BERLIN -(Dow Jones)- Germany's largest telecommunications operator Deutsche Telekom said Thursday its U.S. wireless arm added a record number of new customers in the fourth quarter, fueling overall growth at its mobile unit.
T-Mobile USA - Deutsche Telekom's U.S. wireless unit - added 1.4 million new subscribers in the quarter, taking its overall tally to 21.7 million. That exceeded analysts' estimates of around 1 million customer additions.
Deutsche Telekom moved into the U.S. by acquiring VoiceStream, now T-Mobile USA, for some EUR39 billion during the technology boom years. At the time, many analysts were alarmed by the price paid, but since then T-Mobile USA has become Telekom's growth driver, vindicating Chief Executive Kai-Uwe Ricke's decision to keep the business.
"The figures from the U.S. growth market were particularly convincing," said one trader, who declined to be named. Still, he said the big question remains to what extent growth has come at the expense of profit margins.
In Thursday's release of fourth-quarter subscriber figures, Deutsche Telekom said its German mobile business gained 810,000 new customers in the fourth quarter to 29.5 million in a "market characterized by increasingly tough competition."
The figure for Germany also exceeded analysts' expectations for around 509,000 customer additions.
At 0847 GMT, the shares were trading up EUR0.23, or 1.8%, at EUR13.14 in an overall rising market.
"Customer figures are one thing - key, though, is how much it cost to win them, the impact on margins and the revenues generated," said Holger Bosse, an analyst at Helaba Trust in Frankfurt. The company releases fourth-quarter results on March 2.
Bosse noted that Deutsche Telekom will invest heavily in expanding its U.S. network this year and this is one factor that is weighing on the shares. He rates the stock hold.
Bellvue, Washington-based T-Mobile USA said it added some 911,000 contract customers in the fourth quarter. The churn rate - the percentage of subscribers who don't renew their contracts - edged down slightly to 2.9% in the quarter from 3.1% a year earlier.
In Germany, the company added 246,000 contract customers in the quarter. Competition is intensifying, with several new discount services launched by the likes of Royal KPN NV's E-Plus last year.
Deutsche Telekom, like rivals such as Vodafone Group, is banking on faster third-generation wireless services to help spur growth.
The wireless unit, grouped under T-Mobile International AG, saw data revenues, excluding text messages, increase 43% to EUR900 million in 2005. The company said it had sold a total of 400,000 web'n'walk devices in western Europe by the end of 2005 - the service provides consumers with full Internet access from their mobile phones.
Company Web site: http://www.telekom.de
-By Taska Manzaroli; Dow Jones Newswires; +49 30 2888 410; taska.manzaroli@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 26th January 2006
Posted to: www.cellular-news.com/story/15797.php