Deutsche Telekom ups earnings outlook on US strength - Mobile World Live

Deutsche Telekom ups earnings outlook on US strength

03 AUG 2017

Deutsche Telekom (DT) said with six months of the year under its belt it is raising its guidance for the year, aided by a continued strong performance from its US business.

The company is now guiding for adjusted EBITDA of €22.3 billion, up from €22.2 billion, “driven mainly by strong growth in the United States”.

During the second quarter, the United States business (T-Mobile US) contributed half of DT’s group revenue and 44 percent of core profit, while Germany contributed one-third of reported profits and other business roughly one-fifth.

Thomas Dannenfeldt, CFO (pictured), said: “Revenue and earnings are lifting substantially on the back of strong customer growth. That is especially true of our booming US business, but the trend is also positive in Germany and our European companies.”

For its home market of Germany, the operator said it was “the only provider to record a positive trend in service revenue in the second quarter, thus extending its position as market leader”.

Service revenue increased 0.8 per cent year-on-year in Q2 2017 “despite significant regulatory events”, with non-contract device revenue in the mobile business a positive, against weakness in the fixed segment.

For its Europe segment (excluding Germany), revenue increased by 2.4 per cent, as the company cited development in “strategic growth areas” and terminal sales, although roaming rate cuts and competition “put further pressure on revenue”.

On a group level, the company reported a profit for the quarter of €874 million, a 40.7 per cent increase year-on-year, on revenue of €18.9 billion, up 6 per cent.

Some 68.1 per cent of revenue was generated internationally, up 2.1 points.

The company said it invested €3 billion during the quarter, a “substantial increase” of 12.4 per cent year-on-year. On top of this was a €7.2 billion spectrum acquisition in the US.

This did take its toll on debt, which increased by “a good €5 billion”, although the company said balance sheet ratios are still within target ranges and Deutsche Telekom’s ratings remain unchanged.

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