Financial Times FT.com

Deutsche Telekom sees dip in US revenues

By Gerrit Wiesmann in Frankfurt

Published: November 5 2009 10:19 | Last updated: November 5 2009 14:20

Deutsche Telekom, the German telecoms group, gave a glimpse of the pressure it is under in the US when it said dollar-denominated revenues there dropped in the third quarter after its T-Mobile US unit lost 77,000 customers.

The Bonn-based company said the loss of subscribers was “unsatisfactory”, but that it was in part balanced out by strong growth in data-services – a result of the spread of so-called 3G-enabled handsets giving internet access.

Dollar revenues at T-Mobile US were $5.4bn, 2.3 per cent less than in quarter three of 2008, although the performance expressed in euros was better: Sales rose 3 per cent to €3.8bn and core operating profit up 5 per cent at €1.1bn.

This helped adjusted group earnings before interest, tax, depreciation and amortisation rose 5.2 per cent to €5.5bn, while sales increased by the same rate to €16.3bn. Deutsche Telekom said it was on course to hit its 2009 free cash flow target of €7bn.

The company shocked investors this spring when it cut its full-year goals after its T-Mobile franchises in the UK and the US – two of the company’s biggest markets – saw their profitability suffer under attacks by more sprightly rivals.

In September the company put its UK operation into a 50-50 joint venture with Orange UK, owned by rival France Telecom, and Deutsche Telekom is now under pressure from its owners to quickly improve T-Mobile US’s performance as well.

The German government, which owns just less than a third of Deutsche Telekom, and Blackstone, the US private equity group, which owns 4.5 per cent, are giving management time to prove the US business’s fortunes can be turned round by investment.

Deutsche Telekom said on Thursday that T-Mobile US was continuing with a “rapid roll-out” of its 3G mobile network, with network coverage rising by 50 per cent in the third quarter to embrace 170m people; the aim is to cover 200m by year’s end.

T-Mobile US is the fourth-largest operator in the US with 33.4m subscribers and has seen its profitability threatened in recent months as it was squeezed between the larger premium sellers and a growing band of smaller, cut-price competitors.

René Obermann, Deutsche Telekom chief executive, admitted the company still faced a “challenging situation” in its largest market, adding that he was “not happy” with the performance of T-Mobile US in July, August and September.

Mr Obermann said the unpredictability of the course of the economy in the wake of global financial crisis had led the company to postpone giving a performance forecast for next year by three months to February 2010.

At that juncture, Mr Obermann said, Deutsche Telekom would also detail the next phase of a cost-reduction programme, which has generated savings of €5.4m since 2005, as well as announcing its proposal for a dividend for 2009.

More from this sector

Recovery will take years, says Siemens

Nokia predicts modest boost in profitability

Bango expects to be profitable after US growth

Rivals oppose idea to cut BT pension deficit

Samsung feels the heat from iPhone

France Telecom loses in European court

Ex-Vimpelcom chief returns to lead group

Malaysia’s Maxis lines up $6bn in India push

Carphone Warehouse raises guidance

Further delay to 3G licences in Thailand

France Telecom optimistic on Swiss link

Jobs and classifieds

Jobs

Search
Type your search criteria below:
Recruiters

FT.com can deliver talented individuals across all industries around the world

Post a job now