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Earnings

Deutsche Telekom Back To Profit As T-Mobile USA Loses 77,000 Customers

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Deutsche Telekom (NYSE: DT) swung back to profitability in Q3 but T-Mobile USA lost 77,000 mobile customers in the quarter, after adding 325,000 in Q2.

SEE ALSO: Earnings: T-Mobile UK Health Hits Deutsche Telekom

For the three months to September 30, profits rose 7.2 percent from last year to €959 million ($1.42 billion) in Q309—beating analysts’ predictions of €830 million—a welcome sight for investors after DT suffered a H1 loss of €600 million.

Revenue rose 5.2 percent to €16.26 billion ($24.18 billion) in the quarter and the company’s total mobile customers grew 4.3 percent to 150.9 million.

Release | Webcast (10.30 GMT) | Slides

But a healthy Q3 still doesn’t make the year-to-date figure look all that good: for the first nine months of the year DT made profits of just €356 million ($529 million), compared to a €2.21 billion ($3.28 billion) profit in the same period last year. DT repeated its prediction that full-year EBITDA will fall by up to four percent from last year’s €19.4 billion.

T-Mobile USA: The company’s American division now has a total of 33.4 million mobile customers—DT blames tough competition and rivals’ “handset innovation” for the customer losses; those recent service disruptions can’t help either. The division made Q3 revenue of €3.75 billion ($5.57 billion)—down on Q1 and Q2 but up 2.8 percent year on year—and for the year to date revenue was €11.81 billion ($17.5 billion), up 11.3 percent year on year. DT says its 3G network will expand to cover 200 million Americans by the end of the year.

T-Mobile UK: UK customer base was the same as in Q2 at 16.6 million, but revenue was down 14.6 percent period-on-period at €853 million ($1.26 billion). Illustrating exactly why DT was considering offloading the underperforming division, its year-to-date profits of €447 million ($664 million) is 30.8 percent less than the year-ago figure.

Cost-cutting:DT’s long-running cost-saving programme which began in 2006 with the aim of cutting up to €4.7 billion by 2010 has exceeded that figure and shaved €5.4 billion from the company’s balance sheet, largely through voluntary redundancies and early retirement.

Update: In the journalist and analyst presentation (now combined), CEO Rene Obermann put his finger on the problem behind the 77,000 net customer losses in the US in Q3: when the release says “handset innovation” was to blame, he says that’s “namely, the iPhone”. Vodafone (NYSE: VOD) CEO Vittorio Colao admitted in July that his company was similarly suffering from a “negative iPhone effect”—though the merged Orange-T-Mobile JV in the UK will sell the sought-after handset.

Nov 5, 2009 5:26 AM ET

Deutsche Telekom's head office in Bonn, Germany


Posted In: Mobile, Money, Earnings

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