Deutsche Telekom reports return to profit in Q1 as lower write-downs offset weaker sales
By David Rising, APWednesday, May 12, 2010
Deutsche Telekom reports Q1 profit
BERLIN — Germany’s Deutsche Telekom AG on Wednesday reported a better-than-expected profit for the first quarter of 2010, up from a loss a year earlier, when it wrote off €1.8 billion ($2.3 billion) from the value of its T-Mobile UK unit.
The Bonn-based provider of high-speed Internet access and home and cell phone service said it saw a net profit of €767 million ($974 million) in the quarter, compared to a loss of €1.124 billion in the first quarter of 2009. It follows a €3 million loss in the fourth quarter.
Sales dropped 0.6 percent to €15.8 billion from €15.9 billion in the quarter in 2009.
Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 1.6 percent to €4.89 billion from €4.812 billion in the same period the year before, Telekom said.
The company is in the middle of a cost-cutting program with the goal of reaching €4.2 billion ($5.33 billion) in reductions by the end of 2012.
It said its bottom line was helped in particular by “outstanding figures” in the German mobile business, while the profitability of its mobile subsidiaries elsewhere in Europe and revenue growth at T-Systems were “also satisfactory.”
Business in southern and eastern Europe was stable, while T-Mobile USA sustained high demand for 3G-enabled devices, the company said.
“These results show that we got off to a good start in 2010,” CEO Rene Obermann said in a statement. “We have further stabilized our operations — in some cases achieving substantial improvements — and implemented important steps in our new strategy at the same time.”
Telekom said it was maintaining its guidance of EBITDA of approximately €20 billion and free cash flow of around €6.2 billion for the 2010 fiscal year, excluding the effects of the joint venture between its T-Mobile UK unit and Orange UK.
The assets and liabilities of T-Mobile UK have been excluded from the company’s consolidated statement of financial position since April 1, 2010, following the establishment of the joint venture in the U.K.
Telekom shares closed up 2.9 percent to €9.07 in Frankfurt.
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