue still increased by 4.2 percent.
However, at the same time, adjusted EBITDA fell 3.9 percent to EUR 4.1 billion; in organic terms, it decreased by 8.3 percent. This decline was mainly attributable to higher market investments in the United States, which resulted in 2.4 million net customer adds between January and March.
"Our success story in the United States continues. The decision to invest boldly in this market was right on the mark," stated Tim Höttges, CEO of Deutsche Telekom.
At EUR 1.8 billion, net profit was more than three times higher in the first three months than in the prior-year period. This is attributable to income from the partial sale of the Scout24 group.
Excluding that one-off deal, net profit fell by 23.5 percent to EUR 587 million (USD817 million), reflecting the decline in adjusted EBITDA. Free cash flow declined 5.3 percent to EUR 983 million.
Net debt was reduced by more than EUR 1 billion compared with the end of 2013 to EUR 38.0 billion.