2nd UPDATE: Deutsche Tel Swings Into 1Q Net Loss On UK Operations
07 Mai 2009 - 5:19PM
Dow Jones News
Deutsche Telekom AG (DT) Thursday said it took a huge write-down
on its struggling U.K. operations as it swung to a first-quarter
net loss.
Deutsche Telekom said its net loss in the quarter ended March 31
was EUR1.12 billion, after a net profit of EUR924 million a year
earlier. Deutsche Telekom's bottom line was hurt by the EUR1.8
billion impairment charge on the goodwill of its T-Mobile
operations in the U.K. Deutsche Telekom wrote down almost all of
the EUR2.1 billion goodwill on its U.K. mobile operations.
Deutsche Telekom said April 21 that its 2009 operating profit
would fall short of expectations on weak mobile operations in the
U.S., the U.K. and Poland, in particular.
Chief Executive Rene Obermann said the U.K. market would benefit
from a consolidation but declined to comment if Deutsche Telekom
plans to sell its U.K. operations or merge them.
"The fact that we appointed a new management says something,"
Obermann said. Deutsche Telekom Chief Financial Officer Timotheus
Hoettges said the equity value of T-Mobile U.K. is GBP3.3
billion.
Also Thursday, the Bonn-based company said it had appointed
Richard Moat, the former boss of France Telecom SA's (FTE) Orange
Romania operations, as managing director after naming Srini Gopalan
as new U.K. chief marketing officer last month.
The company said Thursday it expects 2009 earnings before
interest, tax, depreciation and amortization, or Ebitda, adjusted
for exceptional items to be 2%-4% below 2008's EUR19.5 billion
level, but added that Hellenic Telecommunications Organization SA
(OTE), consolidated from Feb. 1, would contribute an additional
EUR2 billion to its 2009 adjusted Ebitda. Free cash flow including
OTE is set to reach around EUR7 billion, to which OTE is expected
to contribute EUR600 million.
Deutsche Telekom confirmed that, including OTE, its
first-quarter sales were up 6.2% on year to EUR15.9 billion, while
earnings before interest, taxes, deprecation and amortization,
adjusted for special items, rose 2.7% to EUR4.81 billion.
Deutsche Telekom was the first European integrated operator to
lower its guidance due to adverse economic conditions, sending it
shares lower at the time.
Landesbank Baden-Wuerttemberg analysts said the results were in
line with the bank's view. The analysts rate the share a buy with a
EUR10.50 target.
As most results were already provided with April's profit
warning, the share-price reaction was limited. At 1400 GMT, the
shares were down 0.4% at EUR8.27 in a flat overall German
market.
In the U.S., T-Mobile's key growth driver in the past, revenue
growth slowed and operating profit was down due to slower top-line
growth and higher costs.
T-Mobile's net additions in the first quarter, defined as new
customers minus churn, were 68.4% down on year.
In Germany, T-Mobile lost 118,000 customers, partly because the
company terminated relation with inactive prepaid customers, while
in the U.K. T-Mobile lost 111,000 customers in the January to March
quarter.
Company Web site: www.telekom.de
-By Archibald Preuschat, Dow Jones Newswires, +49 211 138 7218,
archibald.preuschat@dowjones.com