DT again boosts forecasts on US strength

08 NOV 2018

Deutsche Telekom revised its financial forecasts upwards again as its US operation continued to boost its numbers, although its CEO reiterated fears that an unfavourable 5G licensing regime in its home market puts the country’s digital future at risk.

Operators in Germany have been vocal in stating their positions in the face of demands made by politicians with regard to 5G licensing. Central issues in discussions with regulators have included strong coverage requirements, support for national roaming and the reservation of regional 5G spectrum.

Concern from Deutsche Telekom is not new, of course, and rival Telefonica Germany has been similarly outspoken.

Deutsche Telekom today affirmed that, with regard to 5G, it intends to invest an additional €20 billion in Germany by 2021, with the longer term aim of reaching 99 per cent population coverage with the technology by 2025.

On a group level, the operator boosted guidance for 2018 adjusted EBITDA to €23.6 billion from €23.4 billion, and free cash flow to €6.3 billion from €6.2 billion. The company had already adjusted the figure in the previous two quarters.

Numbers
For the third quarter, the company reported a profit of €1.1 billion, almost doubled from €507 million in Q3 2017, on revenue of €19.1 billion, up 4.7 per cent. It noted profit in the 2017 period was negatively impacted by special factors, which now flatters the year-on-year comparison: it pointed to adjusted net profit growth of 6.2 per cent as a better comparison.

Some €9.3 billion of revenue was attributable to T-Mobile US, with its home market of Germany generating €5.4 billion and its Europe segment €3 billion. Revenue for Germany was down by around 1 per cent, with the company noting a change in accounting standards.

In a conference call, the company was also quizzed about the role of supplier Huawei in its network buildout, following security concerns in markets including the US, Australia and the UK. CEO Timotheus Hoettges said it is “observing developments globally”, noting Deutsche Telekom has a dual supplier strategy and business continuity plans in all markets, and also coordinates with government security agencies when needed.

“We have had it on our radar for many years,” Hoettges said.

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