Deutsche Telekom CFO Thomas Dannenfeldt bemoaned the challenge of competing with converged players in the Netherlands, while revealing a sharp drop in Q2 profit due to a €600 million settlement with German authorities.
During its earnings call, Dannenfeldt said competing with two dominant converged players in the Netherlands was “particularly challenging,” adding: “If the Netherlands wants a fast 5G rollout, then the country needs a strong third integrated provider that is in it for the long haul.”
Deutsche Telekom is in the process of attempting to acquire rival Tele2 Netherlands, a transaction which would expand its mobile base and allow it to provide converged services using Tele2’s fixed and broadband network.
Announcing the deal in December 2017, the companies were confident it would close in the second half of 2018. The European Commission last week again pushed-back its deadline to approve the deal as it conducts an in-depth probe over the implications for competition in the country.
It originally aimed to offer a decision by mid-October, but the date was extended and no new deadline offered.
In its Q2 earnings, Deutsche Telekom posted year-on-year falls in revenue and profit. Its revenue decline was attributed to the US dollar being “10 per cent weaker than the previous year”, while profit was hit by a large bill from authorities.
Net profit for the quarter dropped 43 per cent to €495 million, though it noted this included a €600 million hit to settle a long-running legal case with the German government. Revenue declined 2.8 per cent to 18.4 billion: it added organic revenue increased 1.3 per cent.
Analyst Paolo Pescatore warned the operator could face tough times ahead: “The outlook remains challenging for Deutsche Telekom in light of the Liberty Global and Vodafone deal. Should it receive regulatory approval, the new entity will pose a formidable force both in Germany and Eastern Europe.”